Saturday, 15 September 2012

US online gambling regulation is “gaining momentum” as Department of Justice settles

PokerStars, the Isle of Man-based online poker company, has settled with US authorities over allegations of money laundering and bank fraud. PokerStars has confirmed it will pay $731 million (£466 million) to avoid any further prosecution in the US.

The deal includes a paragraph stating that PokerStars could potentially return to the US market, when online poker is legalised. The Chairman of PokerStars, Mark Scheinberg, said he is “delighted”.

“The deal appears to be a win for all parties”, said Lloyd Levine, President of Filament Strategies and a former Member of the Califonia State Legislature. “The players will get their money, the companies assets will be merged, and they will be given a clean start in the US market, the Department of Justice gets settlement money, and nobody has to go to court.”

It has also been agreed that PokerStars acquires the assets, and pays off debts, of Full Tilt Poker, a onetime rival that was also indicted on 15 April 2011, which became known as ‘Black Friday’. On that day the US Department of Justice (DoJ) brought criminal charges against executives of PokerStars, Full Tilt Poker and Absolute Poker, shut their websites to US-based players and seized funds. PokerStars will pay $547 million to the DoJ and $184 million to poker players outside the US who are owed money by Full Tilt Poker.

Levine stresses “the move to legalisation of internet gambling is gaining momentum.” Although he adds “things here are moving at a snail’s pace”, Levine emphasizes that “we have gone from no legalisation, to three states being legalised, and five more states and Congress discussing it.”

Linda Shorey, a Partner in the Harrisburg office of K&L Gates, thinks “there is a possibility of federal legislation being passed by Congress when it returns to work after the election.” Whether Congress will propose any framework for regulation “depends on the results of the November election”, Shorey said.

Levine explains the surge in enthusiasm for regulation because “obviously, money is a big factor. Governments at all levels are cash strapped and they see this as a way to bolster their budgets without increasing taxes.” Levine is convinced “were there not this much money involved it is likely the other efforts would have been a lot less effective.” He predicts “legalisation will happen eventually. Not this year, but perhaps late in 2013 or 2014.”

Michiel Willems © 2012 CP Publishing Ltd. London, UK.