Why New Jersey is freezing out PokerStars for 2 Years

By now, many people have heard that New Jersey have suspended review of PokerStars’ gaming license application for two years. This means that the earliest PokerStars would be eligible for the regulated New Jersey online poker market would be the first quarter of 2015.

In suspending Stars’ application, the New Jersey Division of Gaming Enforcement (NJDGE) did provide a glimmer of hope by saying that they could revisit the issue earlier if “significant changes” are made. This brings us to the first and most obvious reason why Stars is being shut out of the Garden State: their founder Isai Scheinberg.

Scheinberg stepped down from his executive position with PokerStars as part of the Black Friday settlement with the US Department of Justice. But things are by no means cleared with the US government since Scheinberg is still under federal indictment. Because PokerStars’ disgraced founder is still associated with the company, the NJDGE want to wait until the federal indictment matter is handled before they consider issuing a license.

Okay, so this covers the publicly stated reason for why PokerStars isn’t allowed in New Jersey. But is Scheinberg, who’s already stepped down, really the only reason why Stars is being kept out? Not by a long shot because the state government and Atlantic City casinos are no fans of PokerStars!

Atlantic City have been on a steady decline since 2005, when their gaming revenues reached a peak of $5 billion. Since that time, they’ve seen neighboring Pennsylvania pass them by and are facing increasing competition from New York and Maryland. All 12 casinos in Atlantic City are looking to online gaming for a boost, and having to compete with the world’s largest poker site wouldn’t exactly make this easy. Resorts Casino, which was set to be PokerStars’ partner, is the only gaming establishment that was in support of them coming to New Jersey.

So much like Nevada, New Jersey found some convenient excuses to keep Stars out and give in-state casinos a better chance to succeed. It’ll be interesting to see if New Jersey tries to use Scheinberg and run-ins with the US DOJ as excuses again in two years when they revisit PokerStars’ application.

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