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European online chief: Shuffle up and deal PokerStars in

19 June 2014

By Howard Stutz

The chief executive of European online gaming giant 888 Holdings said Wednesday that rival PokerStars should be allowed to operate in the United States now that the company is being sold for $4.9 billion to a Canadian Internet wagering firm.

The comments by 888 CEO Brian Mattingley differ dramatically from online industry rivals and various state lawmakers, who have moved to ban PokerStars from entering legal U.S. gaming jurisdictions.

PokerStars, which forfeited $731 million to federal prosecutors in 2012 to settle a civil complaint, accepted online wagers from Americans after the activity was ruled illegal in 2006.

Mattingley, whose Gibraltar-based company is partners with Caesars Interactive Entertainment in legal online gaming websites in Nevada and New Jersey, said adding PokerStars into the mix would grow the U.S. Internet market. Actual Internet gaming revenues reported by Nevada — less than $1 million a month — and New Jersey have fallen far below lofty projections.

“We compete with PokerStars throughout Europe,” Mattingley said in a phone interview from London. “They are a formidable competitor. But they would make all of us work much harder and it would expand the market. I would much rather have a small slice of a large pie, than a big piece of a small pie.”

Mattingley said Nevada’s three online poker operations and the six Atlantic City casinos that currently handle New Jersey’s online gaming business, suffer because U.S. customers still access illegal and unregulated online gaming websites.

‘It would be like unleashing an 800-pound gorilla into the market, but having more players on a regulated site would benefit everyone,” Mattingley said.

WEBSITES TOTAL 85 MILLION USERS

Last week, Montreal-based Amaya Gaming Corp. announced it was buying privately held Oldford Group — parent company of PokerStars owner Rational Group — for $4.9 billion. The deal is expected to close in September.

PokerStars and its affiliated Full Tilt Poker control some 54 percent of the global online gaming traffic outside the U.S. Combined, the websites have more than 85 million users.

Millions of Americans wagered on PokerStars before the company pulled the plug on its U.S. business in April 2011 after its founder and two other company officials were indicted in connection with fraud and money-laundering charges.

Nevada has a “bad actor clause” in the state’s interactive gaming regulations that put a five-year ban on companies that accepted wagers from Americans following the 2006 passage of the Unlawful Internet Gambling Enforcement Act.

California, which is debating the legalization of online poker, has a similar “bad actor clause” written into its twin bills currently being considered in Sacramento. But the California measure doesn’t have a time element.

PokerStars has a deal to operate online poker for three Southern California card rooms and the Morongo Band of Mission Indians. However, 13 other Indian tribes are backing the legislation as written.

Amaya officials believe the company’s acquisition of PokerStars’ parent could facilitate the website’s entry into the U.S.

888’s Mattingley said he didn’t like “bad actor clauses,” but thinks it might be too late to change the language in the regulations. He said 888 has been talking with several Indian casinos about online poker in California, but deals have not been reached.

Caesars Interactive CEO Mitch Garber, which operates WSOP.com in Nevada and New Jersey and additional New Jersey websites under the Caesars brand, declined to comment on Mattingley’s remarks or the Amaya purchase of Oldford Group.

“We don’t yet know all the details of the transaction, but today we wouldn’t comment other than to reiterate our prior position that regulators and lawmakers have become increasingly sophisticated in understanding online businesses, their history and other elements that contribute to the highest standards of suitability and probity,” Garber said in an email. “To the extent that regulators or lawmakers seek our opinion or contribution, we will deal with them confidentially.”

Officials from Ultimate Gaming, which operates Ultimate Poker in Nevada and the online presence for the Trump Taj Mahal in New Jersey, were unavailable for comment.

DEAL CALLED A ‘GAME CHANGER’

Mattingley said 888 Holdings hopes to launch online gaming operations in Nevada on behalf of Treasure Island this year.

On Monday, Fitch Ratings Service called Amaya’s purchase of PokerStars a potential “game changer” in the legal U.S. online gaming business.

In a statement, Fitch gaming analyst Brian Bertsch said PokerStars would be “a formidable competitor” but could also grow the overall market and facilitate legislation in untapped states, such as California and Pennsylvania.

“PokerStars’ database and brand recognition among poker players could lead to faster ramp-up in these newer markets and may reinvigorate markets where online poker is already legal, if these states reconsider PokerStars’ application,” Bertsch said.


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Howard Stutz
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