Billionaire Steve Wynn Makes Big Online Poker Bet With PokerStars

In a dramatic move that will forever change the online poker landscape, billionaire Steve Wynn has announced he is joining up with PokerStars, the world’s biggest online gaming company, to establish a strategic relationship that aims to regulate online poker in the U.S.

“We are convinced that the lack of regulation of Internet gaming within the US must change,” said Wynn, chief executive of Las Vegas casino company Wynn Resorts, in a statement. “We must recognize that this activity is occurring and that law enforcement does not have the tools to stop it.”

PokerStars and Wynn Resorts plan to work together to secure the passage of federal legislation that will regulate online poker in the U.S. with an eye toward setting up a joint venture, PokerStarsWynn.com, that will offer for-money online poker play in the U.S.

For the last few years, PokerStars, based in the Isle of Man, has dominated the U.S. market, building a hugely profitable business while operating in the shadow of the law. The U.S. Justice Department has for years taken the position that facilitating for-money online poker violates U.S. law, making no distinction between sports betting—clearly illegal— and poker play. But PokerStars says it has received legal opinions from several U.S law firms stating it is not violating U.S. law and the feds have never challenged this position.

PokerStars is run by Isai Scheinberg, a former IBM programmer, and his son Mark Scheinberg, although the company hired a chief executive in recent months. “We have long supported the enactment of local regulatory regimes that protect consumers and provide valuable tax revenues and jobs,” Mark Scheinberg said in a statement. “PokerStars is closely regulated in many European countries and it has been endorsing the adoption of the same approach in the United States for years.”

Late last year the online poker industry almost managed to squeeze through legislation that would have regulated online poker in the U.S. after the casino companies in Las Vegas decided to back the effort, tired of sitting on the sidelines and watching companies like PokerStars and Full Tilt Poker earn hundreds of millions of dollars annually from the large U.S. market. The effort, however, could not overcome opposition from some powerful Republican lawmakers.

Now, Wynn has decided to boldly attach his name and credibility to online poker in return for securing an association with the leading online poker brand. By inking this deal, PokerStars is not only getting a powerful ally, it is also making a preemptive end-run around efforts from lawmakers or business interests to exclude offshore online poker companies that have operated in the U.S. in recent years from any regulated U.S. marketplace.

Still, Wynn is entering into a deal with a company that has played a massive cat-and-mouse game with federal law enforcement. Unwilling to confront the actual online poker companies in court, the Justice Department has tried instead to cut off the financial lifeline of the online poker business by going after the financial firms that process the industry’s payments.

In the summer of 2008, for example, the U.S. Attorney in Manhattan froze some $34 million owed to poker players from PokerStars and Full Tilt, after which both companies refunded their customers. PokerStars says these kind of asset seizures have always involved payment processors that were acting in a non-transparent manner and hiding information from the company. The feds got a new tool in this battle when a 2006 law that targets online gaming payment processors came into full effect last year.

But no law enforcement or legislative effort has put a dent in the demand for online poker play in the U.S. that involves financial bets. State lawmakers in places like New Jersey have recently promoted regulated online poker play within their state borders, drooling over potentially rich tax revenues. Now Steve Wynn has upped the ante.

Related posts:

1. Online Poker Legislation Could Open Up Seminole Gambling In Florida
2. Proposed Legalizing Online Poker in Nevada Supports PokerStars
3. The European Union yesterday published a Green Paper on online gambling.
4. Dutch Parlament say yes to online gambling on sports, poker
5. Lee Jones Returns to Pokerstars

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Posted by Senior Editor on Mar 25 2011. Filed under Gossip. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.