DOJ Online Poker Settlement Unleashes Two Top Brands

PokerStars and Full Tilt Poker on path to online gaming licensing.

The U.S. Department of Justice, (DOJ) Southern District of New York, reached a settlement today with PokerStars on the U.S. Government’s civil charges that the company defrauded customers and evaded U.S. prohibitions on Internet gambling. The DOJ action arose from the Black Friday, April 15, 2011, indictment and civil complaints against PokerStars, Full Tilt Poker and Absolute Poker and its chief executives, which left online poker players in the U.S. in shock and disarray, as detailed in this New York Times blog.

Under the settlement, PokerStars will pay $731 million dollars, which includes a forfeiture to the United State Government and funds to reimburse customers of Full Tilt Poker. PokerStars obtains the rights to Full Tilt Poker’s business from the U.S. in the deal. PokerStars had already paid all of its customers’ claims. The settlement did not involve an admission of any wrongdoing. The settlement funds will be paid over three years.

With anticipated full reimbursement of all former Full Tilt Poker customers in the United States and non-U.S. customers, PokerStars plans to re-launch Full Tilt Poker as a separate brand after the establishment of a new and independent management team.

Media releases on the settlement were issued by PokerStars, Full Tilt Poker, and by Ray Bitar, the CEO of Full Tilt Poker indicted on “Black Friday” when Full Tilt and PokerStars operations were shut down. Both Mr. Bitar and Isai Scheinberg, the founder of PokerStars, have been charged with operating illegal gambling businesses. Mr. Bitar returned to the United State from Ireland, has pleaded “Not Guilty” and is currently released on bail. Mr. Scheinberg is a fugitive, reportedly in the Isle of Man at present.

By resolving the DOJ claims from the civil forfeiture actions, PokerStars will excite the online poker community. Not only are U.S. and non-U.S. players of Full Tilt Poker being compensated, but these leading brands are expressly preserved for the inevitable licensing by a federal or state-by-state regulatory system of online poker play. PokerStars now emerges as the brightest star of the on-line poker community.

PokerStars will still need to hurdle licensing investigations by gaming regulators upon legalization of online poker. Land-based casinos have been preparing for either federal or intra-state online poker and may lead the opposition to these companies and the gaming regulators may not prove as forgiving as the DOJ.

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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