Digging into the AGA / PokerStars New Jersey War

A couple of days ago, industry writer Dave “FTrain” Behr shared for our readers here at FlushDraw the latest from New Jersey, where a petition drafted by the American Gaming Association (AGA) was sent to New Jersey regulators, hoping to influence the state’s Casino Control Commission against granting approval to PokerStars parent Rational Group to operate the struggling Atlantic Club casino in Atlantic City, which Rational purchased a couple of months back.

Stars quickly responded in kind to the historic intrusion by the AGA, matching the AGA’s accusations with heated rhetoric of their own, assailing the AGA for not only pushing market protectionism and attempting to freeze out PokerStars to benefit their own commercial interests, but for also daring to step on the New Jersey regulators’ toes, and telling them how to do their own job.  According to Stars’ attorneys A. Jeff Ifrah and David Deitch, it’s the first time any third-party entity has attempted to intrude on a New Jersey regulatory process in such a matter.

So it’s time to catch up with the latest, dig into some of the best takes offered to date on the pending legal war, and dig into both the AGA and Stars briefs, separating some of the bluster from the actual points being made.

First, the latest developments.  According to New Jersey gaming-beat reporter John Brennan, who first broke the Stars response brief on his “Meadowlands Matters” blog, New Jersey regulators were scheduled to consider whether or not to allow the AGA to intervene in the Stars / Atlantic City process.  However, as Brennan has updated, the AGA took the matter off its agenda for last night’s hearing, suggesting that the legal issues Ifrah and Deitch brought up in their response may have some merit, or are at least being considered.

And yet this may still be a case of closing the barn door after the horses cows have wandered off to pasture.  Whether or not the AGA is actually granted permission to intervene, their real goal was to get New Jersey regulators to take a long, hard look at PokerStars.  And they’ve certainly succeeded in that.

If you don’t mind a bit of metaphor mixing, it’s like one of those cheesy TV courtroom dramas where the prosecuting attorney asks the defendant, “So after you killed your wife, where did you hide the body?”

“Objection!” screams the defensive attorney.  And of course the question is tossed out, and the TV jury is instructed to ignore having heard the prejudicial question.  But they have heard it; you can’t unring a bell.  And that’s what the AGA was really up to.  Whether or not their petition to join the fray isn’t really the point; getting all the evidence of PokerStars alleged misdeeds in front of the NJ regulators is what this was all about.

So let’s look at a few of the key points in the AGA and Stars briefs, and grant some totally non-binding winners of verdicts on some of the points being made.  And of course, this all comes with the standard IANAL (I am not a lawyer disclaimer).

On the matter of the AGA having or seeking legal standing to file its petition in the first place: Winner — PokerStars.  The points made by Ifrah and Deitch about the AGA trying to hide its protectionism and competitive-market manipulation are flat-out correct.  The AGA isn’t acting on behalf of the state of New Jersey, the employees of the Atlantic Club (who face the possible loss of jobs), poker players and casino-goers, or anyone other than the AGA member casinos themselves.

On the matter of the AGA asserting that New Jersey should ignore the DOJ/PokerStars settlement: Winner — PokerStars.  The AGA cannot call PokerStars a “criminal enterprise” (among many other similar slurs), bring up the DOJ’s Black Friday prosecution, and yet ignore the fact that the settlement that Stars reached with the DOJ specifically included language asserting that PokerStars admitted no wrongdoing.  Lousy legal argument, states this armchair lawyer.

Now, assuming that the NJ regulators take a peek at some of the stuff the AGA has submitted, regardless of whether or not the AGA’s petition is officially recognized….

On the matter of asserting that PokerStars serviced underaged players: Winner — AGA.  The problem is that Stars allowed players 18 and older to participate on its site, while New Jersey’s age of legality is 21 for entering casinos and playing poker and other casino games.  (Hat top to commenter Mike for the need for clarification.)  That was never a problem as long as the legal and business worlds occupied by New Jersey and PokerStars remained separate, but now that has to be reconciled.

On the matter of PokerStars, according to the AGA, breaking the laws of all 50 US states by offering their services to Americans in violation of those states’ laws.  Winner — Split Decision.  The AGA correctly notes that at least eight states (Washington, South Dakota, Oregon, Nevada, Illinois, Indiana, Louisiana and Massachusetts) have specific statutes against internet gambling, yet Stars offered services in all 50 states, leaving only Washington after its felony statute against the playing of online poker was enacted.  The AGA also supplied numerous notes, most culled from player profiles on PocketFives, showing players from these other states participating on Stars.

The answer has to do with the specific mention of “poker” (or lack thereof) in these statutes, while poker is generally recognized as a form of live gambling in other statutes within these states, and also goes to the “skill game” argument made by Stars and other poker proponents.

But here’s the thing: Matters in other states should have no basis on a New Jersey legal decision.  Now, as to whether PokerStars previously violated New Jersey law, now that’s something the state can and should consider.  Not the federal stuff, which also doesn’t apply, and certainly not the other states.

There’s one other out to this whole situation, and we should add this tag right here: Winner — New Jersey.  There’s no reason that the state can’t quickly file a complaint against Stars, then settle for some nice extra bonus dollars — say, $100 million — and grant Stars an additional “admission of no wrongdoing” in the settlement regarding only its New Jersey activities while thus allowing the Stars / Atlantic Club deal to move forward.

Notice that the DOJ / Stars settlement works both ways.  It doesn’t apply to New Jersey as a state, and by the same measure, New Jersey itself got none of the more than half a billion in Stars money that the DOJ pocketed.  There’s no reason at all why New Jersey can’t hold out its hands and say, “Okay, now, Mister PokerStars sirs, you’ve got several years of state-level back taxes due based on your previous history.  Time to pony up.”