A recent decision by New Jersey regulators opens the door for PokerStars to finally return to the state after a three year absence. New Jersey Division of Gaming Enforcement recently approved a partnership between casino owner Resorts A.C. and the parent company of PokerStars. That decision will allow Amaya to launch an online poker room in New Jersey.
Resorts AC already has an established online presence in New Jersey, since it currently operate two online New Jersey casinos: one a Mohegan Sun-branded site and a second under its own name.
Winning approval in New Jersey has been a long, drawn-out process for PokerStars. It first attempted to get licensed by purchasing Atlantic City casino The Atlantic Club in 2013, after the state legislature passed a law making online gambling and poker play legal in New Jersey. That casino purchase fell through and in 2014 PokerStars parent company Rational Group was purchased by Amaya in 2014 for a reported $4 billion. Amaya was already a licensed gambling industry vendor in the state and the presumption was that approval for an online casino would happen quickly.
But for reasons that still aren’t entirely clear, the process by the New Jersey Division of Gaming Enforcement took nearly 2 years. Part of the problem apparently dated back to 2011, when PokerStars Full Tilt was shut down by the U.S. Department of Justice following a lengthy investigation. Ultimately PokerStars settled the matter without admitting guilt, but the shutdown tainted the approval process in places like New Jersey. The purchase of the company by Amaya was done in part to help PokerStar’s reputation, but many of the regulators in New Jersey still voiced concerns about the company operating an online casino given its past problems.
Ironically, the Amaya purchase of PokerStar’s parent company sparked regulatory problems of its own in Canada. There, the Financial Industry Regulatory Authority (FINRA) closely examined the sale after reports surfaced that insider trading might have affected the price of Amaya stock prior to the acquisition. Amaya was subsequently cleared of any wrongdoing, but the scrutiny gave New Jersey officials yet another reason to delay approval to the company.
So now that the approval has been given, when can New Jersey residents anticipate getting the chance to use a PokerStar online casino in the state? Company officials haven’t announced a specific start date, although it could be as soon as early 2016.
There are a number of problems that will have to be solved before the launch and just one of them is the branding and promotion of the site. The two existing Resorts AC online casino web sites currently split the New Jersey market 50/50. So any new online casino has to figure out a way to differentiate itself while still dealing with the same regulatory constraints as current operators.
There are also some technical problems, although those issues tend to be less difficult to solve. Online casinos tend to have some payment processing challenges and the combination of a smaller overall population and high media advertising costs make any television and/or radio advertising an expensive proposition.
But the biggest delay may be the approval of technical and operational aspects of the proposed site. While New Jersey regulators have given the transactional waiver for Amaya and PokerStars to operate in the state, they still need to sign off on the proposed online casino’s backend and security components. That process is faster than the one for the transactional waiver, but the delays can stretch into months if there are questions about the operation.
To get to the point where the state can approve the operation, it has to be built and finalized by Amaya. And it’s not clear whether a fledgling operation in New Jersey is near the top of the list for the company. Amaya spent close to two years seeking the initial approval and its likely the company delayed major work on the site until it was closer to final approval. Now Amaya has several other high-priority online casinos launching in other states and it’s not know whether New Jersey’s project will be delayed until those sites are up and running.
One final complication is that executives at Amaya have long argued that getting a casino license in New Jersey is a more valuable asset than actually operating an online casino in the state. Now that Amaya has that casino license, will it still be as motivated to finish the online casino component of the plan?
One possible distraction for Amaya is that there have been reports that a PokerStar-branded live poker room might be in the works at Resorts AC. That idea was first announced in 2013 and both companies say that a room is planned for the “near future.” So a healthy off-line component might make the online side of the deal less compelling for Amaya.
So the bottom line for online casino enthusiasts in New Jersey is that while PokerStars is coming to the state at some point, it’s not going to be until well into 2016. That’s bad news for potential customers and even worse news for Amaya, which has already sunk a substantial amount of resources into the New Jersey regulatory approval process.