PokerStars dealt the first legally licensed hand of online poker in Pennsylvania last week, more than eight years since the operator—which runs the world’s biggest online poker site—accepted bets from players in the Keystone State.
PokerStars left the U.S. in 2011 after the U.S. Department of Justice (DOJ) seized its dot.com internet address and unsealed indictments against its founder, Isai Scheinberg, and director of payments, Paul Tate, for violating the Unlawful Internet Gambling Enforcement Act (UIGEA). The day is remembered by U.S. poker players as Black Friday, the day Full Tilt Poker and UltimateBet disappeared.
PokerStars claimed that online poker was exempt from UIGEA and the federal Wire Act. The DOJ failed to fully clarify the matter when asked in 2005. But a $731 million settlement with authorities, as well as a change of ownership, helped PokerStars shake off its pariah status, and it reentered the U.S. via the New Jersey market in the fall of 2015. PokerStars has remained the biggest name in online poker with about 70 percent global market share.
Now, just over two years after lawmakers in Harrisburg legalized online poker, sports betting, and casino gaming, PokerStars has returned to Pennsylvania in partnership with Mount Airy Casino. The Pennsylvania Gaming Control Board (PGCB) played it close to the vest, with Communications Director Doug Harbach telling PennBets.com, “At this juncture, all I can tell you is that online poker will be available when one of the operators which plans to offer it is ready to do so.”
The soft launch phase was expected to last a few days and feature real-money play within restricted hours, possibly with a cap on the number of players participating. Those with existing PokerStars accounts in New Jersey will need to create a separate account for Pennsylvania. Players can enter cash games, sit-and-go’s or tournaments for real money, but only at limited times until the PGCB has been able to properly test the game play and security measures. Once fully live, don’t expect an immediate return to the pre-2011 days. Players in Pennsylvania will not be able to link up with others in New Jersey.
In general, online poker participation and revenue has been a disappointment in New Jersey, and after a strong start, PokerStars lost its position as the clear leader in the state back in the spring of 2018. That was when WSOP/888 took the lead over ’Stars, powered by their ability to share liquidity between Jersey and Nevada.
The numbers for PokerStars have steadily trended down. In September, WSOP/888 led in revenue followed by PokerStars and PartyPoker. Combined, those only add up to about 71 percent of the business PokerStars alone was doing when it debuted in New Jersey.
Online poker’s reemergence in the United States in regulated form has largely been disappointing, lacking the necessary player volume to produce tournament prize pools and a variety of variations and stakes to cater to all tastes.
While New Jersey, Nevada and Delaware have entered into interstate compacts that allow them to share player pools, Pennsylvania won’t—at least not soon. Regulators were drawing up their rules around the time the Trump administration reversed a 2011 opinion that the Wire Act only prohibited interstate sports betting, not online poker or casino gaming.
The Obama-era decision paved the way for individual states to regulate online gaming, and its reversal would—in its very loosest interpretation—at least prohibit interstate online poker compacts.
The new DOJ opinion has been challenged successfully in the courts. In June, U.S. District Court Judge Paul Barbadoro said the Wire Act’s prohibitions are “limited to sports gambling,” although the DOJ has an appeal pending. Pennsylvania’s regulators erred on the side of caution, but that will likely change if the DOJ is ultimately defeated.
Since Pennsylvania has a population similar to Nevada, New Jersey and Delaware combined, the market is likely to get off to a better start than those states when they launched in 2013. But if interstate pool-sharing receives the go-ahead in the courts, the addition of Pennsylvania into the mix will give the online poker sector a huge shot in the arm.
