The New Jersey Directorate of Gaming Enforcement has released its 89-page report detailing a conscientious and exhaustive investigation into Pokerstars and its parent group Amaya and their suitability for licensing.
The regulator recently issued a transactional waiver to the company, allowing it to enter the New Jersey market in partnership with Resorts Casino Hotel (see previous reports).
Highlights of the report include:
* Detailed reviews of 45,000 business documents for the period 2008 to the present relating to Amaya and Pokerstars were conducted, assisted by the group’s independent auditors;
* Investigators travelled to Montreal, Toronto, Dublin, the Isle of Man and the United Kingdom to ensure that past owners, management and practices were “purged” from the PokerStars operation;
* The DGE enquiries extended to the enquiries of the Autorité des marchés financiers (AMF) in Quebec, which investigated activity around trading of Amaya’s stock after the company acquired Pokerstars . The regulator notes that the AMF enquiry has not resulted in any proceedings or charges, and that Amaya has consistently assured that it has done nothing wrong. The DGE continues to monitor the AMF enquiry;
* Investigators interviewed and took sworn statements from 63 former Pokerstars, Full Tilt, and Pyr (now Amaya’s software arm) employees still with the group;
* Investigators reported that Pokerstars generated $44.3 million in revenue in New Jersey from October 2006 until Black Friday in April 2011. The company subsequently returned $5 million to New Jersey players after the Black Friday shutdowns, with just short of half-a-million dollars still unclaimed;
* Amaya has withdrawn from 34 markets where Pokerstars activity was not expressly authorised;
* Full Tilt’s New Jersey player base consisted of 75,000 accounts – it is not clear how many accounts Pokerstars had;
•The report cites Amaya’s decision to withdraw “from 34 “grey markets” in which the Pokerstars entities previously operated Internet gaming, where it was not expressly authorized” as a reason in support of granting a license.
* Four unnamed Rational-Oldford Group executives who remained with Amaya after its acquisition have to be released from employment by January 30 2016 “…having failed to establish the requisite good character, honesty and integrity required by the Act due to their involvement in the business activities of the Pokerstars Entities between the enactment of UIGEA and Black Friday.”
The DGE findings note that Amaya has “permanently and irrevocably severed” all previous ownership interests in the Oldford-Rational Groups, and has met the “significantly changed circumstances” benchmark required in the two year suspension imposed by the DGE when Pokerstars first applied for a New Jersey licence in 2013.
The findings go on to assert:
“The Division concludes that Amaya has demonstrated its suitability for a Transactional Waiver Order. While the Pokerstars entities operated in violation of the law between 2006 and 2011, a number of considerations – including the severe criminal and civil sanctions imposed by the federal government, the complete and irrevocable separation of the previous owners and almost all of the former executives, the acquisition of the assets by Amaya and their incorporation into a robust compliance and control environment, as well as significant changes in the Internet gaming market since 2011– lead to a finding of suitability.
“Based upon the lack of material derogatory information revealed during the Division’s investigation and the strength of the integrated compliance plan, the Division concludes that Amaya and Amaya Holdings (IOM) have established the requisite good character, honesty, and integrity required for qualification as a qualifier of a CSIE.”
MORE TRAVAIL FOR DAILY FANTASY SPORTS (Update)
Federal Grand Jury convened in Florida, and a new class action in Illinois.
The troubles keep mounting for the beleaguered daily fantasy sports industry with developments late Friday including the convening of a federal Grand Jury in Florida, and the filing in Illinois of another class action against market leaders Fanduel and DraftKings.
Twitter and online sports media reports revealed that a class action similar to that launched in New York earlier this week by a Kentucky resident was filed in an Illinois federal court, citing FanDuel and DraftKings, and that Judge Gregory H. Woods has been assigned to the case.
Wallach Legal tweeted that the US Attorney’s Office in Tampa, Florida is additionally investigating DFS operators for violations of federal law (IGBA) and Florida law (849.14), and that a Grand Jury has been convened.
The IGBA is a law enacted before the DFS industry arose and is mainly designed to curb gambling operations that fund mafia families. It makes it unlawful to bet on the result of a trial or a contest of skill.
Federal grand juries, which can comprise 16 to 23 jurors, require that at least 12 grand jurors find probable cause in order for an indictment to be issued. Whilst not in and of itself a conviction, Grand Jury proceedings are bad publicity and can discourage players from supporting a business that may be found to be illegal.
They tend to be lengthy affairs, hearing testimony from witnesses and delving deeply into the activity and backgrounds of those they are investigating.
Some observers have already pointed out the collateral damage a Grand Jury investigation can inflict, such as withdrawals of sponsorship, funding, investment, partnership and advertising support.
Other developments Friday included a statement from new DFS market entrant Yahoo advising that it has banned its employees from playing real-money DFS contests at rival sites.
And DraftKings partner, the National Hockey League, announced that it is extending its current ban against its players participating in DFS activity to league employees in general.
Over at DraftKings, the three founders, CEO Jason Robins, Matt Kalish and Paul Liberman, were clearly in damage control mode as they sent personally addressed emails to probably millions of DFS players in what appeared to be an effort to reassure them.
The communications contained little that has not already been reported in the extensive media coverage this week as the “:insider” crisis deepened, and focused on reassuring players that the “…fairness and integrity of our contests has been at the heart of everything we have built since we started the company three and a half years ago.”
It goes on to reiterate that its investigation into the Haskell affair has found no evidence of wrongdoing, but observed that the issue has encouraged the company to “re-evaluate our processes,” and details the hiring of an external law firm to conduct a full review.
“In addition to this audit, we have put in place a set of core measures that we believe are central to this process,” the trio advise, reiterating that the company has prohibited its employees from taking part in any DFS activity for monetary prizes, and that this ban extended to employees from rivals trying to play on DraftKings.
The company is also “actively reviewing” its organisational structure and will add resources to ensure compliance with all recommendations stemming from internal and external findings. It is also working with multiple third parties to strengthen all internal policies and procedures.
The email concludes with the observation:
“You will no doubt continue to hear from the media about both DraftKings and the industry. It is our prerogative to keep driving that conversation ourselves. We will work to respond to your concerns in complete transparency and to inform you of the steps we are taking to inspire your full trust.
“Please know how grateful we are for the passion and loyalty you have shown DraftKings throughout our history and especially over the past week. You remain our greatest priority.”