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New Jersey Suspends PokerStars’ License Request for Two Years

PokerStars, the world’s largest Internet poker site, had its application for a New Jersey gambling license suspended for two years by regulators, citing an indictment against its founder.

The suspension by the New Jersey Division of Gaming Enforcement “is based primarily on the unresolved federal indictment against Isai Scheinberg,” the founder of PokerStars, “for the alleged violation of federal gambling statutes,” the division said in an e-mailed statement today.

It also cited “the involvement of certain PokerStars executives with Internet gaming operations” in the U.S., after passage of the Unlawful Internet Gambling Enforcement Act in 2006.

PokerStars, based in the Isle of Man, had sought to re-enter the U.S. market through an agreement with the Resorts Casino Hotel in Atlantic City. New Jersey legalized online betting in February as a way to boost the state’s $3 billion casino industry, which has been losing business as nearby markets expanded.

The 2006 act prohibits businesses from processing online wagers in jurisdictions where it is not legal. Prosecutors obtained indictments against 11 people in 2011 for allegedly circumventing U.S. laws preventing banks in the country from processing player payments. Scheinberg was among the individual defendants.

Last year, PokerStars reached a $731 million settlement with the U.S. Justice Department over allegations of money laundering and fraud related to its now-closed real-money online poker service in the U.S.

New Jersey regulators said today they may consider a request to reactivate the application “if significantly changed circumstances are demonstrated.”

“We are disappointed that the N.J. Division of Gaming Enforcement has suspended the review of our application at this time,” PokerStars spokesman Eric Hollreiser said in a statement. “We will remain in open dialogue with the DGE and will update them on changes in our situation as they occur.”

To contact the reporter on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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