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PokerStars Founder Isai Scheinberg Pleads Guilty

George Miller

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PokerStars Founder Isai Scheinberg Pleads Guilty
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Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ISAI SCHEINBERG, the founder and former executive of PokerStars, an online poker company, pled guilty  to running a multimillion-dollar unlawful internet gambling business.  SCHEINBERG pled guilty before U.S. Magistrate Judge Sarah L. Cave.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Ten years ago, this Office charged 11 defendants who operated, or provided fraudulent payment processing services to, three of the largest online poker companies then operating in the United States – PokerStars, Full Tilt Poker, and Absolute Poker – with operating illegal gambling businesses and other crimes.  As Isai Scheinberg’s guilty plea today shows, the passage of time will not undermine this Office’s commitment to holding accountable individuals who violate U.S. law.”

As alleged in the Indictment filed in March 2011 in Manhattan federal court, PokerStars was founded in approximately 2001, with headquarters in the Isle of Man.  PokerStars offered online poker games to players around the world, including in New York, New York.  SCHEINBERG was PokerStars’ founder and principal.  On October 13, 2006, the United States enacted the Unlawful Internet Gambling Enforcement Act (“UIGEA”), making it a federal crime for gambling businesses to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful Internet gambling.”  With the enactment of UIGEA, leading internet gambling businesses – including the leading internet poker company doing business in the United States at that time – terminated their United States operations.  However, PokerStars, along with Full Tilt Poker and Absolute Poker, continued illegally to make internet poker available to U.S. customers through March 2011.  

In pleading guilty, SCHEINBERG admitted that he knew operating a business that offered internet poker to New Yorkers violated state law, and that it was the clear position of the U.S. government that offering online poker in the United States violated federal law.  Nonetheless, Scheinberg decided to continue running his multimillion-dollar online poker business in the United States.

SCHEINBERG, 73, a dual Canadian and Israeli national, was arrested in Switzerland on June 7, 2019, based on the U.S. charges.  In early October 2019, SCHEINBERG was ordered to be extradited to the United States by the Swiss Federal Office of Justice, a decision he initially appealed.  SCHEINBERG subsequently withdrew his appeal and surrendered to U.S. federal agents on January 17, 2020.  He was arraigned before United States Magistrate Judge Katharine H. Parker on the same day.

 

Source: justice.gov

Compliance Updates

UK House of Lords Calls for Urgent Regulation of Loot Boxes

Niji Narayan

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UK House of Lords Calls for Urgent Regulation of Loot Boxes
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The House of Lords Gambling Committee has urged the UK government to classify video game loot boxes as “games of chance.” The recommendation came as part of a wide-ranging report in which the committee suggested a number of changes to the gaming industry.

“If a product looks like gambling and feels like gambling, it should be regulated as gambling. The government must act immediately to bring loot boxes within the remit of gambling legislation and regulation,” the report says.

Loot boxes have long been controversial in video games. They offer players a chance at a randomised reward when opened. To further complicate matters, boxes can often be bought for real money, and the rewards can sometimes be traded.

Lord Grade, chairman of the committee, said that lots of other countries have already started to regulate loot boxes because “they can see the dangers” which is teaching “kids to gamble.”

He said the Gambling Act was “way behind what was actually happening in the market” but he added that the “overwhelming majority” of the report’s recommendations “could be enacted today” as they do not require legislation.

The Lords report is wide-ranging, covering the entire gambling industry, but focuses in part on new forms of gambling, and those targeted towards children.

“There is academic research which proves that there is a connection, though not necessarily a causal link, between loot box spending and problem gambling,” it says.

The Lords report concludes that ministers should make new regulations which explicitly state that loot boxes are games of chance. It also says the same definition should apply to any other in-game item paid for with real money, such as FIFA player packs.

The government told the committee that its planned future review of the Gambling Act would focus on loot boxes. But the Lords report warns: “This issue requires more urgent attention.”

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Compliance Updates

Norway to Consolidate Gambling Laws Under Single Legislative Banner

Niji Narayan

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Norway to Consolidate Gambling Laws Under Single Legislative Banner
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The Norwegian Ministry of Culture is going to launch a consultation on unifying the country’s gambling laws into a single piece of legislation. The new bill would bring together the existing Lottery Act, Gambling Act and Totalisator Act under a group of gambling laws that would apply to the entire Norwegian market.

The consultation will run through to September 29, with a range of stakeholders invited to give their opinions on the proposals.

“The purpose of the bill is to improve responsible gaming [standards] and to prevent problems and other negative consequences of gambling,” Minister of Culture and Gender Equality Abid Q. Raja said.

“We still want voluntary and non-profit purposes to benefit from the profits that gambling generate, and the bill facilitates this, but at the same time also demands more efficiencies from Norsk Tipping,” Raja added.

Among the key proposals in the bill are for Norsk Tipping and Norsk Rikstoto to retain the exclusive right to offer gambling. Both operators would be subject to strict state control, including the government having a final say on board appointments to each business.

The bill would also have the Ministry of Culture assume responsibility for all elements of the gambling market, including rules governing the horse racing sector, which is currently overseen by the Ministry of Agriculture and Food.

The country’s regulator Lotteritilsynet would also be given more power to ensure that gambling is taking place legally. This would include ordering internet service providers to notify users that when they see marketing from offshore operators, this is both unlicensed and illegal.

Aside from traditional gambling, the consultation will also gather opinions on loot boxes in video games and whether these features should be covered by the new set of laws.

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Compliance Updates

GiG Secures Sports Betting License in Colorado for WSN.com

George Miller

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GiG Secures Sports Betting License in Colorado for WSN.com
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Gaming Innovation Group (GiG) has further expanded its presence in the United States after receiving a Vendor Minor sports betting license for its flagship affiliate site WSN.com from the Colorado Limited Gaming Control Commission.

GiG Media is now active in seven US states through its flagship US-facing sports betting website World Sports Network (WSN.com).

GiG was granted its first affiliate vendor registration in January 2019 for the state of New Jersey. This was followed in December 2019 by a certificate of registration for sports wagering in Indiana. In February 2020, GiG secured authorisation from the Pennsylvania Gaming Control Board to provide affiliate services in the Keystone State.

Jonas Warrer, Managing Director of GiG Media, said “We are delighted to further strengthen our position in the US with this latest license approval. WSN.com continues to gain momentum in the US market and Colorado provides us with an even greater opportunity to convert visitors into players as legal sportsbooks begin accepting customers in the state.”

Colorado became the 18th state to legalise online sports betting in the US in May 2020. The online sports betting market in the centennial state is estimated to reach approximately $200 million in annual revenue at saturation, according to H2 Gambling Capital.

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