On March 25th of this year, Vegas Billionaire Steve Wynn announced that he was entering into a partnership with the world's largest online poker site, PokerStars. After Friday's government seizure of Pokerstars.com and the subsequent indictment of it's owners, the casino superstar announced that the partnership has been abandoned.
As most of you know, the world of online poker has been living in a legal grey area for quite some time. After the Unlawful Internet Gambling Enforcement Act (UIGEA) was passed as a rider on another bill, it prohibited transactions between online poker sites and American financial institutions. This obviously puts a damper on the whole operation.
However, many popular sites have been able to get around some regulations by hosting poker games offshore. The real-money transactions for the sites have shifted from direct deposits through VISA and Mastercard to more roundabout methods using bank accounts and offshore deposits. Friday's indictment of 11 online poker executives claims that they tricked and bribed American banks into receiving online gambling profits.
Only a few weeks ago, it seemed as though the legitimacy of online poker in America was about to receive a gigantic boost. Steve Wynn decided to attach himself to PokerStars in an effort to get legislation through congress that would regulate online poker. Once that was achieved, the plans were to launch PokerStarsWynn.com as a fully legal and regulated online poker site. From Wynn Resorts, March 25th:
The companies will first work to secure the passage of federal legislation that will finally and conclusively define illegal internet gambling, provide law enforcement with the tools necessary to stop illegal internet gambling, protect consumers by establishing a robust regulatory environment for the safe operation of online poker by experienced operators, and establish a regime for the assessment and collection of taxes.
The above statement is interesting because it separates "internet gambling" from "online poker." This echoes a main argument from proponent of online poker; poker is not gambling, it is an exercise in skill. This distinction is what many advocates lean on when discussing the legality of online poker.
"After much study, we are convinced that the lack of regulation of internet gaming within the US must change. We must recognize that this activity is occurring and that law enforcement does not have the tools to stop it. As a company that has safely conducted gaming in the US for more than 40 years, we believe that the same can be done for poker on the internet," said Wynn.
Contingent on the acquisition of regulation legislation, this partnership looked like a behemoth in the making. It really looked like it had huge implications for the poker world.
Note the use of the past tense, as following the indictments of the PokerStars execs, Wynn announced that he is cutting ties with the company, thus ending a huge venture before it even started.
From an official release:
Wynn Resorts, Limited announced today that it terminated its alliance with PokerStars, the online poker company. The decision was reached as a result of the indictment unsealed by the U.S. Attorney for the Southern District of New York.
This should come as no surprise, as any involvement with a company under such government scrutiny amounts to an extremely toxic relationship. If and when these online poker sites get back on their feet, it will be interesting to see who jumps for the opportunity to legitimize the game. If the legal part of it can be worked out, whoa momma is there a lot of money to be made for those involved.