The Gloves Are off: PokerStars Respond to the AGA Request for Participation in the ICA Process

The Gloves Are off: PokerStars Respond to the AGA Request for Participation in the ICA ProcessRational Group US Holdings Inc. have responded to the New Jersey Division of Gaming Enforcement (DGE), and Casino Control Commission (CCC), in reaction to the petition for participation that was filed by the American Gaming Association (AGA), in relation to the Rational Group’s application for Interim Casino Authorization (ICA). The application was made in connection with the Rational Groups plans to purchase the floundering Atlantic Club Casino, in Atlantic City, from Resort International Holdings.

The gloves are well and truly off and the Rational Group (the parent company of PokerStars) looks to have a decent set of knuckles. The letter, which is addressed to both David L. Rebuck, Director of the New Jersey DGE, and Matthew B. Levinson, Chairman & Chief Executive Officer of the CCC gets straight to the point in the first paragraph of any note, citing New Jersey Administrative Code 1:1-16.6 stating that only an ‘entity with a significant interest in the outcome of a case may move to participate,” and participation will be allowed only if, ‘the participant’s interest is likely to add constructively to the case without causing undue delay or confusion.’ The letter continues to assert that the AGA meets neither of these criteria.

The letter then goes on to urge the CCC to deny the AGA’s petition, ‘to avoid setting a dangerous precedent,’ and decreed the AGA’s attempted involvement as a, ‘thinly veiled anti-competitive campaign against a competitor into the market.’

The bulk of the letter is structured around three foundational points. They are:

1. The AGA lacks a ‘significant interest in the outcome’ of these proceedings.

The letter points out that the AGA’s petition doesn’t explain how they have a significant interest in Rational’s petition for a license, and it also goes on to state that the licensing statutes and regulations that exist in New Jersey set the highest standards in the industry, meaning the AGA’s claimed interest in preserving ‘suitability-based licensing of gaming operations’ is not needed. In other words, keep your nose out because New Jersey is a big boy and can look after its self.

The other claim that Rational makes is that the AGA has no specific information appertaining to the petition that is not available in the public domain. It also continues to suggest that by petitioning it is actually alleging that the divisions process is flawed, before continuing to get right to the point and allege that the only interest the AGA actually has, derives from the fact, ‘that some of its members perceive themselves to be Rational’s competitors’. One can only assume that they are referring to the Caesars organization.

2. The AGA’s participation is not “likely to add constructively to the case.”

In this bone of contention the meat centers on the belief that the AGA fails to show how it is, ‘likely you add constructively to the case without causing undue delay or confusion.’ Once again it very cleverly acknowledges that the role the AGA are trying to carve out for themselves actually belongs to both the Division and the Commission. It also highlights the rather ‘voluminous’ submissions from the AGA and wonders how they cannot cause undue delay and confusion.

The other important point that the Rational Group is keen to impress is the lack of evidence that shows the AGA has a concrete interest in the sale or operation of the Atlantic Club Casino. As a result, Rational believe the concerns of the AGA are purely abstract at best.

3. To permit the AGA to participate in this matter would be destructively anti competitive, and would do a disservice to the people of New Jersey.

The Rational Group starts by asserting that, ‘PokerStars became the world’s largest, and most respected, Internet gaming companies because it works closely with regulators and is in good standing with governments around the world.’ It goes on to remind the commission that PokerStars holds licenses in France, Germany, Italy, Spain, Denmark, Estonia, Belgium, Malta and the Isle of Man. A good point well made if you want to demonstrate that you are a trustworthy company.

It goes on to say that they, ‘finally resolved the civil action against it in the New York federal court without admitting any wrongdoing,’ before promising that PokerStars would, ‘infuse the New Jersey economy and create jobs by bringing brand name recognition and well-recognized quality to the State.’

The letter ends on a quite succinct note when it states that the, ‘AGA’s inconsistency is also apparent in the stark contrast between the arguments raised in its petition and the prior efforts of one of its board members to form a business relationship with PokerStars.’ It continues, ‘On February 8, 2013, AGA member Caesars Entertainment approached PokerStars and offered to sell it the Rio Casino in Las Vegas. At that time, Caesars suggested that this acquisition would give PokerStars a better relationship with Caesars and would help PokerStars gain a license in Nevada.’

Now that’s what you call a body shot that is going to knock the wind right out of your sails and send you to the canvas.

Over to you AGA!