PokerStars says eyes off New Jersey online gambling license application

TAGs: class action, Jeff Ifrah, judy fahrner, kelly sonnenberg, New Jersey Online Gambling, PokerStars, rational entertainment enterprises, rational group

pokerstars-new-jersey-gaming-license-subpoenaOne of the three members of the New Jersey Casino Control Commission (CCC) is in career limbo after her term expired on Thursday. Sharon Anne Harrington is serving as a holdover until Gov. Chris Christie decides whether or not to reappoint her. Harrington, who was appointed by Christie’s Democratic predecessor, told the Press of Atlantic City that her stint with the CCC had been “interesting and exciting” and that despite AC’s challenges, she was “optimistic for the future.” Harrington was especially enthusiastic about the state’s mid-November launch of online gambling, which she described as “another positive change” for the troubled seaside gaming hub.

Meanwhile, one of New Jersey’s internet gambling hopefuls is trying to block prying eyes from getting a gander at its gaming license application. On Sunday (4), PokerStars’ parent company Rational Entertainment Enterprises asked US District Court Judge Renee Bumb to block a request by Illinois resident Kelly Sonnenberg to examine Rational’s New Jersey paperwork.

A little backstory… In August 2012, Sonnenberg filed a class action suit in St. Clair County Circuit Court against Rational, its boss Isai Scheinberg, execs Paul Tate and Nelson Burtnick and a few other associated companies. Sonnenberg sought to recover the gambling losses of all PokerStars’ Illinois players under the Illinois Loss Recovery Act (LRA), which allows individuals to collect “illegal gambling” losses on behalf of third parties, provided those third parties fail to make their own claim within six months of losing the wager.

(Interestingly, the Commonwealth of Kentucky employed the same gambit when it filed suit against PartyGaming in 2010, using a century-old statute similar to the LRA. In June, paid $15m to settle PartyGaming’s ‘debt’ to Kentucky, but Rational appears to be made of sterner stuff.)

A month prior to Sonnenberg’s suit, Illinois resident Judy Fahrner launched a similar class action against 26 defendants, including Full Tilt Poker offshoot Tiltware LLC, some former FTP execs plus poker pros Erik Seidel and Jennifer Harmon. Shortly thereafter, Rational acquired FTP’s assets from the US Department of Justice and provided sufficient funds to make FTP’s former players whole, but that hasn’t deterred Fahrner from pursuing her claim. In addition to Illinois residency, Sonnenberg and Fahrner also share legal representation and both suits have since been moved to federal court.

In April, Rational filed motions to dismiss both suits, arguing that the fraud allegations made by the Illinois plaintiffs were identical to the civil charges contained in the Black Friday indictments, which Rational’s $731m payment to the DOJ last summer had already resolved. In May, Rational filed motions for a stay of discovery in both Illinois cases, arguing that the LRA’s language didn’t cover class action suits. In June, US Magistrate Judge Stephen Williams granted the stay of discovery until Rational’s pending motion to dismiss the suits is resolved. Assuming they actually go forward, neither class action suit is scheduled to go to trial before the spring of 2015.

To pass the time, Sonnenberg served the DGE with a subpoena to rifle through Rational’s underwear drawer (metaphorically, at least). In its motion to quash the subpoena, Rational reminded the court of Judge Williams’ stay order and described the subpoena as a ploy to get around the stay.

Rational argues that Sonnenberg is “plainly not entitled” to the “personal, confidential and private information and documents related to [Rational] and other PokerStars entities and individuals.” Rational further argues that the info in question was submitted to the DGE “under a regulatory framework that ensures their confidentiality and protects them from public disclosure.” Judge Bumb will issue a ruling on Rational’s motion on Sept. 3.

Attorney Jeff Ifrah, whose firm is handling Rational’s defense, told that although the Sonnenberg and Fahrner suits were joined at the hip, Sonnenberg was the only one to hit the DGE with a subpoena, “presumably because the Fahrner case applies to legacy FTP companies and those companies never filed anything with DGE, so there is nothing at DGE to subpoena. Of course, that is assuming there is any logic or intelligence to what Plaintiffs are doing in this case, and that is far from warranted.”

Rational’s quest to acquire a New Jersey gaming license has occasionally made Frodo’s journey to Mordor resemble a walk in the park. Following the spectacularly messy collapse of its deal to buy the Atlantic Club Casino Hotel this spring, Rational entered into an online gambling partnership with Resorts Casino Hotel last month. However, questions remain as to whether New Jersey regulators will approve Rational’s license application in the face of fierce opposition from the likes of online rival Caesars Entertainment and its American Gaming Association (AGA) beard. Watch this space…


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