PokerStars Founder Pleads Guilty to Federal Charges
April 15, 2011, is a day known as “Black Friday” in the poker world, and the results of that day finally reached a conclusion this week. PokerStars, Cereus, and Full Tilt Poker had both their assets and domains seized by federal prosecutors on that day.
The seizure came after those companies were found to break the Unlawful Internet Gambling Enforcement Act, and PokerStars founder Isai Scheinberg was also charged with bank fraud, and money laundering as well.
PokerStars was forced to pay $731 million to the Department of Justice in 2012 to retain their assets and domains. During that time, PokerStars was also able to acquire the assets and domains of Full Tilt Poker who was one of the biggest US online poker sites during the rise of online poker.
Full Tilt Poker owed its customers more than $400 million, but they only had $60 million to pay out. PokerStars was able to pay off its customers for them and took control of their assets in the process.
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While that payment took care of the money portion of the arrest, the Department of Justice was still planning to prosecute Scheinberg and other leaders of the companies. Scheinberg was arrested on June 7, 2019, in the country of Switzerland.
Scheinberg was ordered to be extradited to the United States some three months later but initially appealed that ruling. He eventually withdrew his appeal and surrendered to US Federal Agents in January 2020.
After his return to the United States, Scheinberg was released on $1 million bond, but he was forced to give up his passport. Scheinberg was allowed to travel to Washington DC to meet with his attorneys but was otherwise restricted to certain parts of New York state.
On Wednesday in a federal courtroom, Scheinberg pled guilty to running an illegal poker site, and for breaking the 1971 Unlawful Internet Gambling Enforcement Act. He could be sentenced up to five years in prison, but a sentencing date has not yet been scheduled for the 73-year-old.
All other defendants in this federal case pled guilty as well, and their sentences were handed out depending on their level of involvement.
What’s Next For PokerStars?
Even though “Black Friday” was the darkest of days for the PokerStars company, there were much brighter days ahead. The company was not going to be able to move forward under the leadership of Scheinberg, and it was clear that he was going to have to sell.
Scheinberg and his son Mark sold the company to Amaya Inc. for a whopping total of $4.9 billion. The deal was complete in June of 2014, some three years after Black Friday. Amaya Inc. is a publicly-traded company that is based in Toronto.
Amaya Inc. was later renamed The Stars Group, and that is the name that they go by today.
The Stars Group purchased PokerStars as a way to break into the growing market in the United States. They were able to launch online poker in the state of New Jersey in March 2016, and after much success, they eventually launched in Pennsylvania as well.
After partnering with Fox Sports, the Stars Group was also able to break into the sports betting industry in the US as well.
The Stars Group wasn’t done looking to expand, and in October 2019, they announced a major move. They merged with Flutter Entertainment in a deal that was worth more than $12 Billion.
Flutter Entertainment owns both BetFair and FanDuel, two of the biggest companies in the sports betting industry. The merger has yet to be finalized as the two companies are still awaiting regulatory approvals.