PokerStars founder pleads guilty to running illegal online gambling business
Isai Scheinberg faces a maximum of five years in prison for knowingly accepting deposits from US players
PokerStars founder Isai Scheinberg yesterday pleaded guilty in a New York court to operating a multi-million-dollar unlawful internet gambling business.
Scheinberg is looking at a maximum sentence of five years behind bars for allowing US players to gamble on the Isle of Man-based online poker giant’s site following the passing of the Unlawful Internet Gaming Enforcement Act (UIGEA) in October 2006.
UIGEA, which was signed into law by George W. Bush as part of the SAFE Port Act, made it a federal crime to “knowingly accept” most forms of payment “in connection with the participation of another person in unlawful internet gambling”.
While publicly listed PartyGaming, parent company of the world’s largest poker site at the time, partypoker, quickly withdrew from the US, PokerStars, Full Tilt Poker and Absolute Poker continued make online poker available to US players.
Scheinberg, a dual Canadian and Israeli national, was arrested in Switzerland on 7 June 2019 based on the charges in the US and was ordered in October to be extradited to the US, a decision he initially appealed.
The 73-year-old subsequently withdrew his appeal and surrendered to US federal agents in New York on 17 January of this year.
He initially pleaded not guilty and was released on a $1m bond but has now changed his plea to guilty.
Manhattan US 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 US law.”
Launched in 2001, PokerStars went on to become the largest poker site in the world after the passing of UIGEA.
However, in 2011 the US Department of Justice unsealed a 52-page indictment against executives from PokerStars, Full Tilt Poker and Absolute Poker, accusing them of bank fraud, illegal gambling and money laundering.
US players were blocked from accessing these operators’ sites in what became known in poker circles as ‘Black Friday’, while Full Tilt later collapsed.
In 2012, PokerStars agreed to forfeit $547m to the US authorities and to reimburse Full Tilt Poker’s players outside the US to the tune of $184m. The following year, Scheinberg’s son, Mark, agreed to forfeit an additional $50m to US authorities.
With Scheinberg’s guilty plea, all 11 defendants originally charged in the indictment have now pleaded guilty.
They are: Raymond Bitar (Full Tilt Poker), Scott Tom (Absolute Poker), Brent Beckley (payments), Nelson Burtnick (payments), Paul Tate (patments), Ryan Lang (payments), Bradley Franzen (payments), Ira Rubin (payments), Chad Elie (payments), and John Campos (payments).
PokerStars was acquired by Canadian firm Amaya in 2014 in a $4.9bn deal before transforming into The Stars Group (TSG) three years later.
Last October, TSG entered into a £10bn mega-merger with London-listed online gambling giant Flutter Entertainment.
Today, PokerStars legally offers its poker product in New Jersey and Pennsylvania, while TSG provides sports betting in regulated US states with the Fox Bet brand.