Online poker companies settle with U.S.; two to combine

Reuters News
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Posted: Jul 31, 2012 2:26 PM
Online poker companies settle with U.S.; two to combine

By Basil Katz

NEW YORK (Reuters) - Two online poker companies settled U.S. civil charges of illegal Internet gambling on Tuesday in a deal that positions one of them to take over the assets of the other and to capitalize on the growing legalization of the U.S. market.

The Department of Justice said it had brokered a deal in which Isle of Man-based PokerStars will acquire the assets of rival Full Tilt of Dublin and forfeit $731 million. The two companies, once the main online poker operators in the United States, along with a third, Absolute Poker, were slapped with civil money laundering charges last year.

The PokerStars forfeiture comprises $547 million payable over three years to reimburse Full Tilt customers in the United States, as well as $184 million representing all outstanding balances owed to non-U.S. customers of Full Tilt, prosecutors said in a statement.

The companies did not admit wrongdoing in the settlement.

Mark Scheinberg, PokerStars' chairman, said in a statement that the company was "delighted" to resolve the case.

Criminal charges against individual owners and employees of the gaming companies will continue. In April 2011, prosecutors accused 11 owners and employees of the three companies of tricking regulators and banks into processing billions of dollars of illegal Internet gambling proceeds.

Prosecutors on Tuesday also announced they had entered into a proposed settlement with Absolute Poker, which called for it to forfeit assets to the government. That deal must be approved by U.S. District Judge Leonard Sand in Manhattan, who has overseen the civil cases against the three companies.

Tuesday's civil settlements come as Delaware in July became the second state to authorize licensed online poker within its borders, following Nevada, which is now reviewing license applications.

Many cash-starved states, encouraged by intensive industry lobbying, have felt freer to act since December, when the Justice Department declared that one federal anti-gambling law, the Wire Act, would no longer be enforced beyond sports betting.

(Additional reporting By Joseph Menn in San Francisco and Jonathan Stempel in New York; Editing by Martha Graybow, Maureen Bavdek and Tim Dobbyn)