PokerStars and Wynn at it Again?

The PokerStars deal to purchase the Atlantic Club casino looks less likely or near impossible at this point. This would have been PokerStars’ trojan horse to gain traction in the United States’ online gaming market. If they are unable to get a gambling license on their own, it is in their best interest to find an established partner.

The first partner to come to mind is Steve Wynn, a past teammate. Wynn has said that his company will participate in the online gambling market, but has not applied for a license or partnered with any software operators. PokerStarsWynn was a partnership in 2011 that would have created a co-branded poker site, but was disrupted by Black Friday when the DOJ seized PokerStars domains and bank accounts.  The partnership ended shortly after it was announced.

The legal landscape has dramatically changed in the past two years as Nevada, Delaware and New Jersey passed online poker regulation. Additionally, PokerStars has settled with the DOJ, although the company admitted no fault. The main issue working against PokerStars is the bad actor clause finding its way into Nevada’s online poker law and there are likely more to come. If PokerStars wants to continue dominating the online poker market they need to find a way to get back into the United States either on their own or with the help of another company.

Poker Stars is well known for offering the best poker software, and through years of refinement has created the best online poker experience available today. This is exactly what Wynn is looking for – he wants to provide the luxury hotel experience for online gaming. He can do this by combining PokerStars’ software with his expertise in luxury casino hotels to create a powerful mix of online and offline gaming for the US poker market.

Could this happen? I think ideally PokerStars would like to be independent, but they may not have much choice in the matter. They will need a gaming license and good-standing, which Wynn could provide.  They had a deal in the past so they both know the importance of online poker, and it is only a matter of time before they decide it is in their best interest to work together.

I am not a law expert but surely there is a way around the bad actor clause, either through litigation or carefully structured partnership agreements. With millions and possibly billions at stake in the US online gaming market – they can likely find a way to structure the deal that would allow Wynn to operate the online gaming sites and PokerStars to share the profits from it.