Chris Christie accused of blocking casino deal to help billionaire donor
Business Insider By Hunter Walker
February 12, 2015 4:26 PM
AP Chris Christie discussing the regulation of sports books at an event in 2014. A plan to bring one of the world's largest online gambling companies to Atlantic City has seemingly stalled, and some critics are pointing their fingers at New Jersey Gov. Chris Christie (R) and Sheldon Adelson, a billionaire casino mogul and one of the GOP's most influential donors.
Adelson has a reputation as a man whose money can make or break a presidential campaign, and Christie is widely seen as a likely 2016 hopeful. Their relationship made headlines last week after revelations showed Adelson had lent the governor his plane.
Christie's office told Business Insider it is "nonsensical" to say he interfered with the deal, which a local union leader claimed would bring about 1,000 desperately needed jobs to the troubled Garden State gambling destination. However, one influential Democratic lawmaker suggested the New Jersey Legislature should potentially consider investigating the issue.
'Christie put a stop to it'
The company in question is PokerStars, which runs one of the world's most popular online poker sites. In July 2013, PokerStars announced a partnership with Atlantic City's Resorts Casino Hotel. PokerStars planned to open a $10 million poker room at the casino. This would have allowed PokerStars to build its brand with live poker tournaments and other events. However, the company has been unable to obtain a gaming license in New Jersey. State Sen. Raymond Lesniak, a Democrat who sponsored the bill that legalized online gambling in the state, blamed the company's inability to get licensed on Christie.
"Christie put a stop to it," said Lesniak. "With a high degree of confidence it's apparent that's exactly what has happened."
Bob McDevitt, the president of Unite Here Local 54, the union that represents Atlantic City's casino workers, told Business Insider he believes the PokerStars license is being tied up by Christie.
"My impression was that PokerStars should have been already up and operating long before this point," McDevitt said. "My understanding is that it was the attorney general's office and the governor who are holding up the approvals."
The office of New Jersey Attorney General John Jay Hoffman did not respond to a request for comment on this story.
Lesniak suggested it's common knowledge among those in Garden State gaming and political circles that the governor interfered with PokerStars' license.
"It's pretty well known," said Lesniak. "But I don't think anyone's going to go on the record to confirm it."
Indeed, multiple sources familiar with the negotiations, who said they did not wish to be named because of the sensitive nature of the process, also told Business Insider that Christie was blocking the company's license.
"There's no reason that the deal shouldn't have gone through. But the government's holding back," one source said.
"I think politics has played a role in it," said another.
A third source with knowledge of the transaction cited Adelson as the primary reason for the delay.
"There is no question in my mind that Sheldon Adelson is the reason why this hasn't moved forward, and that's the only reason," they said.
'A good story for New Jersey'
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.Atlantic Club
AP The Atlantic Club Casino Hotel in April 2013. PokerStars first attempted to gain a foothold in New Jersey almost immediately after Lesniak's online gambling bill was passed by the legislature in December 2012. The following month, the company made a deal to purchase the Atlantic Club Casino Hotel, which was one of Atlantic City's most vulnerable casinos.
That plan was contingent on PokerStars' receiving approval from New Jersey's Division of Gaming Enforcement. PokerStars' plan to buy the Atlantic Club ultimately fell through after the casino's original owners bowed out of the deal in May 2013 following delays in the company's efforts to obtain approval from the DGE.
The Atlantic Club ultimately shut its doors in January 2014 after a bankruptcy sale. It was one of several Atlantic City casinos that closed last year amid falling revenues and falling hotel occupancy.
PokerStars' initial failure to get the DGE's approval was hardly shocking. When the Atlantic Club deal was first unveiled, the Press of Atlantic City reported the company was "expected to attract intense regulatory scrutiny in New Jersey." In December 2013, the DGE suspended PokerStars' license application citing concerns about what NJ.com described as "unnamed individuals" associated with the company and its founder, Isai Scheinberg.
The company's difficulties stemmed from the fact it was hit with a slew of federal charges in 2011 for allegedly illegally doing business with American customers. At the time, PokerStars was headquartered in the Isle of Man. Those charges were dismissed in 2012 after PokerStars made a settlement deal that involved paying more than $500 million to the government.
After the unsuccessful effort to purchase the Atlantic Club, PokerStars announced a plan to partner with Resorts Casino Hotel in July 2013. The company also made another deal that was specifically aimed at addressing the regulatory concerns that previously prevented PokerStars from obtaining DGE approval. Last June, it was announced that a Canadian firm, Amaya Gaming, would acquire PokerStars' parent company, Rational Group Ltd., for $4.9 billion. According to NJ.com, as part of that deal, Scheinberg, his son, and another cofounder would "step away from the company 100%."
With the acquisition of PokerStars, Amaya almost immediately began licensing talks. In an article published on June 18, 2014, David Rebuck, the director of the DGE, told the AP that discussions about the license would begin the following day. Rebuck also said he was "encouraged" by the sale and indicated it would have a positive outcome. He also noted Amaya was already licensed in New Jersey for some of its other operations.
"I think in the long run it will be a good story for New Jersey," Rebuck said. "I'm optimistic that they know what the rules are, and I fully expect them to be very aggressive because they want to be here."
Six days later, the AP reported that Amaya had met with DGE officials "who voiced optimism that Amaya could get approval for PokerStars to join New Jersey's Internet gambling market by this fall."
Almost eight months after that meeting, however, the company has yet to receive transactional waivers that essentially would function as a temporary license for it to do business in Atlantic City. This is the delay that has critics pointing at Christie.
Kerry Langan, a spokeswoman for the DGE, declined to comment on allegations the governor was involved in the licensing process in a conversation with Business Insider on Thursday. She described the division's review of Amaya's license application for PokerStars as "ongoing."
"We don't give out details about it except that it's ongoing," said Langan.
A spokesperson for Amaya and PokerStars declined to comment on this story. However, Marie Jones, an attorney representing the company told Business Insider they expected the approval process for PokerStars would have moved faster since Amaya already has been cleared for other businesses in the state.
"We, of course, had hoped that we would be able to get transactional waivers rather quickly, especially in light of the fact that Amaya already has transactional waivers for other business it's conducting in Atlantic City," Jones said.
Jones declined to say if she believed the governor was interfering with PokerStars.
"I'm not going to comment on that," she said with an audible laugh. "That's not something that I'm comfortable commenting on."
The licensing delay comes at a time when Atlantic City urgently needs investment — which McDevitt, the casino workers' union leader, described as another sign something is amiss.
"PokerStars is one of the only gaming companies that has been actively committed to pursuing a position in the Atlantic City market. Everybody else is running away," he said. "So, why would we rebuff a company that wants to make a major investment in Atlantic City while everybody else is sort of backing off? I just don't understand it. It doesn't make any sense at all."
McDevitt also noted Christie has made revitalizing Atlantic City a priority including holding a summit on its future last year amid the streak of casino closures.
"They spent so much time talking about Atlantic City with the summit and all this energy. ... For the attorney general's office and the governor's office to stop the development of this PokerStars deal with Resorts is just unfathomable," said McDevitt. "I totally believe that the PokerStars deal is one of the biggest gamechangers that you could bring to Atlantic City."
According to McDevitt, PokerStars' deal with Resorts Casino Hotel would bring around 1,000 jobs to Atlantic City. When PokerStars initially unveiled its plan to build the $10-million poker room at the casino in 2013, a company representative told the Press of Atlantic City it would initially result in about 400 jobs. Along with the room at Resorts Casino Hotel, the representative emphasized that PokerStars remained "interested in buying an Atlantic City casino."
In addition to jobs that would be created by the Resorts Casino Hotel deal, McDevitt argued PokerStars' presence in Atlantic City would have a transformative effect on the local economy.
"This is a catalyst kind of thing. This is really unique," he said. "They have a whole different book of business they could bring to the city that no one else has. It's critical. It really is critical."
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.Sheldon Adelson
AP Sheldon Adelson watching Chris Christie speak to the Republican Jewish Coalition in March 2014. 'Sheldon Adelson is the reason'
According to Lesniak, the state senator, the timing of the delay in PokerStars' licensing process has benefited Sheldon Adelson's fight against internet gambling.
"All I know is PokerStars was ready to go and then, all of a sudden, when Adelson started his campaign to ban online gaming nationally ... they put it on the back burner," he said.
Adelson has made banning online gaming one of his top priorities. In 2013, he launched the Coalition to Stop Internet Gambling, and he is a prominent backer of a bill introduced in the House of Representatives last week that would ban online gaming nationwide. Adelson's company, Las Vegas Sands Corp., operates physical casinos, and his critics have argued his attempts to battle online gambling are an effort to eliminate his digital competition.
Lesniak claimed Adelson would be interested in keeping PokerStars out of New Jersey because the company's influence there could lead to the state's congressional delegation fighting any federal online gaming ban.
"If PokerStars comes into New Jersey, because they're the biggest and with our delegation, it would make it very difficult for Congress to do what Adelson wants to do," said Lesniak.
The bill to ban online gaming was initially expected to be introduced in Congress late last year. Lesniak suggested Christie is trying to stop PokerStars from getting licensed before the legislation is approved.
"It was apparent that Christie held back on PokerStars being approved to give Adelson that time," Lesniak said.
A representative for Adelson declined to comment on this story.
In a statement sent to Business Insider, Christie's office vehemently denied the claims it has intervened with PokerStars' attempts to set up shop in New Jersey. Kevin Roberts, a spokesman for the governor, pointed out that Christie had signed the law allowing online gambling in New Jersey, in February 2013, when asked about the accusation.
"It’s a totally nonsensical argument, as Governor Christie signed the law to legalize online gaming in New Jersey. The DGE licensing review is an independent, technical process, the length of which varies case by case," Roberts said.
But Lesniak and others have suggested Christie didn't have the ability to stop the legalization of online gambling in New Jersey even if he had wanted to. Lesniak, who sponsored the bill in the state senate, said Christie would have been overturned if he had tried to veto the legislation.
"Christie had no choice but to sign that bill," said Lesniak.
While Christie's vetoes have never been overridden by the legislature during the governor's more than five years in office, Lesniak argued McDevitt's union would have put unique pressure on lawmakers to pass online gambling.
"Bob McDevitt, who is the president of Unite 54, which represents the casino workers, was going to bring thousands of workers, busloads, from Atlantic City to picket the governor," Lesniak said.
McDevitt confirmed his union would have aggressively fought for the law.
"I would have absolutely brought members, not just to picket, but to testify in support of it," said McDevitt. "I think that the veto would have been overridden if he did it and we would have been a part of it. We would have absolutely been active in that."
Adelson himself suggested the governor told him he had no ability to stop the legalization of online gambling in New Jersey. In a 2013 interview, Adelson discussed his conversations with Christie about the legislation.
"I talk to him," Adelson said. "He said he was about to be overridden anyway. He said it was about to be overridden or over-vetoed or whatever you call it. I like Governor Christie."
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.Resorts Casino Hotel
AP Resorts Casino Hotel in Atlantic City. 'He's not going to fall on that sword'
Christie's ties to the casino mogul made headlines last week after The New York Times revealed Adelson had lent the governor his private plane for a 2012 trip to the Middle East. Adelson donated more than $3.5 million to the Republican Governors Association while it was chaired by Christie.
The governor's office defended Christie's flight on Adelson's plane by saying regulations allow him to accept gifts from personal friends. Nevertheless, Democratic opponents of the governor have suggested his acceptance of gifts and RGA donations from the casino mogul raises ethical questions.
Assemblyman John Wisniewski (D) is a longtime critic of the governor and a cochair of the legislature's special committee dedicated to investigating the administration that was created after the "Bridgegate" scandal. Wisniewski told Business Insider the questions about Christie's relationship with Adelson could lead to the legislature broadening the scope of its investigation — or even a criminal investigation.
"Is it in the legislature's interest to create a permanent, standing investigatory committee? Would we be doing that in suggesting that we continue an investigation into the Adelson issue?" Wisniewski asked. "Or are we better served by at least continuing to focus on the Port Authority and allowing law enforcement to look at that?"
Wisniewski described the situation as a "question of resources." He argued the legislature would need to look at the "financial commitment" of broadening their investigation, particularly since the budget for the rest of this year has already been set. Still, Wisniewski suggested a larger investigation is something he would consider.
"If there weren't the allegations of inappropriate behavior on certain people's parts, then none of this would be necessary," said Wisniewski. "So the question we have to ask ourselves is, yes, it's expensive, but if we weren't enforcing the laws and standards that everyone is supposed to abide by, then what are we doing?"
For his part, Lesniak predicted an investigation would end with Rebuck, the director of New Jersey's Division of Gaming Enforcement, confirming that the governor interfered with PokerStars.
"One thing about Rebuck is, if he's asked by law-enforcement authorities, he's going to tell the truth," Lesniak said. "He's not going to jump on that sword."
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