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PokerStars to Further Establish Canadian Presence

Posted on September 2nd, 2010

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A handful of Canadian provinces have already joined the trend of allowing online gambling into their jurisdictions, having seen the lucrative gains in terms of revenue such a venture may allow. However, one of the world’s biggest internet gambling giants is poised to set up business in the country as it applies a loophole in legalities to its advantage. The online gambling site PokerStars, looks like it will use its Canadian connections to introduce its business. PokerStars is based in Richmond Hill, Ontario and has so far dealt 48 billion hands. The website’s developer, PYR Software, was established by Isai Scheinberg ten years ago. Scheinberg used to work with other computer giants such as IBM, both in Canada and Israel as a programmer himself. He, together with Mark, his son, then established what can be argued as one of the most popular and successful brands in the world of online gambling.

Another connection with Canada that the company has is Mats Sundin, an international celebrity ambassador of the company, who happens to be a former hockey player of the Toronto Maple Leafs and the Vancouver Canucks. But perhps the biggest connection that the company has with Canada is the fact that one of its most crucial servers is located in Quebec, in the province’s Kahnawake Mohawk reserve. The company is hosted by Kahnawake through Mohawk Internet Technologies, the area’s Internet service provider and data center. PokerStars is also under the regulation of the Kahnawake Gaming Commission. On the part of the reserve, it also has plans of reaping financial gains from the company as it has just announced its plans to milk revenues from the online gaming company to fund a wind energy far plan, which the reserve plans to realize with the help of another company based in the UK. The benefits that PokerStars may bring due to its Canadian connections are being looked at by gaming industry stakeholders as more and more gaming bodies of the province want to take advantage of revenue streams brought about by online gambling sites. For example, the province of British Columbia has already launched its own online gambling site. Other provinces of Ontario, Saskatchewan and Quebec have already announced plans of following suit. As of the moment, the country’s criminal code dictates that gambling can only be offered and controlled by the provincial government.

But at the same time, government cracking down on servers that do provide revenue is very unlikely, as pointed out by John Pliniussen, a Queen’s University professor on business and expert in online gambling. He cites that competition is already tough in actual casinos themselves and whichever side the government will favor will surely have the other side put on flight. He adds that there is a big possibility that more online gambling servers will be established in these reserves as the online gambling movement is gaining more support. For its part, Kahnawake claims that the reserve is not included from the mandates of the criminal law because of legal and historical reasons. Meanwhile, PokerStars could not give a comment as of press time. The company has managed to make the poker business big despite more stringent regulations from its supposedly biggest market, the US. The Congress of the US in 2006 disallowed operators of offshore online gaming sites by enacting the Unlawful Internet Gambling Enforcement Act. US players have since then been faced with the difficulty of betting online, although the law did not actually make the act illegal.

Meanwhile, PokerStars has continued to thrive, with close to 38 million members. Business Magazine Forbes reports that the company’s revenues have reached $1.4 billion and profits amounting to $500 million. As a global industry, online poker has generated $4.8 billion in revenue every year according to date from H2 Gambling Capital, 35 percent of that is held by PokerStars. The company also hosts satellite tournaments and sponsors and owns part of several poker tours outfits like the Australia New Zealand Poker Tour and the Latin American Poker Tour, among others.