History of Poker Stars – When Pokerstars Started
Updated June 5, 2010
Introduction to Poker Stars
Poker Stars is considered one of the leading online poker sites in the world, and certainly the most dominant in the US poker industry (at least at the time of this article). Launched in 2001, the site has managed to remain a major player in the market, despite – and sometimes because of – the upheavals in US legislation that dictates gambling policy in the country.
Current Earnings and Financials of Pokerstars (June 2010)
Forbes Magazine reported earlier this year that PokerStars generates $1.4 billion in gross revenues. $500 million of that is profits, coming to an estimated $1.37 million dollars in earnings per day. The US gambling sites market for poker is estimated at $4.8 billion per year, with Pokerstars having the largest stranglehold despite opposing allegations that their business is primary from the US, but instead from Europe. Pokerstars employs over 1,000 people around the world.
The Beginning of Poker Stars
Poker Stars was founded by an Israeli senior programmer for IBM Canada who began writing the program for the poker site in the late 1990’s. Isai Scheinberg founded Rational Enterprises, which was originally based in Costa Rica.
A program for Poker Stars was created in 1999 and on the dubious date of September 11, 2001, the site launched is beta play money only version. Several months later, in December 2001, Poker Stars launched its money wagering site. Scheinberg continues to run the site with the help of his sons – the more prominent being Mark Scheinberg – through the Scheinberg family fund. The founder and his family own 75% of the company, while the other 25% is owned by employees.
Poker Stars Moves to Isle of Man
In 2005, Poker Stars announced a move to the Isle of Man, a British Crown dependency. Scheinberg decided to shift to this location, attracted by the 0% corporate tax rate and the island’s policy to remove all bans on companies from accepting poker bets from US players. Poker Stars was granted an eGaming License by the Isle of Man Department of Home Affairs under its Gambling Regulation Act of 2001.
“The decision to relocate to the Isle of Man was unanimous,” said the Director of Communications of the site, Nola Dolla. “The infrastructure on the Island meets all of our current business needs and strategies and the regulatory structure permits PokerStars to operate to its full potential. We are grateful to the Government for their support and guidance in acquiring our e-Gaming Licence and look forward to developing our future plans in the Island.”
In January 2006, the Scheinberg family enlisted NM Rothschild, a large merchant bank in London to either float or sell the company in an IPO. Poker Stars was worth at the time around $2 billion. Potential buyers at the time included the Rank Group and William Hill. It was believed that Poker Stars would choose to float on the London Stock Exchange, following in the footsteps of some its arch rivals such as Party Gaming founders.
In 2006, following the introduction of the Unlawful Internet Gambling Enforcement Act (UIGEA), Poker Stars declared that it would not be seeking a previously planned IPO in the near future. The $1.6 billion flotation that had been planned for the spring of 2007 and the Scheinberg family’s plans were delayed indefinitely.
Poker Stars and the US Market
When the UIGEA was passed in 2006, some of the top players in the market such as Party Gaming were forced to leave the market. For its part, Party Gaming was already a publicly trading company and was answerable to its shareholders, meaning that it had no recourse but to pull out of the lucrative US market. Poker Stars, however, was still a privately owned company and could make its own decisions about the future of its presence in the local market.
While there was high speculation following the months after the introduction of the UIGEA that Poker Stars would make an official announcement about pulling out of the market, none was ever forthcoming.
Instead, Poker Stars decided to fill the niche left in the US market by so many poker sites leaving, and made a strategic decision to continue serving North American players.
Poker Stars derives the majority of its business from the US market, with its only major competitor being Full Tilt Poker. While the decision to keep serving US customers, despite the UIGEA, may keep Poker Stars from obtaining a license in a legalized and regulated US industry in the future, the site has clearly taken a calculated risk and time will tell whether it has paid off or not.
A Poker Star is Born
The rise of popularity of online poker in the mid 2000s can be put down to one single event – Chris Moneymaker’s victory in the World Series of Poker event in 2003. Moneymaker was a full time accountant and part time poker player who enjoyed dabbling with the game online in his spare time.
Moneymaker entered a $39 satellite at Poker Stars and won himself a seat into a larger satellite. After winning that one too, the player found himself with a prize package to the World Series of Poker event to attend his very first live tournament. What happened after that was nothing short of miraculous, as Chris Moneymaker beat player after player to make it through to the final table and then on to claim the first prize worth $2.5 million.
The “Moneymaker Effect” soon had amateur players flocking to online poker sites around the world, trying to emulate the rags to riches story of their new poker hero. Poker Stars benefitted enormously from the publicity of Moneymaker’s victory and continues to do so with the player as a member of their Team Poker Stars Pro.
Poker Stars and the WSOP
After Moneymaker’s victory in 2003, Poker Stars was on a roll in terms of World Series of Poker qualifiers. A year later, the site qualified 315 players for the $100K championship event – 15% of the total tournament players.
At the time, the Vice President for Marketing for Poker Stars, Dan Goldman said: “Our players continue to prove that their online tournament poker experience has tremendous value in a live tournament environment. The ease and convenience of playing poker online provides millions of people with tournament poker experience before they ever set foot in a casino or card room.”
Poker Stars WCOOP History
For eight years, Poker Stars has been running the World Championship of Online Poker, which has come to be known as the biggest online tournament series ever staged.
2002 – The first WCOOP ran in July 2002, offering nine events and $730,000in prize money.
2003 – Eleven events were offered during 2003, drawing the crowds who wanted to see World Series of Poker winner, Chris Moneymaker in action. $2.7 million in combined prize money was given away by Poker Stars.
2004 – An extra event was added to this WCOOP, and prize money reached $6 million.
2005 – Prize money during 2005 was doubled to $12 million, and 15 events were scheduled. Nearly 20,000 took part in this year’s WCOOP.
2006 – Eighteen events ran during WCOOP 2006, with $18,700,000 in prize money up for grabs.
2007 – This year was characterized by the introduction of short handed tournaments for the first time. $24,218,600 in prize money was offered to the more than 40,000 players who took part from over 100 countries in 23 events.
2008 – Just under $40 million in prize money was offered over 33 events.
2009 – This year’s event broke the record as the biggest online tournament series staged. Players from 140 countries took part in 45 events over the course of 18 days to compete for the prize pool of a staggering $51,652,000.
Poker Stars and Charity
In January 2005, following the devastating tsunami that ripped the Asian coastline that killed over a quarter of a million people, Poker Stars raised nearly $200,000 from poker players at its site who were asked to make a donation to the American Red Cross. Poker Stars agreed to match all player donations dollar-to-dollar and eventually wrote out a check for $400K – the largest amount donated by a single company in the gambling industry to the tsunami relief fund.
“I am proud of poker players from around the world who reached deep into their pockets to help those who were affected by the tragedy,” said the Director of Communication for Poker Stars, Nolan Dalla at the time. “It goes to show – there are many poker people who care about others, and I am proud that PokerStars led the way in an effort to not only raise money and awareness, but also agreed to add a substantial amount to the final donation.”
In 2007, Poker Stars donated $1 million to the Not on our Watch Project that supports aid to Sudan. The charity, supported by stars such as Brad Pitt and George Clooney, collected the money at that the Cannes Film Festival.
In 2005, Poker Stars announced that it had hosted over 10 million tournaments – more than any other online site or casino in the world.
There seems to be no stopping the success of online poker room, Poker Stars. This site has enjoyed popularity from the day it was launched, entering a market that was ripe for the revolutionary world of online poker and staying put in the US market when all others left it. The number of online poker players, especially from the United States, keeps rising and there is no doubt that Poker Stars enjoys a huge advantage in this growing market.
Poker Stars Search Traffic Timeline