Historical Overview of PokerStars
PokerStars was the most dominant poker site in the United States for several years.
When many other sites had ceased to operate in the region, PokerStars was strong.
Despite eventually being forced to pull out of the US itself, it’s still considered to be the largest online poker room in the world.
It claims to have other 50 million registered customers and consistently has thousands of players online at any one given time.
Below we have covered the history of PokerStars from its very beginning right through its rise to the top.
The Beginning of PokerStars
PokerStars was founded by an Israeli senior programmer for IBM Canada, Isai Scheinberg. He began to write the software that would form the basis for PokerStars in the late 1990s and formed Rational Enterprises, originally based in Costa Rica, to operate his new poker site.
On September 11, 2001, the site was launched in beta version for play money only. A few months later, in December, the real money version was opened.
After a few years operating in Costa Rica, PokerStars announced a move to the Isle of Man, a British Crown dependency, in 2005. Scheinberg’s decision to shift to this location was influenced by the 0% corporate tax rate and the island’s policy to remove all bans on companies that were accepting poker bets from US players.
The site 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 for the site, Nola Dolla.
The Moneymaker Effect
Online poker experienced a dramatic rise in popularity in the mid-2000s, and this can largely be pinpointed to one single event: Chris Moneymaker’s victory in the World Series of Poker (WSOP) event in 2003.
Moneymaker was a full time accountant and part time poker player who enjoyed dabbling with the game in his spare time. Moneymaker entered a $39 satellite tournament at PokerStars and won himself a seat into a larger satellite. He went on to win that one too, earning entry into the WSOP.
What happened after that was nothing short of miraculous.
Amateur poker players were suddenly flocking to online poker sites around the world, trying to emulate the rags to riches story of their new poker hero. PokerStars in particular benefitted enormously from what became known as the “Moneymaker Effect”.
After Moneymaker’s victory in 2003, PokerStars was on a roll in terms of WSOP 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 of PokerStars, Dan Goldman said:
Plans to Go Public
In January 2006 the Scheinberg family enlisted NM Rothschild, a large merchant bank in London, to explore options for floating or selling the company. At the time PokerStars was valued at around $2 billion.
Potential buyers included the Rank Group and William Hill and there was also speculation that a merger could take place. It was widely believed that PokerStars would choose to float on the London Stock Exchange, following in the footsteps of some of its rivals such as PartyPoker.
Later in 2006, the UIGEA was introduced in the United States, making it illegal for financial institutions to process transactions from US residents that were related to online gambling. As a result, many gambling sites made the decision to pull out of the lucrative America market.
Those that were publically traded had no choice as they were answerable to their shareholders. As a privately owned company though, PokerStars could make its own decisions.
PokerStars declared that it would not be seeking its previously planned IPO in the near future. The flotation that had been planned for the spring of 2007 was delayed indefinitely.
The company made a strategic decision to continue serving North American players, filling the niche left in the US market by so many poker sites leaving.
It would face consequences for remaining active in the US in later years though.
No history of PokerStars would be complete without a mention of the World Championship of Online Poker (WCOOP). This was launched by PokerStars in 2002 and has grown to be the biggest online tournament series in the world.
Below is a brief timeline of how this competition has evolved over time.
- 2002 – The first WCOOP began offering nine events and $730,000 in prize money.
- 2003 – Eleven events were offered, drawing the crowds who wanted to see WSOP winner Chris Moneymaker in action. A total of $2.7 million in combined prize money was up for grabs.
- 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.
- 2006 – Eighteen events ran during WCOOP 2006, with $18,700,000 in prize money.
- 2007 – This year saw the introduction of short-handed tournaments for the first time. $24 million in prize money was available to more than 40,000 players who took part in the 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 over $50 million.
- 2010 – More records are beaten and over $63 million in prize money was paid out in 62 events taking place over 23 days.
- 2011 – The Main Event featured over 1,600 players and a first prize of $1,260,018.
- 2012 – The number of events was up to 65 and over $55 million in prize money was awarded.
- 2013 – Prize money was back up to over $60 million and a total of 66 events took place.
Black Friday and Beyond
On April 15, 2011, the PokerStars website was shut down by the US government, along with other poker sites still serving the US market. PokerStars had no choice but to suspend its poker services for US customers, although it remained open in other regions.
This day became known as Black Friday in the online poker industry. On April 20, PokerStars reached an agreement with the Department of Justice to regain use of their website in order to distribute account funds to there US customers.
PokerStars began to pay out funds to US customers almost immediately and, the following year, the company reached an agreement with the American government.
They admitted no wrongdoing for its past activities in accepting US customers and it was acknowledged that they would be able to apply for licenses to operate in the US once the necessary legal framework was in place. As part of the agreement PokerStars purchased the assets of its previous competitor:Full Tilt Poker.
Today, despite no longer operating in the United States, PokerStars remains the largest poker website in the world. It’s already active in attempts to legally return to the US as the nation begins to regulate online poker.