After the indictment of the founder of PokerStars, Isai Scheinberg, by the U.S. Department of Justice on “Black Friday,” many in the business and poker communities are asking, “Who is Isai Scheinberg?” An article in a Canadian newspaper attempts to answer that question.
The Toronto Globe and Mail presented an article written by Colin Freeze that covers much of what is known about Scheinberg. Freeze looks at the Scheinbergs as an “Internet Age equivalent of the Bronfmans, the Montreal clan who famously parlayed U.S. Prohibition laws into a billion-dollar booze business.” The Bronfmans owned Seagram’s during the Prohibition Era of the early 20th century.
Freeze details the April 15 indictment of Scheinberg and Paul Tate of PokerStars as well as the founders of Full Tilt Poker and Absolute Poker before delving into what effect the shutdown of poker in the United States will mean for the company.
“Win or lose, PokerStars’ luck has already soured fast,” Freeze wrote in his article. “Gone already are millions of paying American customers, a number of lucrative television contracts, and the nascent partnership with Wynn Resorts. Operations in other jurisdictions – including Europe, where it is partly licensed, and Canada, where it is not – should help PokerStars weather the U.S. shutdown, albeit in a diminished form.”
So what is known about Scheinberg and how did he reach such lofty heights with PokerStars? According to the Globe and Mail, Scheinberg got his start in the computer industry as a programmer with IBM in Canada. While working in the computer industry, Scheinberg showed an interest in poker.
According to the Hendon Mob database, Scheinberg competed at the 1996 World Series of Poker, earning a 25th place finish in a $2,500 No Limit Hold’em event. Two years later, he made the final table in a $1,000 No Limit Hold’em tournament at the United States Poker Championships in Atlantic City. Scheinberg would eventually bow out of the tournament in eighth place against a table that featured poker pros like Men “The Master” Nguyen and Kevin Song.
Perhaps these brushes with the poker world were what planted the seed for what would become Scheinberg’s greatest success – or his greatest pain. As the 21st century dawned, Scheinberg created PYR Software, a company that Forbes described in a February 2010 article as “a software development company that helps customers worldwide to retain industry leadership.” The real reason for the development of PYR Software, however, was to facilitate an idea in Scheinberg’s head.
In March 2001, PokerStars went active, offering internet poker to a quietly growing worldwide market. Over the next five years, the gaming site became one of the major players in the online poker industry. By 2006, the growth of the company led Scheinberg to float the idea of holding an initial public offering (IPO). Political activity in that same year, however, changed his mind and led PokerStars onto the path it has reached today.
The passage of the Unlawful Internet Gambling Enforcement Act in 2006 shut down the IPO rumblings, as PokerStars continued to offer its wares to American customers. The reason for this was simple: with the major players in the industry such as PartyPoker and 888 leaving the market due to their publicly traded status, PokerStars would be able to snare a sizeable chunk of the American market.
Over the past five years, PokerStars became the preeminent leader in online poker, with a reported value of around $10 billion.
The 65-year-old Scheinberg and his family do not actively court media attention, although Scheinberg has occasionally stepped to the poker tables. In 2008, he played in one of the preliminary events during the PokerStars European Poker Tour Grand Final. In a €1,000 No Limit Hold’em tournament, Scheinberg finished eighth, but many in the audience had no clue that the founder of the site they played at was in such close proximity.
The future for Scheinberg is murky at best. Due to the indictment, Scheinberg and his family may never set foot on North American soil because of extradition treaties among the U.S., Mexico, and Canada. MANX Radio, the radio station of the Isle of Man where PokerStars’ headquarters are located, reports that the legal team for PokerStars is already ramping up, stating to a reporter from the station that they will “robustly” defend Scheinberg and Paul Tate against the charges in the United States.
