New Jersey DGE Continues Pala Interactive, James Ryan Background Research
The New Jersey Division of Gaming Enforcement (DGE) and its director, David Rebuck, have publicly released correspondence associated with the recent granting of a transactional waiver to California-based Pala Interactive, LLC. Pala Interactive, a software entity, associated with the Pala tribal nation of southern California, has received a waiver allowing them to open a New Jersey-based online site in partnership with Atlantic City’s Borgata Hotel & Casino.
The recently released correspondence, however, reiterates that an investigation into Pala Interactive CEO James Ryan remains open, and both Pala Interactive’s and Ryan’s tentative ability to do business as part of the state’s regulated online-gaming regime remains open to further evaluation, particularly in light of Ryan’s stint as CEO of troubled and scandal-ridden site UltimateBet for a couple of years last decade.
An anonymous source close to the investigation indicated to FlushDraw that while Pala Interactive has received conditional approval by the state, company CEO Ryan has received no such approval at this time.
As Rebuck wrote, in communication dated Thursday, November 20th, “Please be advised that the Transaction Waiver granted by the Division is based upon a preliminary investigation and does not constitute final licensing approval by the Division of Pala or its individual qualifiers,” the latter referring to key employees of Pala Interactive, the new entity.
“If the Division uncovers any facts that are consistent with those it has currently reviewed,” added Rebuck, “it may move to rescind the transactional waiver and may also object to the final licensure of Pala or its individual qualifiers.”
Rebuck also attached a summary of the DGE’s initial report regarding the suitability of Pala Interactive and Ryan in regards to the granting of the transactional waiver, which includes a brief and partial retelling of Ryan’s gaming-industry background and an acknowledgement that Ryan already has testified under oath to the DGE regarding his own background and certain technical aspects of the online software available at palacasino.com, which Ryan assured the DGE has no connection to legacy software used at UltimateBet that has since reemerged at some other sites.
Pala Interactive has already launched the real-money casino games portion of its planned offerings, with the client available for download to New Jersey residents at the palacasino.com site. The company plans to launch the online-poker portion of its offerings some time in 2015.
Ryan’s reemergence as the primary executive behind Pala Interactive has been met with widespread disapproval from the poker-playing community (including, with proper acknowledgment, this piece’s writer), with enough pushback from the poker world emerging in recent days that the DGE has kept the research window open regarding Ryan’s background.
Rebuck noted in his letter to Ryan that his decision to make the correspondence was designed to protect the DGE’s integrity as the overseer of New Jersey gaming regulatory matters in the event a reevaluation is necessary. Wrote Rebuck:
Please be advised that I have made the decision to make this correspondence public to provide some clarity with respect to the Division’s actions to date. As Director of the Division, it is my responsibility to protect the integrity of the casino gaming in New Jersey both in its operation and in the suitability of those individuals involved in its management. I take that responsibility seriously. The super user scandal involving Ultimate Bet (sic) raised serious issues about the operation and regulation of online gaming and questions have surfaced as to whether certain senior executives at Pala, including yourself, may have been involved in that matter. As you have been advised, additional investigation regarding that and other matters will continue to be examined by the Division before it renders a final licensing decision on Pala and its qualifiers. Consistent with all cases before the Division, its investigation will be comprehensive, impartial and based upon facts, not speculation.
Ryan himself has not been directly linked as a participant of the insider cheating ring that stole as much as $25 million from UltimateBet players from 2002-07, a span which included Ryan’s entire tenure as CEO of UltimateBet parent company Excapsa. The cheating’s primary figure was former WSOP main event winner Russ Hamilton, with company founder Greg Pierson and a co-investor and business partner of Hamilton’s, poker player Mansour (Monsour) Matloubi, among those clearly and directly implicated as well.
Nonetheless, numerous questions remains regarding both the scandal itself, a secondary cheating scandal never publicized (and allegedly, according to a UB source, covered up by Ryan himself), and a series of curious business and legal happenings both during and after his years at UltimateBet, that culminated in his reemergence as co-CEO of PartyGaming in the summer of 2008. This author continues work on a series of posts regarding some of that background history, to be published in the near future.
A couple of interesting notes emerged from a summary of Ryan’s sworn testimony before the DGE, which occurred last summer. One is the acknowledgment, widely rumored but never officially confirmed by Pala Interactive, that former spokesman Phil Ivey is no longer associated with the company. Ivey continues to be independently involved in a lawsuit brought by Pala’s New Jersey partner, the Borgata, over allegedly illegal “edge sorting” techniques employed by Ivey and a companion at the casino’s high-stakes punto banco tables. The summary as published by Rebuck notes that the Pala-Ivey deal was ended in June of 2014, with no further explanation given.
The summary also contains one detail of interest regarding the old UltimateBet cheating scandal. According to Ryan, the total amount actually refunded to players in the years following the exposure of the cheating was $14.65 million. That amount is significantly lower than the $20-25 million estimated by company insiders to be a more accurate accounting of the amount stolen by Hamilton and his co-conspirators, and adds credibility to claims made by former players on the site that cheating victims were significantly (and perhaps intentionally) under-refunded.
The $20-25 million amount used internally as an evaluation of the known cheating also failed to account for at least a dozen additional accounts later discovered to have been used by Hamilton as part of his complex cheating scheme.