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From: Nick Verardi
Sent: Monday, February 01, 2010 9:13 AM
To:
Cc:
Subject: Pokerstars

Gents,

I trust all is well. I am writing in relation to one of clients in the Isle of Man, Pokerstars.

Pokerstars is the largest online poker card room in the world and is based in the Isle of Man. It currently
holds its license with the Isle of Man Gambling Supervision Commission.

During a recent visit to their offices, their General Counsel (GC) asked us to make inquiries on his behalf
relating to the possibility of setting up certain operations in other common law jurisdictions, i.e. Bermuda,
Cayman, Mauritius (Seychelles); Hong Kong and BVI .

 By way of a brief information their business model is as follows: should an individual go on the Pokerstars
website, play and then win, this individual (commonly referred to as player (Player)) is entitled to his winnings
immediately. The winnings are then withdrawn from the players' winnings fund and sent to the Player via his
preferred method of payment.

Pokerstars' current model is to have this players' fund, which is essentially monies reserved for payment of
any winnings, based in the Isle of Man and held as one sole fund. As you can imagine the total amount runs in
too many millions of dollars.
Pokerstars became the world’s largest online poker room at around the time the U.S. Congress passed the
Unlawful Internet Gambling Enforcement Act. As a direct result of the US’s stance many sites immediately
suspended business with US Players, whilst others, including Pokerstars, did not.
Of course, by continuing to take bets from US players there is a risk that the US government may decide to
take legal action against Pokerstars. However, we understand the US’s approach is likely to soften in the not
too distant future with new proposed legislation currently being discussed which would legalise the entire
industry. Nevertheless, at the moment, it is an accepted fact that the DoJ, may at its own discretion, attempt
to take steps to seize any monies relating to online gambling conducted in the US. Therefore, GC has asked
us to inquire about the position of other jurisdictions vis a vis their international relationships with the US,
and in particular, how your jurisdiction would react to any attempts made by the US authorities, including
obtaining injunctions or freezing orders, to seize such Players' funds.

Essentially, his inquiry is as follows: should Pokerstars decide to split the players monies (currently held as a
whole) into different jurisdictions, would that specific jurisdiction (where part of the Players' fund is held)
automatically obey to the US order or would it offer a defence relating to the security of such Player's funds?
The most obvious defence being that the funds do not belong to Pokerstars rather they are Players’ funds
and so should be treated independently. What would be the your courts' likely view on a potential injunction
made by the US authorities relating to the players funds – is international comity high on your jurisdiction’s
agenda at the moment? Are there any reciprocal agreements in your jurisdiction with the US that may
impact on Pokerstars’ position as outlined above?

Please note that GC is seeking only a very high level review in regards to each of your jurisdictions and has
asked that we spend no longer than about an hour in each jurisdiction on this initial opinion. Once reviewed,
he may come back and ask for a more thorough analysis.

Of course, should you feel this would be more suited for your DR group, please pass along my request.

Kind regards and many thanks

Nick

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Nick Verardi Local Group Head -­‐ Corporate & Commercial, Partner Corporate & Commercial

33 Athol Street Douglas IM1 1LB Isle of Man
Tel: +44 (0)1624 647 648 Fax: +44 (0)1624 618 448

APPLEBY
THE RIGHT PEOPLE THE RIGHT PLACES

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