A $731 million deal between PokerStars, the largest online poker site, and the U.S. Justice Department has resolved a closely watched civil forfeiture dispute that roiled the gambling industry.

Prosecutors targeted the assets of three poker companies, including PokerStars and Full Tilt Poker, in a federal civil action filed on April 15, 2011, in New York. On July 31, PokerStars agreed to forfeit $547 million as compensation to poker players. Additionally, PokerStars will make available about $184 million that Full Tilt owes to foreign players. PokerStars will acquire the bulk of Full Tilt’s assets under terms of the deal.

U.S. District Judge Leonard Sand approved the settlement agreements with PokerStars and Full Tilt. Neither company acknowledged wrongdoing in the three-way deal, which prohibits PokerStars from offering online poker in the United States for real money unless it is legal under U.S. law.

“We are pleased to announce these settlements by Full Tilt Poker and PokerStars, which allow us to quickly get significant compensation into the victim players’ hands,” U.S. Attorney Preet Bharara in New York said in a written statement. “Today’s settlements demonstrate that if you engage in conduct that violates the laws of the United States, as we alleged in this case, then even if you are doing so from across the ocean, you will have to answer for that conduct and turn over your ill-gotten gains.”

Skadden, Arps, Slate, Meagher & Flom partner Anand Raman was a lead attorney for PokerStars. Raman, co-leader of Skadden’s consumer financial services litigation and enforcement practice, could not be reached for comment.

Counsel for Full Tilt, represented by Cozen O’Connor and Ifrah Law, heralded the deal as historic, calling it a win-win for the government and online poker players, who dubbed the announcement of the civil action last year “Black Friday.”

“It’s a great day for Full Tilt poker but a greater day for millions of poker players,” said Barry Boss, managing partner of Cozen’s office in Washington. “Poker players have had money tied up since Black Friday. This settlement presents them with a realistic opportunity to be compensated.”

Jeff Ifrah called the settlement a creative solution that prosecutors brokered to resolve a “huge dilemma” — how to get Full Tilt customers their money back while encouraging PokerStars to wrap up the civil action. “PokerStars was very concerned about the impact a Full Tilt explosion would have on the industry,” Ifrah said.

Prosecutors alleged in complaints that the online pokers companies, which operated offshore, used fraudulent methods to get around federal law that governs Internet gambling. DOJ lawyers said the companies deceived financial institutions into processing payments. DOJ said that, for example, the poker companies disguised money received from U.S. customers as payments to fictitious online merchants that purported to sell items such as golf balls and jewelry.

Eleven defendants were charged in a related criminal action, prosecutors said. Seven of the defendants have been arrested. Six of the defendants, excluding Raymond Bitar, the Full Tilt chief executive officer, have pleaded guilty.

Contact Mike Scarcella at mscarcella@alm.com.