PokerStars to be Excluded from Online Poker in California

Online Poker in CaliforniaThe latest proposals for online poker in California exclude PokerStars from participating in the regulated market for a minimum of five years.

Attempts to regulate online poker in California have been ongoing for seven years. During that time as many as four bills per year have been presented to various committees and legislative authorities – each having its own rules and regulations.

One of the main reasons why nothing has been achieved during that time is the question of “bad actors” and the suitability standards that should be applied to operators who provided an online poker service in the years following the Unlawful Internet Gaming Enforcement Act (UIGEA).

PokerStars falls under the category of a “bad actor”, having provided an online poker service to Californians up until Black Friday. However, after paying a massive fine to the Department of Justice, PokerStars has been allowed to resume operations in New Jersey and was at the forefront of advocating for regulation in California – until yesterday.

Timeline of the Bad Actor Debate

The passage of an online poker bill in 2016 had pretty much been written off due to the bad actor debate. A politically strong coalition of tribes opposed to PokerStars´ participation in the regulated market claimed that the world´s largest online poker site had gained a commercial advantage between 2006 and 2011 that would create an uneven playing field for other stakeholders.

PokerStars – with the support of several cardrooms and other tribal groups – fought the allegations and worked with the author of the “Internet Consumer Protection Act” – Adam Gray – to find compromises wherever possible. The most recent compromise was that PokerStars would pay a $20 million fine to avoid being excluded from the regulated market.

However, this was not acceptable to the coalition, who demanded a ten-year ban and a $60 million fine. Adam Gray´s bill was going nowhere until earlier this week, when rumours started surfacing that the coalition had agreed to a five-year ban with no “get-out-of-jail-free” option of a fine. In order to get the bill passed before the Californian legislative deadline, the language of the bill was changed to accommodate this latest development.

The Californian Legislative Deadline

The reason why PokerStars´ proposed exclusion is making such large waves in the poker media is the Californian legislative deadline. What has normally happened in the past is that something is written into a bill, somebody objects to it, and it is taken out again. In the current bill there have been varying provisions for the horseracing industry, several different tax schedules, and even one suggestion that the bill should be passed but not enforced until the bad actor debate had been resolved by another bill.

However, because it is election year, the Californian legislature breaks at the end of August. Not only does it mean that any bills have to be passed by both the Assembly and the Senate by August 31st, but there is also the stipulation that bills already resented cannot be amended after today (Friday). A hearing of the Assembly is scheduled for Monday when – assuming that the latest amendments are the final amendments – there will be a vote on the bill in its current format.

If the bill passes the Assembly vote, it then has to be presented to the Senate after being considered by the Senate Governmental Organization Committee. The consensus of opinion in the poker media is that both the Committee and the full Senate will pass the bill if it is approved by the Assembly on Monday. This does not leave PokerStars with much time to find enough supporters to defeat a bill that is a likely vote-winner in election year.

PokerStars Hints at Legal Action

Soon after it was confirmed that proposals to exclude PokerStars were going to be included in the revised language of the “Internet Consumer Protection Act”, a statement was released by PokerStars and its supporters expressing its strong opposition to the amendments. The statement also addressed Assembly members, asking them to oppose the bill in Monday´s vote.

PokerStars claims that the bill in its revised form raises constitutional questions that will likely result in litigation and likened the amendments to a bill of attainder – medieval legislation that found a person or group of persons guilty of an illegal act without a trial, and that was often used to justify the execution of political opponents.

Whether or not PokerStars statement is enough to sway the opinions of the Assembly we will not know until Monday. However, there are several other issues that may stall the bill´s progress. Some observers believe that the Senate will find the proposed tax rate of 10% too low, while others have commented that the “Internet Consumer Protection Act” does not have any consumer protection written into it.

There is also the issue about the creation a felony charge for players who continue to patronise unregulated poker sites once the bill is enacted – even though the first licenses will not be issued in California until at least eighteen months later. Maybe the outcome of this saga will ultimately depend on how many Assemblymen and Senators currently play online poker at sites such as Americas Cardroom and Black Chip Poker!