Prior to Black Friday, online poker rooms like PokerStars and Full Tilt offered unregulated games to the United States that could be coming back to haunt them. The online poker bill in California, which recently had a hearing, now includes a so called “bad actor clause,” stating that some companies will not be allowed back in to the US market. What does this mean for the future of the largest poker room and legalized poker in California? We’ll take a look.
There has been a lot of debate over the bad actor clauses in recent poker bills. These clauses do not, however, specifically say that companies that violated the UIGEA and offered American games. Gaming regulators, still, could conclude that companies like PokerStars are “bad actors” and should not be granted licenses for newly regulated gaming since they are instructed to bar those with “involvement in Internet betting prior to the state’s authorization of Internet poker.” The success in New Jersey was believed to indicate that these clauses were not longer a part of new legislation, although it remains to be seen whether or not that is true. This addition could mean that the fight is not quite over, although one tribal source even went so far as to say that the language was considered “moot” in January. The calls for this kind of language were appearing to shrink as the coalition grew to include almost unanimous support from the horse racing industry as well.
The two clauses, in full, state:
-The bill would become operative when criteria are established by statute addressing involvement in Internet betting prior to the state’s authorization of Internet poker pursuant to its provisions.
-The act that added this subparagraph shall not become operative until criteria are established by statute to address involvement in Internet betting prior to the state’s authorization of Internet poker pursuant to this chapter.
Given the vague nature of the clause, PokerStars could be allowed in the state, although they may have an uphill battle given the recent revelations with the CEO of their parent company, Amaya. David Baazov has been accused of insider trading related to stock in companies he has been a part of. Does this bolster the case that the company is a bad actor? That remains to be seen. The Pechanga tribe itself has vowed to work with regulators on the Suitability Standards for Prospective Applicants to ensure that negotiations are impartial, suggesting they are willing to fight on the behalf of PokerStars.
Worth noting here is that a Harvard Law School professor has concluded that these Bad Actor Clauses are unconstitutional, violating the rights of the company. Given that the UIGEA was never found to be legal in a courtroom, they should be free to operate in legal, regulated markets.
The PokerStars Coalition in California has appeared to grow in recent months, although this could be a road block. The cooperation of PokerStars with tribes in the state could perhaps overcome this, given that they have been the driving factor and primary player in the tribes’ efforts to bring online poker back to the state of California. The bill has passed the first vote, so stay tuned to see when poker could return to the California Republic.
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