With the sale of PokerStars to Amaya Gaming, online poker expansion in California could be breathing its last harried gasps of 2014.
The main point of contention all along has been the inclusion of PokerStars in the market, especially after it partnered with several entities, and this point of contention seems to only be growing more volatile since the announcement of the sale.
There are also several other smaller, but still significant issues, from revenue sharing to the role (if any) the California horse racing industry will play.
I’m not saying it’s over in California, but there are only a couple chapters left in the book and there doesn’t seem to be enough time for a new plot twist to emerge. In other words, if California online poker was a vampire it would be high noon, Dr. Van Helsing would be prying open the coffin lid with Jonathan Harker standing at the ready with a wooden stake in hand.
How did we arrive at this point
The most amazing part of this entire saga is that California would seem to be the perfect candidate for online poker expansion.
The state is massive, with a population of 38 million, and capable of supporting a robust online poker industry on its own, without joining interstate compacts or sharing liquidity.
The state is one of the most liberal when it comes to gaming, having allowed certain forms of poker to be played legally since the state was incorporated, and more recently allowing tribal resort casinos to be built.
That being said, the numerous and seemingly always at odds California gaming interests have struggled to come to any type of consensus on how to adopt online gambling, despite trying for the past five years.
2014 initially seemed like the stars were finally aligned, but an announced partnership between PokerStars, the Morongo Band of Mission Indians, the Bicycle Casino, the Commerce Casino, and the Hawaiian Gardens Casino derailed any chance of a complete consensus being reached.
The partnership did bring many tribes and card rooms together, but rather than several different warring factions with some disagreement and some overlap, we now have two powerhouse factions at complete odds with one another.
With PokerStars being allied with certain interests the remainder of the state’s power players lined up on the other side, calling for a sweeping bad actor clause to be added to the bill, a measure that PokerStars and its consortium called a deal-breaker and vowed to fight to the bitter end, even if it meant going to the courts.
PokerStars has even enlisted the help of a constitutional law professor from Harvard University to tear apart the bad actor arguments.
Why the sale to Amaya makes things worse in California
The sale to Amaya makes the exclusion of PokerStars far more difficult down the road, as labeling the current version of PokerStars a “Bad Actor” would also require attaching that same label to Amaya Gaming.
Furthermore, it’s simply harder for PokerStars detractors to make a reasonable case for why the company should be barred. They can cite whatever reasons they want but all anyone is hearing is that they don’t want to compete against PokerStars.
By purchasing PokerStars, Amaya Gaming has effectively made it impossible for the coalition of 13 tribes to back off their support for a “Bad Actor” clause (not that it seemed like they were going to anyway) since regulators would almost certainly find PokerStars suitable for a license, just as they are likely to do in New Jersey.
Light at the end of the tunnel
The good news is it already appeared 2014 was slipping through California’s so the sale may be the straw that broke the camel’s back but it’s far from the main reason.
What the sale does do is give PokerStars a second chance in New Jersey, and once the company is licensed (found suitable) in one locale other locales will find it much harder to keep the company out, especially when their new parent company is licensed in several jurisdictions and supplies B2C games (both online and brick & mortar) to virtually every operator in the country.
So what we have is the sale hurting California’s chances in the short-term, but perhaps helping California’s chances in 2015 by removing the key obstacle which is whether or not PokerStars should be licensed.