California iGaming Week in Review: PokerStars and Morongo Respond

Posted on June 11, 2014

What a difference a week can make.

Last week, we appeared to be moving closer to a potential compromise. This week we have two sides digging their heels in the ground and not willing to move an inch in the other direction over a single issue – an issue that has the capability of derailing the entire process.

It’s not only a matter of PokerStars and their allies between the opposition group of tribes disagreeing on the issue of a “Bad Actor” Clause, it’s that both sides have taken the polar opposite view. Thus, effectively announcing that if they don’t get their way there won’t be a poker bill in 2014.

Unfortunately, both sides can’t get their way, so it’s either compromise or kill the bill at this point.

In the week’s installment of the California iGaming Review we’ll take a look at the positions both sides have staked out this past week and what it might mean for California’s unborn online poker industry.

Coalition of Tribes Draw Bad Actor Line in the Sand

12 of the most powerful tribal factions in California have come together on what they are terming a “unified” online poker bill which they hope will displace the current duo of bills, which presently sit in the state assembly and state senate.

The unified bill calls for several non-contentious changes / clarifications, including the number of skins a license will be allowed to launch and the tax rate and licensing fee.

The bill also clearly defines who the tribes feel should be allowed to launch online gambling platforms, which boils down to if a tribe or card room casino currently offers poker.

This policy will likely foster some opposition from smaller, non-poker, casinos as well as the racing industry, but is not seen as a major obstacle as the political clout of these groups is minimal.

However, there is another contentious aspect to the newly proposed bill, the so-called “Bad Actor” Clause designed to keep PokerStars out of the market. The language in the bill is extremely clear on this matter and even goes so far as to propose a “poison pill” strategy should PokerStars and their allies make good on their threat to legally challenge such a clause – if the Bad Actor language is stricken from the bill the bill is null and void according to the poison pill clause as it is being called.

Obviously this has created quite a convoluted situation, which we at CaliforniaGambler.com have tried to make sense in the following articles:

All Tribes But One Agree on New California Online Poker Bill

Is California’s New Bill the End of Online Poker Talk in 2014?

A look at California online poker with and without PokerStars

PokerStars and Others Respond

While this “consensus” sounds pretty set in stone, there is a missing element, which is the PokerStars aligned Morongo Band of Mission Indians and of course the trio of card rooms that have also entered into an agreement with PokerStars, Bicycle CasinoCommerce Casino, and Hawaiian Gardens.

After a short statement when the “unified bill” was first announced, the PokerStars faction formulated a detailed response, which they sent out on Thursday. This proposal comprised of nine bullet point rebuttals. Here is the complete response from PokerStars and their California allies:

Morongo Band of Mission Indians, Commerce Club, Hawaiian Gardens Casino, Bicycle Casino and The Rational Group Coalition Response to 13 Tribe Announcement and Proposed Amendments to iPoker Legislation

We support legislation that would allow Californians to play online poker on well-regulated websites owned by California’s existing trusted gaming partners and operated by the most qualified and suitable companies in the industry.

We believe the legislative process should be used to establish a strong regulatory system that ensures stringent consumer protection, consumer choice, and maximum revenue for the state.

However, we strongly oppose the so-called “bad actor” language that is nothing other than a blatant attempt to provide certain interests with an unfair competitive advantage by arbitrarily locking out trusted iPoker brands. We will vigorously oppose any legislation that includes this language.

These provisions in the Tribal coalition’s proposed amendments that are solely intended to lock out certain providers violate both the U.S. and California constitutions.

The tribal coalition amendments would exclude from participation, for purely anti-competitive reasons, companies that have never admitted or been convicted of wrongdoing, are duly licensed in jurisdictions around the world, and have set the gold standard in the online poker industry for game and financial integrity and player satisfaction.

At the same time, the legislation would not exclude companies or individuals that clearly have operated illegal California-facing casino wagering and sports betting sites and that have admitted to breaking the law.

Make no mistake, we believe strongly that all licensees and operators should meet the highest standards of accountability and suitability.

We believe the job of determining suitability should be left with the existing regulators – the CA Gambling Control Commission and the Attorney General’s Bureau of Gambling Control, using the Gambling Control Act’s existing standards that these regulators have been successfully applying for many years.

We look forward to working with all stakeholders and with members of the Legislature to craft a final bill that will best serve the interests and needs of all Californians – and not just those who would use the Legislature to protect them from fair competition.

California iGaming Barometer

The battle between these two factions has a 2014 online poker bill looking far more unrealistic than it did just a week ago. If this was a real barometer let’s just say that a severe low pressure system would be moving in, and the only real hope is a last minute change of course that sends it back out over the water leaving the coast with just a few showers.

We’ll see what happens if and when the new bill is introduced, and of course there is a proposed hearing scheduled for this month.

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Steve Ruddock

Steve Ruddock is a longtime member of the online gambling industry. He covers the regulated US online casino and poker industries for variety of publications, including OnlinePokerReport.com, PlayNJ.com, USPoker.com, and USA Today.

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