California iGaming Week in Review: Restored Hope For PokerStars

Written By Steve Ruddock on April 4, 2014 - Last Updated on September 13, 2022
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The battle for California online poker continues to rage on as PokerStars and their allies (the Morongo Band of Mission Indians, the Commerce Casino, the Bicycle Casino, and Hawaiian Gardens) continue to make their case for inclusion while their opponents continue to plead with regulators to keep PokerStars out of the market.

In this installment of the California iGaming Week in Review we’ll take a brief look at both sides of this issue and see who has the stronger case.

We’ll also see which California Senator has landed on the “Naughty List” of the casinos and card-rooms in the state thanks to her support of a federal online gambling ban, and as always we’ll take a look at the California iGaming barometer in the state.

PokerStars and California Episode IV: A New Hope?

The early reports concerning a potential partnership between PokerStars and the Morongo Band of Mission Indians, as well as three card-rooms, the Commerce, the Bike, and Hawaiian Gardens are gaining more and more legs, and it looks like this is shaping up to be one of the bigger fights in US online poker history as neither side appears to be backing down.

The debate is centered on “bad actor” clauses, and whether PokerStars’ past should preclude them from being a part of the US online poker market.

From Leslie Lohse, representing the California Tribal Business Alliance (CTBA), to a coalition of 12 tribes who have put their other differences aside to fight against PokerStars, the battle is going to be fierce, and both sides are armed with valid points.

On the one hand there are PokerStars opponents, who have cited (incorrectly in some instances) that there is a precedent for “bad actor” clauses, declaring that PokerStars decision to remain in the US market following UIGEA passage in 2006, and the company’s subsequent legal entanglements with the US Department of Justice, should prevent them from being a part of the online poker industry.

On the other hand is PokerStars point of view (their complete response can be found below), which rightly indicates that UIGEA did not ban online gambling in the US, and when it comes to online gambling PokerStars is no more guilty of illegal operation as 888 or partypoker.

Furthermore, in PokerStars settlement with the DOJ the company did not admit to any wrongdoing, and the DOJ did not bar them from operating in the US in the future.

In fact, the DOJ said PokerStars could operate anywhere in the US where it was legal to do so.

Full PokerStars response

The following is a statement on pending California online poker legislation by Eric Hollreiser, head of corporate communications for The Rational Group, which operates PokerStars.

PokerStars shares the belief that a future licensing framework for online poker in California should be based upon the highest standards of suitability that maximize consumer protection and consumer choice. We have consistently met those standards in jurisdictions around the world, where we hold 11 licenses – more than any other company, including licenses in leading European jurisdictions such as Italy, France and Spain.

PokerStars has not, will not and need not request any changes to the California gaming regulations. Most regulatory frameworks around the world leave the assessment of suitability to qualified expert regulators. The same position has been taken by the legislators in New Jersey. The California Gambling Control Commission has a 15-year history of successful consumer protection and is more than qualified to continue to determine suitability.

The only parties seeking to change this are certain groups who want to use the Legislature to gain a competitive market advantage and to limit competition. Their efforts are not in the best interest of consumer choice or consumer protection.

These groups are misrepresenting the Unlawful Internet Enforcement Gambling Act (UIGEA) and PokerStars’ past U.S. operations serving only to exclude PokerStars from the market in order to avoid what should be fair competition. The fact is that UIGEA did not make illegal any gaming that was not already illegal before its passage. This has been confirmed by the U.S. Third Circuit Court of Appeals and by the U.S. Department of Justice (**see below). PokerStars operated under legal opinion that its offering of online poker did not violate U.S. law before 2006 and maintained that opinion following the passage of UIGEA.

PokerStars looks forward to demonstrating our suitability to the regulator just like any other company seeking to operate in California and investing in a fair and well-regulated market.

** 1) Brian Benczowski, Principal Deputy Assistant Attorney General (Justice Department), wrote in a letter to Rep. John Conyers, Chairman, House Committee on the Judiciary on July 23, 2007 – “[T]he UIGEA itself does not make any type of gambling legal or illegal; rather, the statute is focused on regulating the methods of payment for already-illegal gambling.”

2) The United States Court of Appeals for the Third Circuit held that the UIGEA “does not itself outlaw any gambling activity, but rather incorporates other Federal or State law related to gambling.” Interactive Media Entertainment & Gaming Ass’n v. Attorney General, 580 F.3d 113, 116 (3d Cir. 2009).

Senator Diane Feinstein “goes rogue”

With her support of Senator Lindsey Graham’s (R-SC) Restore America’s Wire Act legislation, Senator Diane Feinstein has rankled a number of powerful interests in the state, namely the casino and card-rooms fighting for the legalization of online poker in the state.

Feinstein’s opposition to online gambling is nothing new, she has long opposed any type of gambling expansion, but Leslie Lohse of the CBTA was still nonplussed about Feinstein’s opposition, which she felt came without any consultation with tribal interests according to this column:

“We’re concerned that there appears to have been no consultation before she decided to support this bill, which would have direct impacts on California tribes,” Lohse stated.

Feinstein was the only Democrat to co-sponsor the legislation, and unlike many of the other advocates for a ban, Feinstein does not seemed to be aligning herself with Sheldon Adelson.

California iGaming Barometer

The uncertainty surrounding PokerStars, and just how deeply both sides are committed to their stance is by far the most troubling issue surrounding potential online poker legislation in California; even more troubling than the current storm cloud of a potential federal online gambling ban that looms over our heads.

Because of this uncertainty, the iGaming barometer remains virtually unreadable, at this point we could end up with sunshine or a hurricane.

Hopefully some questions will be answered at the online poker hearing later this month in Sacramento, but I wouldn’t be surprised if the hearing produces even more uncertainty than we have now.

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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,,, and USA Today.

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