There was some breaking news coming out of California on Tuesday, as 13 California tribes submitted a joint letter to two of California’s biggest online poker supporters in the legislature, State Senator Lou Correra and Assemblyman Reginald Jones-Sawyer, that included a draft of a new “unified” online poker bill for the legislature to consider.
The proposed bill, with its catchy title “The Internet Poker Consumer Protection Act of 2014,” irons out a number of the minor disagreements that were contained within the two separate bills that are currently sitting in the legislature (one in the assembly and one in the senate) and clarifies a number of specific points including “Bad Actor” language, the number of skins permitted under each license, and licensing fees and tax rates.
Despite being called a “unified” or consensus bill, not everyone was in on the negotiations, and it is the new dedication to the “Bad Actor” language that will ruffle the most feathers of those who were not offered a seat at the table, namely the Morongo Band of Mission Indians.
The Morongos, along with the Bicycle Casino, the Commerce Casino, and Hawaiian Gardens have already partnered with PokerStars, and have vowed to fight any bad actor language, instead championing the New Jersey approach which allowed regulators to determine who would and who wouldn’t be licensed.
Bad actor language is toughest to date
At the heart of the new bill is the suddenly extremely comprehensive and clear-cut “Bad Actor” clause, which would disallow PokerStars (or any other company who accepted wagers of any kind in the US after December 31, 2006) from applying for or receiving a license in the state, and even calls for the bill to be nullified if the bad actor clause is contested in court and stricken from the bill.
This “poison pill” as other outlets are calling it, is in addition to several other bad actor stipulations including against vendors, service providers, and even past employees of companies that fall under the sweeping bad actor umbrella.
With this new bill, the unified coalition of tribes have essentially pushed all of their chips in the middle and are forcing the Morongo Band of Mission Indians, along with the Bicycle Casino, the Commerce Casino, and Hawaiian Gardens to either fold (sever their relationship with PokerStars) or call their bluff and kill the bill.
The coalition of tribes has just pulled the classic poker move of getting all your chips in the middle first knowing your opponent cannot call if you do – I had originally thought the Morongos and their allies were utilizing this tactic, with their partnership announcement during the online poker hearing followed by their declarations at the recent iGaming hearing where they threatened legal action, but it seems they weren’t quite pot-committed.
After Tuesday’s announcement of the new unified bill (which even addressed this supposed legal action with the “poison pill” clause) it’s clear that the coalition of tribes went all-in and it’s the PokerStars faction that is left with only two options; either fold or make a hero call and live with the consequences.
One other possibility is the bad actor clause gets struck down and the “poison pill” provision goes with it, as was stated by Attorney Vincent Oliver on Twitter:
If legislation can't pass rational basis, that's saying something. If bad actor clause goes, poison pill will be likely be struck down w it.
— Vincent Oliver (@tangerinelaw) June 4, 2014
A rock and a hard place
The new bill forces the Morongos and the trio of card rooms into a very difficult decision, assuming the bill is eventually introduced and the bad actor language remains intact through the amendment process – which is no small task or guarantee.
They must either disavow PokerStars and sign off on the new bill, or withdraw their support from online poker expansion effectively killing the bill in 2014.
If they leave PokerStars high and dry, (joining an ever growing list in that respect) an online poker bill in California would suddenly become far more likely, as the single major issue would be resolved.
If the Morongos and co. decide to withdraw their support, in all likelihood they would receive the brunt of the blame for the bill’s failure to pass, as would PokerStars. Deserving or not, this is how it will likely play out in the court of public opinion and among legislators.
If they decide to stick by PokerStars, and 2014 goes by the wayside, then we will almost certainly be talking about how California has attempted to pass an online poker bill for eight straight years around this time in 2015.
So the question is, do the Morongo’s, The Bike, The Commerce, and Hawaiian Gardens ditch PokerStars?
Considering their response to the introduction of the bill it seems as though they will fight the inclusion:
The coalition, which includes Morongo, PokerStars, Bicycle Casino, Commerce Casino and Hawaiian Gardens Casino, said, “Efforts by a select few interests to rewrite longstanding and effective policy in order to gain a competitive market advantage or to lock out specific companies is not in the best interests of consumers or the state and will be vigorously opposed by our coalition, online poker players and many others,”
Where I see this going
To what extent they will fight the bad actor language is unclear. I see the phrase “vigorously oppose” in the statement above, but what I’m not seeing is any language in absolute terms that says either PokerStars gets a shot or the bill is dead.
I have a sneaky suspicion that the PokerStars bloc will fight to amend the bill, but will eventually give up so as not to appear as the “bad guys,” the group that killed online poker in California.
While this might be good for the California poker bill’s chances to pass, it may not be the best option for the California online poker industry or its customers.
The other option in this battle (the option that was not absolutist) was to let the regulators decide if PokerStars was suitable for a license, but that door seems closed.
Unfortunately for them, this leaves PokerStars once again on the outside looking in at the US market. Their attempts to gain entry into the US market have been stymied at every point so far, and if the California door closes they are running out of potential entry points.