Barry Greenstein Pens Opinion Responding to “Bad Actor” Clauses

Written By Earl Burton on August 20, 2014
Greenstein pens opinion piece on bad actor clause

One of poker’s best ambassadors, Poker Hall of Famer and Team PokerStars Pro Barry Greenstein, penned an opinion piece regarding the various “bad actor” clauses that are appearing in many states’ potential online poker legislation.

Those “bad actor” clauses would prohibit companies who offered online gaming to U. S. citizens following the passage of the Unlawful Internet Gaming Enforcement Act (UIGEA) of 2006 from being, at the most, able to operate in the United States and, at the minimum, force them into a “waiting period” up to five years.

Last week Greenstein took to his personal blog to discuss the usage of these clauses, which are prominent in any potential California regulation of the industry.

“Everybody knows this provision [the clauses] is specifically written into these laws to exclude PokerStars,” he writes.

Greenstein details his discussions with PokerStars legal staff and upper management that took place since the passage of the UIGEA. He ensures that the players’ monies were always safe (proven by the quick repayment of U. S. players following “Black Friday”).

In one case in particular, Greenstein notes that PokerStars withdrew from the state of Washington following passage of their anti-online poker legislation. He also recounts the actions of the company regarding payment processors who weren’t legitimately operating.

When it comes to the potential usage of the “bad actor” clause, Greenstein notes two main reasons why this clause shouldn’t be allowed. Citing the settlement between the U. S. Department of Justice and PokerStars regarding the “Black Friday” indictments, Greenstein states:

“You would think that after this judgment was handed down and all the charges dropped, PokerStars would be viewed in the right and, state by state, online poker would become legal. Well, it just doesn’t work that way.”

Greenstein demonstrates that the settlement, as well as the resulting clarification by the DoJ in December 2011 of the Wire Act of 1961 (what had been the “law of the land” regarding the legality of online poker in the U. S.), should be opening the gates for PokerStars’ return to U. S. soil.

Instead, the settlement – and the ongoing indictment of PokerStars’ founder Isai Scheinberg and payment processor Paul Tate – is being used as a roadblock by competitors and politicians to retroactively punish PokerStars, something that isn’t allowed in the U. S. under what is called a “bill of attainder” (legislative punishment rather than judicial punishment).

Greenstein concludes:

“I don’t expect any of these arguments for the Bad Actor Clause to hold up in court and one of the best-known Constitutional scholars in America has said it is unconstitutional. But I don’t believe that this issue will be resolved in a court of law. The future of online poker in the U.S. will most likely be resolved at the political level after a whole lot of lobbying on both sides. I’m still hopeful that sometime in 2015 I’ll be able to play poker on PokerStars from my home in California. But it’s going to be a fight to get there.”

While Greenstein’s opinion is well thought out (if there is one person in the poker world that you would like to have an intelligent discussion with, it would be Barry), there are some flaws in his arguments. PokerStars did operate in the U. S. post-UIGEA, violating the “law of the land” at that point. Regardless of the civil charges against the company by the DoJ, or the change in the DoJ’s reading of the Wire Act, those in charge at the time did knowingly decide to flaunt the laws.

Then there are Scheinberg and Tate (who, along with Absolute Poker’s Scott Tom, are the only three from the 11 criminally indicted in 2011 that have yet to be apprehended by U. S. authorities), the two men who were in charge following the UIGEA passage.

Although PokerStars’ owner, the Rational Group, decided to sell the company to Amaya Gaming this summer, that doesn’t change the fact that Scheinberg and Tate knowingly continued to violate what was law at the time. A change in ownership doesn’t discount what the company has previously done.

While it may not be right, there has to be someone that “pays the piper” for the past transgressions of PokerStars and its management, and that could very well be Amaya Gaming and online poker players in general.

Through the “bad actor” clauses, many states are looking to enact that punishment on PokerStars. The constitutionality of such moves will be the big question, and something that might tie up any online poker legislation for the foreseeable future.

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Earl Burton

Earl has written about poker, its participants, its politics and its growth over the past 10 years and is one of the most highly respected poker journalists in the game today.

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