Last week began with the Morongo Band of Mission Indians locked in a virtual stymie with a coalition of California’s most influential tribes.
It ended with a bombshell.
With Amaya’s acquisition of PokerStars, the “Bad Actor” clause dispute – which for all intents and purposes is the only significant barrier holding up California’s entry into the iGaming arena – takes on new life.
To elaborate, its inclusion as part of a regulated online poker bill would no longer be a death blow for PokerStars prospect of reentry, in so long as the language of the clause is sufficiently toned down.
And now that PokerStars is on the verge of being owned by one of the most reputable names in gaming, we anticipate that the true motivations behind the coalition’s insistence of a “Bad Actor” clause will come to light. Are they as noble as the 12 tribes would like you to believe, or are there other factors at play?
I offer my opinions on this, and examine just how significant a role entry into California played in the Amaya / Rational Group acquisition.
Why so adamant, coalition?
It really boils down to one thing: competition.
In its recently proposed unified online poker bill, the coalition’s self-serving agendas are on full display.
First up are the bill’s provisions regarding who should be permitted to partner up with an Internet gaming provider. Should the coalition get its way, tribes and card room casinos that do not host a poker room would be excluded. Racing venues would also be left out in the cold.
Sorry, little guy.
Then there is the fabled “bad actor” clause, which in reality is just a thinly veiled attempt to keep PokerStars out of the market.
With the coalition’s proposed “bad actor” provision in place, the market would likely end up more fragmented than it is in New Jersey, with each party involved getting their moderately-sized piece of the pie.
In a PokerStars dominated California, those pieces would be significantly smaller. This much is apparent.
And while it’s hard to predict whether or not PokerStars would completely monopolize California’s iPoker industry, its presence does task second tier operators with spending more money on better software, improved customer service, player-friendly promos and widespread marketing campaigns. Otherwise, how could they hope to compete?
In short, from the perspective of the coalition, the absence of PokerStars represents healthier revenue returns. And to them, that’s reason enough to push a “bad actor” clause.
How can you be so sure?
Call it informed speculation.
According to PokerScout, PokerStars boasts nearly 10 times the volume of its nearest competitor. It’s extremely likely that the coalition fears the same skewed distribution replicating itself in CA.
Going further, the language of the coalition’s “bad actor” provision, as well as those proposed by State Senator Lou Correa and Assembly member Reggie Jones-Sawyer, not only calls for online gaming operators conducting business in the U.S. post-UIGEA to be banned, but intellectual properties as well.
So even if Mother Theresa owned PokerStars, it wouldn’t be allowed back in. Smells more like an anti-competitive measure than an ethical guideline to me.
And let’s not forget that as part of its settlement with the Department of Justice in 2012, PokerStars never admitted to any wrongdoing. According to at least one renowned Harvard Law Professor that’s reason enough to render any “bad actor” exclusion unconstitutional.
Now, can the coalition necessary be blamed for their standpoint? Absolutely not. Any kid operating a lemonade stand will tell you he’d rather be up against a bunch of lesser competitors than a world renowned beverage retailer.
If the coalition simply stated “we don’t want PokerStars in CA for competitive purposes” it obviously wouldn’t fly. A “bad actor” clause acts as a nice cover.
The PokerStars perspective
All this is not to say that PokerStars interests in California are not self-serving as well. Of course they are.
With reentry into California comes unparalleled financial opportunity, and the always aggressive Rational Group was apparently willing to do anything to make that happen.
In fact, in its recent press release, Amaya came right out and said:
“Amaya believes the Transaction will expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the U.S.A.”
And right now, the U.S.A is essentially synonymous for California. Apologies to New Jersey.
Think about it:
- California’s economy is larger than all but seven other countries.
- It has more card rooms than any other state in the nation, including Nevada.
- Its population of over 38 million rivals that of ring-fenced countries such as France, Spain and Italy.
In those sequestered nations, PokerStars performs more admirably than all but a handful of international poker networks – all of which have access to a much larger player pool.
All of which leads one to believe that expedited entry into California didn’t just play a role in Amaya’s acquisition of PokerStars – it was the role.
Unfortunately, it appears that the rift between the Morongo, PokerStars, the coalition and other vested parties will prevent the passage of an iGaming bill in California until at least 2015.
And guess who suffers the most from this struggle? If you answered “the players,” give yourself a cookie.
Wouldn’t it just be easier to let the state’s regulatory committee decide PokerStars fate, much like the DGE did (and will do again) in New Jersey?
Because I’m sure the Golden State’s online poker aficionados, who have been hungering for regulation for the better part of four years, are of the mind that second tier iPoker is better than none at all – at least for now.