Hearing Wrapup: PokerStars and Their CA Partners Have Drawn Their Line in the Sand

Written By Steve Ruddock on April 24, 2014
PokerStars threatens California iPoker bills


That is how I would describe California’s online poker hearing once it hit the three-hour mark yesterday.

The fireworks began during the third panel of the afternoon, as seven tribal chairman sat before the Governmental Organizations committee, when all of a sudden a press release was issued to members of the poker media declaring PokerStars, the Morongo Band of Mission Indians and three card rooms (the Bicycle Casino, the Commerce Casino, and Hawaiian Gardens) have officially entered into a partnership agreement, if California passes an online poker bill.

The Morongo Band of Mission Indians, California’s (and the world’s) three largest card clubs – the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino – and The Rational Group, which owns and operates PokerStars, announced today that once California enacts legislation authorizing intrastate online poker, PokerStars will serve as the subcontractor providing the online poker platform and related services for a real-money online poker website to be licensed, owned and operated by an entity owned by the Tribe and the card clubs. This will give Californians access to the world’s largest and most popular online poker brand in a safe and locally-regulated environment. The organizations will work together to advocate for legislation that extends California’s tough, long-established gaming regulations to include intrastate online poker and thus ensure stringent consumer protection, consumer choice and maximum revenue for the state.

Read the full press release

The timing of the press release was impeccable as the entire poker media community was already watching and listening to the hearing, and had just finished listening to six of the seven tribal chairs push for a “bad actor” clause in the legislation, some more implicitly than others.

Up to this point the hearing had been optimistic, upbeat, and friendly.

And BOOM goes the dynamite

Just as the final speaker of the panel, Chairman Robert Martin of the Morongo Band of Mission Indians was preparing to speak (one of PokerStars potential partners in California), the press release hit the inboxes of the poker media and from there social media.

While the media tried to get the press release posted to websites, Martin’s comments were almost entirely focused on removal of the bad actor language from the potential online poker bill.

PokerStars, the Morongo’s, and The Bike, The Commerce, and Hawaiian Gardens had effectively dug in their heels with the announcement in conjunction of Martin’s comments; either the bad actor language goes or their support for the bill goes.

The energy in the room was immediately zapped, and the conciliatory and optimistic tone of the committee members became pleading appeals to the tribes to work together as “they’ve come so far.” Imploring the assembled interests to not let this one issue derail the work that has been done.

Where yesterday ranks historically

In my five years covering the poker industry there has only been a handful of times that can compare to the excitement and chaos caused yesterday.

It’s few and far between that the poker media is faced with a situation where information comes out of nowhere and is happening faster than it can be reported: Black Friday, PokerStars settlement with the DOJ, and the New Jersey launch of online gambling.

I don’t know where yesterday’s hearing and the announcement by PokerStars will rank in terms of import compared to the other moments mentioned above, but in terms of throwing the poker community a curveball, PokerStars, the Morongos and the three LA-based card rooms just tossed an unhittable 12-6 breaking ball that would make Aaron Sele proud.

The story may not be resonating with the community at large (yet), but among iGaming reporters and journalists what happened yesterday is a big F’ing deal.

Sorting through the message

The official announcement of the deal would appear to be PokerStars and their California partners way of saying, “we’re not backing down,” and essentially putting the ball in the opposition’s hands. So the question now becomes, will the other tribes and gaming interests capitulate on what has been a hard-line approach to any mention of PokerStars or removal of the bad actor language.

The meaning of the announcement (coupled with its timing) seems quite clear; either remove the bad actor language and give PokerStars a shot at a California license or there will be no deal…again.

That being said, the interests that have aligned with PokerStars are taking a big gamble, and not just because online poker legislation could die in the legislature once again.

As we saw in New Jersey, allowing PokerStars to go through the suitability process doesn’t insure that PokerStars will get a license — which may very well be the only way to sell the removal of the bad actor clause to the other tribes and card rooms.

Essentially, the notion that there is a reasonable possibility that PokerStars will be found unsuitable by regulators is the only glimmer of hope a California online poker bill still has at this point, and the only way a bill sans a bad actor clause can be sold to the other tribes and card rooms.

My feeling is that unlike in New Jersey where PokerStars would not bow to whatever demands the regulators were forcing upon them, the California market is significant enough, and likely represents PokerStars last legitimate gateway to the US market, that Stars would submit to California’s regulators.

The case for PokerStars

Setting aside whether Stars belongs in the US market based on their past, if PokerStars is granted a California license they will certainly become the top site in the market, which should create a trickledown effect that we haven’t seen in Nevada or New Jersey, where the current operators aren’t competing against a powerhouse like Stars.

With PokerStars in the mix, WSOP.com / 888 customer support would have to be improved and Ultimate Poker’s software would have to be overhauled; good enough, which seems to be the current MO, would no longer be an option.

When there is a clear frontrunner to catch, and the chase pack starts bolstering their promotions and providing better service and a better product the players are the ones that will reap the rewards.

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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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