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California Amends Online Poker Bill AB 2863: Still Faces Tribal Coalition Opposition

06/13/2016

California Amends Online Poker Bill AB 2863: Adds “Bad Actor” Clause, Still Faces Tribal Coalition Opposition

In January, Democrat assemblyman Adam Gray first introduced bill AB 2863, which sought to explicitly legalize internet poker in California. Though the bill overwhelmingly passed in the assembly, with over sixty yes votes and only a single no, the bill is still struggling to garner California tribal coalitions’ approval.

This week, Gray amended AB 2863 in an attempt to appeal to some tribal coalitions’ stated objections, while also opening the door for Amaya Gaming and its subsidiary PokerStars to operate in California. It also offended certain other coalitions, who oppose PokerStars’ operation in California. Overall, it will be a tough compromise that will not be approved after many more amendments.

Chief among Gray’s changes was a redefinition of the bill’s ‘bad actor’ clause. The suggested change would roll back an array of restrictions which would previously have disqualified actors such as PokerStars from conducting business in California. Such restrictions would have barred online poker operators who continued business in the United States after the bassage of the Unlawful Internet Gambling Enforcement Act of 2006. While most online poker companies ceased U.S. activity, PokerStars was one of the companies that continued to operate, until it was caught in a wave of anti online poker indictments in April of 2011.

Assemblyman Gray’s new ‘bad actor’ clause seems to have been engineered precisely for PokerStars. It benefited PokerStars in two ways. Firstly, it allows for companies that violated the Unlawful Internet Gambling Enforcement Act, but ceased operations after 2011, to be exempt from a ‘bad actor’ label. Secondly, even if companies had failed to heed the 2011 enforcement actions, they could be exempt from labeling if if certain employees who were active after 2011 are now “no longer affiliated with the applicant.” As per the latter, PokerStars was sold by its owners, Mark and Isai Scheinberg, to Amaya Gaming in 2014.

Both Amaya Gaming, and the Morongo Band of Mission Indians with whom it has partnered, were pleased with the changes. They called them “a step in the right direction” and appreciated “moving the ball forward on iPoker.”

However, the influential Pechanga and Agua Caliente bands still fiercely oppose the bill and PokerStars’ operation in their home state. They rightly lambasted the amendment because it “grants a free pass to the most egregious foreign offenders” of the Unlawful Internet Gambling Enforcement Act, criticizing those who “evaded paying tens of millions in California taxes,” during a period when California was “making painful budget cuts.”

The Assembly’s Appropriations Committee will vote on Gray’s amendment to AB 2863 on June 15.

 
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