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PPA, PokerStars Opposing California Web Poker Bill

Both Groups Issue Statements Criticizing Latest Amendments


California Assembly ChamberLast-minute tweaks to California’s long-debated online poker legislation have ushered in a reversal of sorts on the issue.

Once supporters of the legislation, the Poker Players Alliance and a coalition formed by PokerStars and its brick-and-mortar partners in California have respectively issued statements opposing the latest changes to a bill in Sacramento that would legalize, regulate and tax online poker sites that receive a license from the state.

With a legislative session quickly winding down, the bill could be voted on as early as next week. If successful, it would move out of the Assembly and to the Senate for consideration.

This week, it was revealed that Assemblymember Adam Gray had worked out a compromise of sorts with a politically powerful tribal coalition, led by the Pechanga Band of Luiseno Indians and the Agua Caliente Band of Cahuilla Indians, that opposes PokerStars involvement with California online poker thanks to the site’s past business in the United States. The deal, which centers on “suitability” for so-called “bad actors,” reportedly bans PokerStars, a platform with about 70 percent of the worldwide market, from entry into California for five years.

Some have characterized this as putting PokerStars in a “penalty box.” The company did facilitate games for Americans after the 2006 Unlawful Internet Gambling Enforcement Act, but in a settlement with the federal government didn’t admit to any wrongdoing. The settlement also paved the way for the company to be licensed by the state of New Jersey for online poker.

According to a report from the Press Enterprise, there was discussion of a $20 million fee that would have allowed PokerStars to avoid the so-called penalty box, but that idea was scrapped.

Those who oppose the proposed amendments are skeptical of the five-year period.

According to a statement from the PPA, “an examination of the proposed amendments reveal that it is actually a lifetime ban.” Also according to the D.C.-based lobbying group, “these amendments would also make AB 2863 less likely to pass” because they raise “serious constitutional issues.”

“We are deeply disappointed that Chairman Adam Gray has chosen to play politics at the behest of special interests," PPA Executive Director John Pappas said. “The proposed amendments threaten to doom the iPoker legislation for which we and our members have advocated for years.”

California lawmakers have taken a look at online poker for a decade.

The PokerStars coalition, which includes the Commerce Casino, Hawaiian Gardens Casino, Bicycle Casino and two tribal groups, said the amendments “will likely result in litigation and prevent implementation” of the online poker bill should it become law.

“As early and strong supporters of AB 2863, who have negotiated all along in good faith and who have championed the right of the State to regulate this industry and protect consumers, we are disappointed at this turn of events,” the coalition added.

The group went on to say that the bill would create “a dangerous anticompetitive precedent and atmosphere.” Just three states currently regulate online poker.

In the state of New Jersey, PokerStars gathered 44 percent of the online poker market in the second quarter of this year, despite not launching until March.

California’s online poker market has been estimated at being worth close to $400 million, but it’s unclear how many unique operators the state could support. One tribal gaming insider told Card Player early this year that California is only large enough for 6-10 unique operators.

A big reason why California is such an online poker battleground is because between 2009 and 2010, California players accounted for 16 percent of U.S. revenue and four percent of worldwide Internet poker revenue. The state has nearly 40 million people.