California’s Online Poker Debate Heats Up; “Bad Actor” PokerStars Still Opposed by Many

Even as members of California’s Assembly Appropriations Committee voted overwhelmingly to approve the financial terms of the Internet Poker Consumer Protection Act, the debate over so-called “bad actors” such as PokerStars continued to rage unabated.

Committee members approved California’s latest incarnation of online poker legislation – officially known as Assembly Bill 2863 – by a 14-1 margin on June 20. But despite the apparent consensus, many lawmakers remained reticent on the bill’s most hotly debated issue: whether or not to allow bad actors back into the fold.

The term bad actor is used to describe online poker operators who willfully chose to continue serving customers in the United States, despite the federal government’s passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

After the UIGEA took effect, several major online poker providers – including PokerStars and Full Tilt Poker – elected to take their chances, refusing to withdraw their services within the American marketplace. While rival companies like PartyPoker willingly withdrew, costing themselves countless millions of dollars in the process, PokerStars and Full Tilt Poker remained and quickly consolidated the American industry.

Lorena Gonzalez (D-Chula Vista), Chairwoman of the Appropriations Committee, encapsulated the current mood among her colleagues when it comes to factoring in the post-UIGEA era. In a statement delivered shortly after the vote took place, Assemblywoman Gonzalez offered the following appraisal of AB-2863’s chances over the long term:

“I think there are very real concerns. There is a … market share component that needs to be addressed. I believe there is a question – a legal question – about activity between 2006 and 2011. I hope we can resolve some of this before this comes to a vote on the floor because … it will, I think, prevent a vote from being successful on the floor. It will require two-thirds vote.”

Adding to the political intrigue is a powerful and highly motivated coalition of seven California tribes – led by the Pechanga Band of Luiseño Indians and the Agua Caliente Band of Cahuilla Indians – as the group has consistently opposed any admittance of bad actors. With the state’s current gambling industry tightly controlled by tribal gaming compacts, this coalition has a vested interest in maintaining control over gambling-related enterprises like online poker.

Leland Kinter, chairman of coalition member the Yocha Dehe Wintun Nation, delivered testimony to the committee, during which he vehemently opposed PokerStars’ planned re-entrance:

“Companies that have engaged in any form of unlawful or unauthorized internet gaming should be disqualified from licensure. These bad actors should not be rewarded with the opportunity to offer internet poker websites. The same is true for companies that purchased the ‘tainted assets’ with the hope of profiting from the ill-gotten gains.”

In referencing “tainted assets,” Kinter tagged Amaya as a bad actor which should also be barred from California.
As written, AB-2863 would require bad actors to choose between paying a $20 million penalty fee to the state, or wait for a period of five years before returning.

The tribal coalition has called for Amaya and PokerStars to pay a massive $60 million penalty for its alleged bad actor violations, along with a mandatory 10-year exile from the state.