Caesars Gives In On Bad Actor Clause in California Online Poker

Though fewer interests oppose allowing PokerStars into the California online poker market, resolution is still a long way off.

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Interest in precluding PokerStars from participating in the California online poker market is waning. Last week, supporters of new laws to regulate online…
Mr. Littlehand, Creative Commons Attribution 2.0 License

Interest in precluding PokerStars from participating in the California online poker market is waning. Last week, supporters of new laws to regulate online poker abandoned stances on two issues that are seen as the biggest hurdles preventing online poker legislation from passing—the so-called “bad actor” clause designed to keep PokerStars out of the state and the inclusion of horse racing interests in the industry.

First Seth Palansky, Vice President of Corporate Communications for Caesars Interactive Entertainment told pokerfuse that “as long as everyone is on a level playing field and the regulations are set up as a win, win, win, we’ll enter the market.”

Then, Chris Krafcik of Gambling Compliance received confirmation from Caesars’ corporate office:

More Tribes Concur That PokerStars should be allowed in California

In addition to the tribes that already support the inclusion of PokerStars in the California online poker market, last week, news broke that the Rincon Band of Luiseño Indians, United Auburn Indian Community and Pala Band of Mission Indians had written to the two sponsors of the California bills presented in the current legislative session to explain their position that any “bad actor” clause should apply to individuals not companies.

The letter to Assemblyman Reginald Jones-Sawyer who put forward AB 167 and Mike Gatto who put up AB 9 justified the shift by stating that the new “approach strikes a balance between the state’s need to ensure that persons who willfully defy gaming laws not be permitted to jeopardize the integrity of Internet poker in California, while recognizing that control of an entity may change over time in a way that resolves regulatory concerns.”

PokerStars is the Target of Bad Actor Clauses

The California bad actor clause has been directed primarily at preventing or delaying PokerStars from obtaining a license. PokerStars has responded vehemently in opposition to the existence of any such clause.

“We strongly oppose the so-called 'bad actor’ language that is nothing other than a blatant attempt to provide certain interests with an unfair competitive advantage by arbitrarily locking out trusted brands,” said the company in a statement issued last June.

The Amaya and PokerStars Head of Corporate Communications has been quick to welcome Caesars’ change of position.

In a series of tweets Eric Hollreiser stated that PokerStars was “encouraged by the recent comments from Caesars, California tribes including Pala, Rincon and United Auburn and several dozen card rooms who believe that working together is best way to promote the industry, protect individual freedom & counter misleading, negative campaign of self-interested, anticompetitive groups.”

Horse Racing Industry Gains Support in its fight to participate in the California online poker market

Another big issue that divides many of the supporters of new legislation is whether to permit the horse racing industry to be eligible for an online poker operator’s license in the same fashion as the state’s tribes and card rooms. According to the same letter that announced the shift in position on the bad actor clause, the Rincon, United Auburn and Pala tribes are not opposing the inclusion of the horse racing industry.

“For the purposes of moving legislation that authorizes Internet poker in California, we support the approach of AB 167 in permitting horse racing associations to be eligible for Internet poker operator licenses on the same terms as eligible tribes or card rooms,” the letter states.

Opposition Still makes online poker legislation in California unlikely

Even with the added support of the additional tribes, opposition to allowing PokerStars and the horse racing industry to participate in the California market is still significant enough to block efforts to pass legislation. The Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians still remain strongly opposed to both measures.

With the required 2/3 majority needed to pass the legislation, the opposing tribes still have enough clout to keep efforts at a standstill.

February 16, 2015
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