New Bill To Regulate Online Poker Introduced in New York

This article may be outdated. Get the latest news on New York here.

Update May 6th: A companion bill to S 6913 has been introduced in the Assembly. That bill – A09509 – appears identical to the Senate bill.

A new bill in the New York Senate – S 6913 – seeks to regulate intrastate online poker for those within the borders of the Empire State.

The bill was introduced by State Sen. John Bonacic (R – 42nd) and comes days after Sen. Lindsey Graham and Rep. Jason Chaffetz introduced a Sheldon Adelson-backed federal bill to outlaw most forms of regulated online gambling, including poker.

Read the full text of the bill here.

“New Yorkers are today spending millions on overseas, illegal gaming sites that have no consumer protections or effective restrictions to keep minors from playing,” Senator Bonacic said in a statement to OPR.

“I believe we need to start having a discussion on addressing this issue.  That is why I have introduced legislation which would regulate online poker here in New York to protect consumers, prevent underage gaming, and combat problem gaming.”

The bill now sits with the Senate Committee on Racing, Gaming and Wagering. Sen. Bonacic is the chair of that committee.

Handicapping the chances for passage

This is not New York’s first attempt at regulating online poker. A last-minute legislative push in March of 2013 to add online poker regulation to the NY state budget came up short.

With that said, Bonacic’s bill appears to be more of an initial step in the process than an immediate precursor to regulated online poker in New York.

As Bonacic told OPR, he views the introduction of the bill as a way to “start having a discussion on the issue.”

Bonacic was even more direct in his comments to the AP, saying that he doesn’t “intend to push this this year.”

John Pappas, Executive Director of the Poker Player’s Alliance, offered a similar prognosis to, saying “[T]here is no House companion bill at this time. Getting House support will be critical and, without that, it will be a real challenge to have legislation considered this year. This is a great first step, but I think we are far from seeing this bill become law.”

Cliffs: New York’s online poker bill

Games allowed: The bill allows for poker only, both cash and tournament play.

License info: The bill authorizes 10 online poker licenses good for 10 years. The licence fee is $10mm. The tax rate is 15% of gross gaming revenue.

Bad actor: Any person or asset involved in taking any wagers – including poker – from the US after 12/31/2006 appears to be disqualified from licensing.

Compacts: The bill allows for New York to enter into liquidity-sharing agreements with other states.

Other: Updates the definition of “contest of chance” in a way that may have significant implications beyond online poker.

Detailed overview of the NY online poker bill

Below are some of the key points of the bill, ordered by section. Read the full text of the bill here.

1400. Legislative Findings and Purpose

  • Argues that poker is a game of skill and therefore distinct from other “contests of chance” as defined by New York gambling law.
  • Draws a distinction between sites and operators that accepted bets from New York before and after enactment of UIGEA. Argues that those who took bets post-UIGEA should be excluded from regulated online poker in New York, saying it would “create unfair competition” with “licensees that respected federal and state law.”

1401. Definitions

  • Authorized game is defined is hold’em, omaha or “any other poker game” that the commission “determines is the material equivalent.” Cash and tournament play are both permitted.
  • Covered asset is where the heart of the “bad actor” clause exists and includes any asset “used in connection with the knowing and willful acceptance of any wager” from the US “of any form of interactive gaming” that was not “affirmatively authorized by state or federal law after 12/31/2006. The definition covers any intellectual property, customer list or any assets “used to provide a core function.”
  • Interactive gaming gross revenue is defined as the sum of all revenue less winnings paid and promotional gaming credits. Non-cash promotional items are not included in the calculation. Deposits do not count as revenue.
  • Significant vendor includes those who provide a core function, who sell or license customer lists, who provide any intellectual property or who share in a percentage of revenue generated by customers.

1402. Authorization

  •  Regulations must be promulgated within 180 days of the bill becoming law.
  • Up to 10 licenses to operate online poker sites can be awarded by the commission.
  • Licenses are intended to be issued no sooner than 180 days after regulations are promulgated.
  • Operators and significant vendors must be licensed by the commission.
  • License fee is $10mm.
  • Licenses are good for 10 years.
  • The commission may enter into agreements with other states to share liquidity.

1403. Required Safeguards / Minimum Standards

  • The commission must ensure minimum standards regarding age, geolocation, consumer privacy, problem gambling resources and fair games.
  • Bots are prevented.
  • Player funds must be segregated.

1404. Scope of Licensing Review

  • The suitability review for licensees covers owners, CFO, CEO and anyone “significantly involved.” Anyone owning 5% or more is also required to face review, although institutional investors holding under 25% ownership get a waiver under certain circumstances.
  • “Bad actors” – defined as anyone who “has at any time, either directly, or through another person it owned, in whole or in significant part, or controlled, knowing and willfully accepted or made available wagers on interactive gaming (including poker) from persons located in the United States” after 12/31/2006. The section also excludes those who “knowingly facilitated or otherwise provided services with respect” to online gambling (including poker) in the US and anyhow who has “purchased or acquired” such a person or plans to use such a person or a “covered asset” in connection with the license they’re pursuing to do business in New York.

1405. State tax

  • The tax rate is 15% of gross gaming revenue.

Updates to penal law

  • The definition of “contest of chance” is edited to read “depends predominantly on an element of chance” instead of “depends in a material degree.”
  • Offering interactive gaming online without a license is now a gambling offense.
  • Unlicensed operators are liable for all taxes due.

Read the full text of the bill here.

Reaction to New York’s online poker bill

John Pappas, Executive Director of the Poker Player’s Alliance, suggested that a legislative move on Internet poker has been brewing in New York for some time.

“Last year I met with legislative leaders in New York and they expressed a deep interest in regulating online poker,” Pappas told OPR. “The state leaders are looking around, and they do not want to be left behind.”

Pappas also suggested some interplay between the online poker bill and the state’s drive to expand land-based gambling, noting that with “an uncertain timetable for brick and mortar casinos in New York, regulated Internet poker could be a more immediate boost for gaming companies to get a foothold in the market and for the state to raise some revenue.”

- Chris is the publisher of Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.
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