So-called ‘bad actors’ clauses get a lot of coverage in poker media, and most view it as a thinly-veiled attempt to keep PokerStars out of US markets.
But is that really all there is to it? Is PokerStars merely a victim of anti-competitive legislation, or is there some validity to the claims that PokerStars was a ‘bad actor?’
When poker great Barry Greenstein recently penned a blog on the subject – “The Bad Actor Clause” – he seemed to highlight PokerStars’ departure from the Washington State market in 2010 as an example of PokerStars’ diligent efforts to be in compliance with US laws.
In every case, in every decision that was made, I was told PokerStars had lawyers who closely examine every detail to ensure that they were not violating any law and that their actions could be defended if they have to go to court or make their case for being licensed in the United States. One example is when the state of Washington passed a law banning online poker, PokerStars pulled out of the state.
But Mr. Greenstein simply omits the four years that passed between the law passing and PokerStars pulling out of the state. Four years in which, by my view, they operated in clear violation of the law.
SSB 6613 went into effect on June 7th, 2006, changing the language of RCW 9.46.240 to include the internet as a prohibited means of transmitting gambling information. It also raised the offense to a felony.
This effectively made not only offering online poker a crime in Washington, but also playing, and even having the programs on your computer, an equal violation. There is no ambiguity in this law.
In short: PokerStars took a calculated risk, but did, to the best of my understanding, knowingly violate that law.
It was only after the Supreme Court upheld the law against a narrow challenge that PokerStars, followed closely by Full Tilt Poker, withdrew from the Washington State market in the fall of 2010.
That ‘little’ detail was pointed out on twitter . . .
— WA iPoker Initiative (@ipokerwa) August 11, 2014
Which brought a reply from Mr. Greenstein that, without acknowledging the discrepancy in his ‘cause and effect’ assertion, expresses a sentiment shared by many:
@ipokerwa It seemed legally wrong that the Indian Casinos gave the governor money to pass a law against their competitors (online poker).
— Barry Greenstein (@barrygreenstein) August 12, 2014
But Greenstein ignores the fact that this law was passed by veto-proof majorities (44-0 in the State Senate; 93-5 in the State House), making the Governor’s signature a mere formality:
Further, violating that Washington State law translates into a violation of the federal “Illegal Gambling Business Act” which reads in part:
(a) Whoever conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business shall be fined under this title or imprisoned not more than five years, or both. (b) As used in this section—
(1) “illegal gambling business” means a gambling business which—
(i) is a violation of the law of a State or political subdivision in which it is conducted;
While it is true PokerStars were not tried nor convicted under these statutes, that they were violated appears quite clear.
I’m not a supporter of so called ‘bad actor’ clauses. I believe there are better ways to assure in-state interests have their shot at offering internet poker without statutes aiming to prohibit a particular brand.
I also believe that players should have access to PokerStars’ product in a regulated environment.
But claims of PokerStars’ absolute innocence by poker media and poker personalities are intellectually dishonest. There was clearly some wrongdoing on the part of PokerStars, just as there was with any operator that served the U.S. market prior to regulation.
What remains now is to answer the question of how we can move forward in a way that allows consumers (i.e. the players) access to the best products in newly regulated markets.