Caesars Thinking On Bad Actor Clauses Could Be Evolving

Caesars Shifts Stance, Now Supports PokerStars Entry To US Online Poker Market

This article may be outdated.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

UPDATE 2/13 6:30 PM PST: Jan Jones Blackhurst, Executive Vice President, Communications & Government Relations for Caesars, confirmed to GamblingCompliance’s Chris Krafcik that Caesars has shifted their position on PokerStars:

Original story follows

The power of one the most divisive issues among supporters of regulated U.S. online poker may be receding.

That issue: so-called “bad actor clauses” in online poker bills that aim to bar operators that accepted American players after a cutoff date (usually based on or around the passage of the UIGEA).

Caesars has been arguably the most powerful and vocal supporter of such clauses, while PokerStars – widely considered to be the primary target of bad actor restrictions – has deployed a well-funded and highly-motivated opposition.

The net result: a fiercely divided pro-regulation lobby wasting countless resources on infighting and presenting a wildly inconsistent message to lawmakers.

As goes Rincon, so goes Caesars?

But if you consider recent indications from the Rincon Band of Luiseño Indians – Caesars’ online and land-based partner in California – to a reliable proxy for Caesars’ position, then it seems that the gaming giant has noticeably softened its bad actor stance.

In a letter acquired by sent to Assemblyman Mike Gatto (sponsor of AB 9) and Assemblyman Reggie Jones-Sawyer (sponsor of AB 167) dated February 10th, Rincon – along with the Pala Band of Mission Indians and the United Auburn Indian Community – laid out their new thinking on bad actor clauses:

Participation by persons or entities who engaged in unauthorized Internet gaming. We suggest an approach that looks specifically at personal participation in unauthorized gaming. Under this approach, those persons with control over a licensed operator, service provider, or marketing affiliate could not include any person who has personally participated in unauthorized gaming. This 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. If a company that engaged in unauthorized gaming changed ownership, regulators would be able to review the effect of that change in ownership under the bill’s standards.

Use of assets developed through unauthorized Internet gaming. We recognize that this is an important issue that remains to be resolved, with different approaches reflected in your respective bills. While we have not yet identified a possible consensus position, we encourage continued conversation on this important issue to identify an approach based on considerations of fairness, regulatory integrity, and legal requirements at issue

Full text here.

That leaves us with the following bad-actor political landscape:

  • Pechanga and Aqua Caliente as for bad actor clauses.
  • Morongo and San Manuel, as opposed to bad actor clauses that would block PokerStars (entity or assets) post-Amaya purchase.
  • Pala, United Auburn and Rincon as generally opposed to bad actor clauses as they pertain to an entity post-acquisition (e.g., Amaya shouldn’t be blocked because they purchased PokerStars), but still undecided regarding the issue of tainted assets (e.g., can Amaya use the PokerStars software?).

That letter came on the heels of comments from Rincon’s corner suggesting the tribe’s thinking on the bad actor issue was moving closer to Morongo’s than Pechanga’s.

Earlier this month, Rincon Councilman Steve Stallings told Dave Palermo at that Stallings thought “the bad actor language will be less of an issue than the tracks.”

And at the Western Indian Gaming Conference this week, Victor Rocha quoted Stephen Hart – a lawyer for Rincon – as suggesting that Amaya’s purchase of PokerStars should remove any association between the PokerStars brand and past acts:

Finally, Rincon – and Caesars – had nothing negative to say on Reggie Jones-Sawyer’s AB 167, which would legalize online poker in California with no bad actor clauses.

“We compete up and down the Las Vegas strip everyday,” Seth Palansky, Vice President of Corporate Communications for Caesars Interactive Entertainmenttold Pokerfuse this week in response to a question regarding the company’s position on licensing of horse tracks and assets used in the U.S. market after December 31, 2006.

“As long as everyone is on a level playing field and the regulations are set up as a win, win, win,” Palansky continued, “we’ll enter the market.”

Pechanga and Agua Caliente spoke out against AB167 independently.

It all adds up to an about-face for Rincon, who in March of 2014 joined with over a dozen tribes in issuing a fiery statement denouncing PokerStars’ efforts to enter California.

What’s good for California is even better for other states

Should Caesars’ implied position on bad actors prove to be in fact their actual position, it would be a shot in the arm for California’s online poker chances. But, of course, it would only be one of the dominoes that still needs to fall for online poker to come to the Golden State.

The impact of such a shift by Caesars in states like Pennsylvania and New York (and others to follow) could be far greater, as the picture for online poker in those states is far less fragmented and complicated than in California.

We’re likely to see a new bill emerge in Pennsylvania in the coming months. Whether or not it contains a bad actor clause will be a solid indicator of how Caesars’ thinking on the matter has – or hasn’t – evolved.

- 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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