The news will likely have material impacts on several aspects of Amaya’s business, but in this article I’m interested in zeroing in on the ways the charges could intersect with PokerStars’ return to the market for online poker in the US.
I would not expect New Jersey regulators to take immediate action on today’s news.
Regulators conducted an exhaustive analysis before approving PokerStars to operate in New Jersey’s online poker market, an analysis that included an assessment of the AMF investigation. As a result, regulators were likely aware that charges were among the possible outcomes of said investigation.
While PokerStars’ operation in New Jersey is likely to continue in the short term, things get cloudier as we move a bit into the future.
The first point worth making is that Amaya’s approval was (as many in NJ are) a temporary one, a point made clear in the DGE’s order granting the approval back in October 2015:
The Amaya applicants’ Internet gaming related business transactions are deemed approved for a term to expire six months from the date of this Order subject to final approval of the Regulated Gaming System and each game by the Division’s Technical Services Bureau. The Division may reconsider the granting of this approval at any time;
The second is that the AMF investigation may reveal additional information germane to the DGE, or present information that does not comport with the DGE’s investigation.
In any case, my sense is that the charges do not pose an immediate threat to PokerStars’ ability to operate in New Jersey, but do represent a near-term hurdle that the company will have to surmount (either via the charges being dismissed / resolved or via a separation from certain individuals) in order to have a clear path to staying in the state.
California is trickier.
The state appears to have some momentum behind a new effort to regulate online poker. But the news of the investigation may re-ignite a divisive debate over so-called “bad actor” provisions aimed at blocking companies who served the U.S. market after passage of the UIGEA from being licensed in California.
The “bad actor” issue was thought to have receded in importance relative to what was considered the more pressing issue of the role of California’s racing industry in online poker.
Part of what was said to have helped tamp down the issue was the sale of PokerStars to Amaya and Amaya’s subsequent approval in New Jersey.
But the charges filed today by the AMF could be seen as neutering that argument, and could potentially serve as a lever to widen a gap between competing stakeholder coalitions that had been steadily shrinking.
It’s not immediately clear how stakeholders will respond to the news. But what’s certain is that if a group wishes to stall the California online poker process over questions of PokerStars’ involvement, the charges provide powerful fodder for doing so.
Movement on the Senate side was recently buttressed by positive indications on the Assembly side. On Thursday, Assemblyman Gary Pretlow, who heads the chamber’s gaming committee, told GamblingCompliance that “[i]f I can get assurances that the brick-and-mortar operations are all a part of it, then we will probably move the bill this year.”
“I don’t want to throw any competition at them before they have opened their doors, but the indication that I’m getting now is they will be part of this legislation,” Pretlow continued.
The “bad actor” debate isn’t an active one in New York, as neither piece of legislation addressing online poker includes such a provision (although past versions of the bill did). But the charges could drive a number of peripheral impacts: Amaya may find itself sidelined in the lobbying push for regulation and could see its partnership opportunities shrink.