Amaya Insider Trading Allegations Cause Uneasiness Amongst California Tribes
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Tribal Coalition Partner of PokerStars Has ‘Deep Concerns’ About Amaya Allegations

San Manuel
New Jersey’s decision to extend for six months Amaya Gaming’s conditional license to operate PokerStars and Full Tilt may have eased “deep concerns” an American Indian lobby partner in California had about the company’s legal problems.

AMF charges resonate with California partners

Chair Lynn Valbuena of the San Manuel Band of Mission Indians expressed concerns about Amaya/PokerStars two weeks ago during a meeting of tribal leaders and lobbyists organized by Assemblyman Adam Gray, sponsor of pending iPoker legislation, sources at the meeting said.

“San Manuel has deep concerns about these latest Amaya revelations,” Valbuena said of allegations leveled by Canadian securities regulators against Amaya Chairman and CEO David Baazov. “Our council is looking into this and we will get back to all of you.”

Baazov has denied all charges.

Valbuena’s remarks surprised many of those at the meeting, including two other tribes (Morongo Band of Mission Indians and United Auburn Indian Community) and three card rooms (Bicycle Club, Commerce Club and Hawaiian Gardens) in a coalition with Amaya to legalize online poker in California.

Six of seven San Manuel council members also attended the meeting, which would seem to indicate they shared Valbuena’s concerns. The council represents the approximately 75 adult members of the tribe.

Tribal officials did not respond Thursday to requests to clarify or elaborate on Valbuena’s remarks.

Instead, Matthew Cullen, CEO of San Manuel Digital, said in a Thursday night email the tribal enterprise reviewed a March 29 order by the New Jersey Division of Gaming Enforcement temporarily extending Amaya’s license.

“We support the regulators’ intent to assure that all entities which engage in regulated gaming activities, including Amaya, maintain their suitability for licensure,” Cullen wrote.

Valbuena raised her concerns to tribal leaders March 28, the day Baazov announced he was taking a leave of absence from the company to contest insider trading allegations by the Autorité des marche’s financiers (AMF), the securities regulatory authority in Quebec.

Baazov’s departure came the day before the New Jersey order temporarily extending the company’s license.

Complications for California online poker

The allegations are intensifying demands by a coalition of six tribes led by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians seeking strong “bad actor” language in iPoker legislation that would preclude PokerStars from operating a website.

Before it was purchased by Amaya in 2014, PokerStars was accused of taking U.S. wagers in violation of a federal prohibition.

Additional allegations published earlier this week that Baazov and his family were implicated in the “Panama papers” investigation of Mossack Fonseca, a Panama law firm accused of helping high-profile clients avoid taxes and launder money, were later proven false. But they fanned the flames of criticism.

“Tying Amaya or its executives to the recent release of the so-called ‘Panama papers’ is inaccurate,” said Eric Hollreiser, Amaya vice president of corporate communications. “None of the information is directly related to David Baazov or Amaya.”

Tribal leaders, card club operators, racing industry officials and other stakeholders have been huddling to discuss iPoker bill language. Amaya’s legal woes have complicated the effort.

“We were making progress and the whole Amaya thing, with the CEO, kind of threw everybody back,” Robyn Black, of Eclipse Government Affairs, a lobbyist for the thoroughbred racing industry, said of the insider trading and Panama investment allegations.

“Before all these new allegations getting iPoker legalized was not a done deal, not by a long shot,” said tribal lobbyist David Quintana.

“Now they [Amaya/PokerStars] are even dirtier than we thought they were.”

Valbuena’s comments came as a surprise

Some of those at the Gray/tribal meeting said they were surprised when Valbuena spoke of her concerns about Amaya. Valbuena is one of California’s most highly respected tribal leaders.

“We didn’t ask her, ‘Chair, what do you think?’ She came out and said it,” Quintana recalled.

Gray and staffers with the Assembly Government Organization Committee, of which Gray is chairman, could not be reached for comment.

“I am not aware of the details of the meeting,” Hollreiser said of the tribal gathering called by Gray, “[but] it’s understandable that our business partners around the world have questions and we are addressing them.

“Amaya maintains the support and is in good standing with all of our regulators around the world, including New Jersey. We’re confident that when stakeholders are provided with the facts they are satisfied and remain committed to our company.”

The bad actor wedge

Sacramento insiders contend near complete consensus among about a dozen politically powerful Indian tribes is necessary to get approval of an iPoker bill requiring two-thirds vote of the state Legislature.

While they remain split on “bad actor” provisions, tribes have apparently agreed to extend a subsidy from iPoker revenues to the racing industry in lieu of allowing them licenses to operate poker websites.

Assemblyman Gray suggests a $60 million annual subsidy, but many do not believe online poker will generate the needed revenue.

California’s racing industry – a broad-based, largely agricultural industry comprised of tracks, labor unions and thoroughbred owners and breeders – has stood firm in demanding licensing eligibility rather than a subsidy.

But union lobbyist Barry Broad said jockeys, trainers and union track employees would welcome a $60 million subsidy.

The economics of online poker in California

Much of what gambling trade publications view as inertia or lack of cooperation among California tribes is recognition by indigenous governments that iPoker is not expected to be a lucrative enterprise that would prove beneficial to tribal citizens.

“There’s simply no money in it,” Quintana said.

Exceptions to the rule would be the tribal/card room/Amaya coalition and the Rincon Band of Luiseño Indians, whose casino resort is managed by Caesars Entertainment, owners of the World Series of Poker. The two entities are expected to dominate the California online poker market.

“The reality is that the bad actor provisions are very much about market share,” said an industry observer who requested anonymity.

There is also a growing belief that with social gaming, daily fantasy sports and other products, it is no longer necessary to pursue online poker in an effort to stay ahead of the Internet industry.

“If this were 2010, iPoker would be the thing,” Quintana said. “But it’s not. It’s 2016. If this were 2010 I would still be carrying around a 3-pound iPod.”

The racing industry is content to let the tribes take the lead in the political maneuvering, despite the fact about 40 percent of track wagers are made online.

“We’re in a position to lose” with expanded Internet gambling, Black said.

“We have expressed our support for the chairman and all the work that he’s doing,” Black said of Assemblyman Gray and his GO committee. “We’re kind of waiting to see when and how he wants to proceed.

“It’s more of a tribal issue. We’re waiting to see how they agree and what they do regarding bad actors. If they can’t deal with that issue, I don’t know how they move forward. The missing piece that people fail to talk about is there are consumers that need protection that are playing and want to play online poker. We shouldn’t penalize consumers and not provide them protection.”

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Dave Palermo
- Dave Palermo is an award-winning metropolitan newspaper reporter. He has written about American Indian governments for more than 20 years, working as an advocate for several tribes and tribal associations. He also has co-authored books on gambling and gambling law.