Consensus Eludes California Online Poker Efforts With Timeout Period Still At Issue

Five-Year Shelf On So-Called ‘Bad Actor’ Issue Crucial To California Online Poker Bill

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Amaya/PokerStars and its business partners are digging in their heels against demands iPoker legislation in California be amended to prevent PokerStars from operating a website for at least five years, a penalty similar to that imposed by Nevada regulators, sources said.

The proposed amendment to AB 2863, sponsored by Assemblyman Adam Gray, represents a concession by a coalition of seven politically powerful American Indian casino tribes critical of industry involvement by the international online giant.

Five years, in writing

The coalition, led by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians, recently demanded that companies accused of taking US wagers in violation of the Unlawful Internet Gambling Enforcement Act of 2006 wait 10 years and pay a $60 million fine.

The group is now willing to cut the shelf time in half, sources said, a penalty similar to that imposed on Amaya/PokerStars by Nevada regulators. The fine apparently has not been determined and the coalition is withholding a commitment until it sees an amendment in writing.

“Five years is good,” said one source closed to bill negotiations who requested anonymity.

“It’s hard for me to give a fair appraisal on consensus when I haven’t seen any language, and it’s getting pretty late,” said another source who also requested anonymity. AB 2863 is awaiting a California Assembly floor vote and action in the Senate before an Aug. 31 legislative adjournment.

“No one has seen any language in print. People have submitted what would be OK for them.”

Consensus remains the critical issue

Political insiders believe a consensus of about a dozen American Indian tribes – including the Pechanga/Agua coalition – is necessary to get a bill through the state legislature.

Amaya/PokerStars and its business partners – the Morongo and San Manuel Mission Indians and three Los Angeles-area card rooms – last week said it remained united in opposition to amending AB 2863. The bill currently includes “bad actor” language calling for a five-year penalty that could be waived with payment of $20 million.

“San Manuel does not support any amendments to the bill that was passed by the Assembly Appropriations Committee” earlier this summer, a San Manuel spokesperson said.

Amaya/PokerStars did not respond to a request for comment.

Agua Caliente Chairman Jeff Grubbe called the AB 2863 provision allowing PokerStars to escape a five-year delay with a $20 million payment a “get out of jail free card.”

The Pechanga/Agua coalition – critical of being portrayed as “obstructionists” by some members of the trade press and others supporting iPoker legislation in California – is now using the term in describing the Amaya/PokerStars group.

“The obstructionists are PokerStars,” said one tribal source. “We could have had this deal years ago if PokerStars wasn’t demanding to be put in this bill.”

“The notion that a couple of us have been obstructionists has not been the truth for a long time,” said another tribal source. “Our focus has been to get legislation done that makes sense.

“I think it’s self-evident who the obstructionists are.”

Another source argued that Amaya/PokerStars, as a vendor, “was the tail wagging the dog.”

“Tribes and card rooms are the primary licensees,” the source said.

End of month legislative deadline

Bill proponents are racing a deadline, but hope remains of getting legislation out of both the Assembly and Senate by the Aug. 31 adjournment date.

Some optimism was squashed last week when Senate Pro Tem Kevin de Leon told the Los Angeles Times he was “not in a rush” to approve online poker and fantasy sports sites.

But Sacramento sources said if AB 2863 gets out of the Assembly next week, it stands a chance of getting through the Senate.

“The assessment is if the bill gets out of the Assembly, it’s pretty much cooked,” a source said. “There would be a lot of momentum for moving it out of the Senate as well.”

That likely will not happen with continued opposition from the Amaya/tribes/card room coalition, which likely has the political clout to block legislation.

“It would be a steep climb,” a Sacramento insider said. “I don’t see it happening this year. I don’t see it happening in the Assembly.”

The Pechanga/Agua coalition, meanwhile, remains steadfast in keeping PokerStars on the shelf, at least for five years.

The company was accused by the federal government of violating UIGEA and paid a $731 million settlement in 2012. A Kentucky federal court judge last year leveled an $870 million fine against the company for similar UIGEA violations.

And CEO David Baazov stepped down last year amid insider trading allegations. Baazov’s permanent resignation was announced on this morning’s Amaya earnings call.

“Bad actors … there has to be consequences,” a tribal source said.

- 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.
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