Is It Fair To Label PokerStars An Obstructionist For Acting In Best Interest?

Tables Turned In California: PokerStars Coalition Tagged With Obstructionist Label

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The groups supporting and opposing Assemblyman Adam Gray’s online poker bill, AB 2863, have undergone a role reversal after new amendments were added to the legislation.

The changes, which would prohibit PokerStars from applying for a license in California for no less than five years, were made at the behest of a tribal coalition consisting of seven tribes, spearheaded by the Pechanga Band of Luiseño Indians.

Suffice it to say, the amendments didn’t sit well with the PokerStars coalition, which called the new suitability language a poison pill amendment that dooms the bill’s chances.

PokerStars takes turn as opponent

Previous suitability language called for so-called “bad actors” to sit out for five years or pay a one-time fee of $20 million. The amended version doesn’t provide a path to negate the five year sit-out period and contains language that would prohibit certain assets indefinitely.

So, now, after accusing the Pechanga coalition of being obstructionists, it’s the PokerStars coalition that finds itself opposing the bill, hoping that the proposed vote on Monday never happens, or goes down in flames.

At present, it’s unclear where the other groups in the Coalition of the Willing — horseracing, labor unions, several tribes, and over a dozen card rooms — that were supporting the previous version of AB 2863 come down on the new language, as they have little vested interest in the severity of the suitability language.

Turnabout is fair play?

Not too long ago there was talk that the PokerStars coalition, backed by the other aforementioned groups in the Coalition of the Willing, were planning on forcing a vote on AB 2863 over the protestations of the Pechanga coalition.

As PokerStars and its partners tried to muster legislative support for the bill in order to override the Pechanga coalition’s protestations, they did their best to paint Pechanga et al. as being obstructionists.

“It is a shame that obstructionist forces continue to block the passage of a pro-consumer online poker bill in California,” Eric Hollreiser, the head of corporate communications for Amaya, said in a statement in late June, when a rumored Assembly vote on AB 2863 was cancelled.

The Poker Players Alliance also got involved, lobbing obstructionist claims against the Pechanga led tribal coalition — which in turn led to the group being called nothing more than lobbyists for Amaya.

Earlier in the month, Mark Macarro, the Chairman of the Pechanga Tribe, released a statement refuting the obstructionist claims, and explaining the rationale behind his tribe’s and the larger coalition’s stance:

“We have made concessions. Racing has made concessions. It’s time for the other group to make meaningful concessions if they truly want iPoker legalized in California. 

If we wanted to stop iPoker we would not be dedicating the time, energy, and resources to shaping good public policy that will protect our rights now and for the decades to come. 

Our position is rooted in shaping policy that protects tribal rights, not give a boost to the stock prices of publicly traded companies desperate to get iPoker at any cost.”

But now that it’s the Pechanga coalition supporting AB 2863, it’s PokerStars and its allies (including the PPA) that are being branded with the obstructionist label.

But is this a fair characterization?

PokerStars coalition makes it case

Following the release of a letter opposing the new version of AB 2863, Hollreiser issued the following statement, explaining the coalition’s reasons for opposing the bill:

“Momentum toward online poker legislation in California has taken a huge step backward with the last-minute introduction of poison pill language that serves the interests of those who have obstructed similar consumer protection legislation for years.

The new bill ignores the progress that had been made through public hearings and good faith negotiations and adds language agreed to in backroom deals with those opposed to advancing online poker legislation.

Unfortunately, the bill is now doomed to fail and this means millions of Californians will continue to be at risk while playing on offshore, illegal online sites.  By injecting suitability standards that are best determined by regulatory experts at the California Division of Gambling Control this amended legislation picks winners and losers in the state.

Moreover, the bill is not likely pass Constitutional muster as it applies penalties for alleged crimes without any application of due process.”

The PPA issued a similarly worded statement, opposing the change to the bill’s suitability language.

Matthew Cullen, the Chief Executive Officer of San Manuel Digital, said the coalition’s pivot to opposing AB 2863 was due to the newly added anti-competitive amendment that “directly targets one company.”

Cullen said this is not only unconstitutional, but would still leave California consumers vulnerable and would lead to the loss of millions in revenue for the state, as one of the global leaders in the industry would be left on the sidelines.

Attorney Keith Sharp, who represents the three card rooms aligned with PokerStars (Bicycle, Commerce, and Gardens) agreed with Cullen, calling the bill’s prohibition of PokerStars, “punishment by legislation.”

Sharp went on to describe how the amended suitability language turns the legislation into a bill of attainder, which makes it unconstitutional under Article 1 Sections 9 and 10 of the US constitution, as well as the California state constitution.

According to Sharp, in order to be considered a bill of attainder the proposed law has to do three things:

  1. Ascertain it’s directed at a specific person or group;
  2. inflict punishment on that person or group; and
  3. do so without due process.

Sharp also said the bill’s covered asset clause, which doesn’t expire in five years, “takes” assets (such as the company’s intellectual property) from PokerStars.

Who is the obstructionist?

Players pining for legal online poker are having a hard time overlooking the self-interest PokerStars and its allies have in opposing the bill.

If players felt Pechanga and its coalition were obstructionists than the same label would likely apply to PokerStars and its partners now that they’re the ones opposing the bill — they’re blocking what the online poker playing community wants.

On the other hand, both groups should be protecting their interests, just as any other business would oppose legislation that would tip the scales in favor of their competitors or cut into their existing business — even though sometimes the fear is real and sometimes it’s imagined.

Here are two quick examples of this:

  1. Liquor stores often fight to deny supermarkets beer and wine licenses.
  2. Lottery retailers have strongly opposed online lottery sales.

It’s frustrating, but it’s the way of the world, and it’s somewhat naive to criticize PokerStars or its allied tribes for opposing the new version of AB 2863.

In addition to protecting its own business interests, there is also a major point of differentiation when it comes to what the two groups oppose and support.

Pechanga and its allies aren’t fighting to be able to offer online poker (they’d be able to do that regardless of which version of AB 2863 passes). They’re fighting to keep PokerStars out of the market.

Whether you agree or disagree with the Pechanga coalition’s position about the past sins of PokerStars and protecting consumers, from a business perspective, its attempts to deny PokerStars access solidifies its position in the market.

On the other hand, PokerStars is fighting for the chance to apply for a license; to compete. PokerStars is not trying to deny another group a license, or better position itself in the market.

If the current version of AB 2863 passes, PokerStars is out, and by extension its partners (who’ve invested a lot of time and money) are put at a major disadvantage, and would be left scrambling to secure a new partner.

Bottom line

Poker players have every right to be frustrated.

But, as I wrote in a previous column, the term obstructionist, while it might be technically correct, doesn’t properly explain the complex policy positions these groups are fighting for, the business interests they’re trying to protect, or why both sides are of the opinion that no bill is exponentially better than a bill that they believe to be highly flawed.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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