The New York Senate amended the state’s online poker bill S3898 with “bad actor” language on Monday. The change to the bill was initiated by State Senator John Bonacic (pictured right), according to the senator’s spokesperson.
Under terms of the proposed law, gaming regulators would have to taken into the account with an applicant had directly or through “another person whom it owned” had knowingly accepted wagers on interactive gaming from persons inside the United States after December 31, 2006.
Senate Bill 3898’s Bad Actor Clause
Senator Bonacic thus amended Senate Bill 3898 to target online gambling companies which acted in bad faith after the Unlawful Internet Gambling Enforcement Act (UIGEA) went into effect at the end of 2006. In particular, the bill targets PokerStars and its current owner, Amaya Gaming. Since the new clause seems to have no provision for bad actors to pay a fine and be approve, the bill would, in all likelihood, bar PokerStars from entering the New York State online poker market — or put up high barriers to entry into the market.
Bonacic’s spokesperson said, “Senator Bonacic amended the online poker bill to provide the Gaming Commission with the opportunity to take into consideration an applicant’s prior bad acts in relation to determining suitability for a license. He is committed to moving the bill forward and looking forward to working with his colleagues in the Senate and Assembly to do so.”
Bad Actor Legislation in Other US States
Bad actor clauses have been discussed in the pending California and Pennesylvania online poker legislation, just as they were adopted by Nevada’s online poker bill. New Jersey’s Division of Gaming Enforcement approved PokerStars for its online poker market. There, PokerStars/Amaya partners with Morris Bailey’s Resorts Casino on an online gambling portal.
Such provisions are a double-edged sword for a state looking to generate revenues from online poker. On the one hand, barring PokerStars provides the tribal and nontribal casinos in the state (that do not have a deal with PokerStars) an even playing field, so New York State’s gaming interests are more likely to back an online poker bill.
On the other hand, blocking PokerStars from accepting New York players limits the amount of revenues the iPoker market will generate. PokerStars generates about 70% of the world’s online poker revenues, so it is a dominant factor in the international online and mobile poker industry. Because of player liquidity, PokerStars customers love the guaranteed prize pools, card playing software, and many play options.
Why Player Liquidity Is Important in Online Poker
In online poker, having a large poker playing community is the key to success. A typical online card room needs to fill up tables of 9 live players to make a table fun. More than that, that same poker room needs to offer a variety of gaming options: freezeouts, rebuy events, add-ons, turbo events, sit’n-go events, and large gauranteed Saturday and Sunday tournaments.
Not only that, but successful Internet poker rooms cannot offer No-Limit Texas Hold’em events only. Instead, it needs to offer Pot-Limit Texas Hold’em, Omaha Holdem, Omaha Hi/Lo events, Seven-Card Stud, Razz, HORSE, and other variants of the game. Those which want to attract the full range poker players need to offer all these various options for low rollers, mid-stakes players, and high rollers. Even more, they need to offer tournament events and ring games (cash games), because some players prefer more flexibility in the hours they play, like they would with their own offline cash games.
In short, the best online poker sites need thousands of players online 24 hours-a-day or the product suffers. If a site has a reputation for low player liquidity, then players stop logging into their accounts. If a poker site has high player liquidity, then a critical mass is reached and gamblers join, because they expect large gauranteed prize pools.
What Banning PokerStars for NY Online Poker Would Mean
Thus, banning PokerStars from New York’s online poker sector would diminish the effect iPoker would have on the state to a significant degree. That would lower the tax revenues the state would receive from online gambling, which undercuts one of the key reasons for legalizing online poker. At the same time, Sen. Bonacic might have counted the votes and decided he could not pass the bill in the New York General Assembly without a “bad actor” clause.
Bad Actor Legislation in California
The bad actor provisions in California’s online poker proposals have killed legislation for the past several years. In California, PokerStars signed a partnership deal with the Morongo Tribe and several Los Angeles brick-and-mortar poker clubs, such as the Bicycle Club.
Such a deal would have given PokerStars’s business partners a huge advantage over their competitors in California, so those competitors lobbied the state’s lawmakers to include prohibitive “bad actor” legislation. The Pechanga Tribe and Agua Caliente Tribe led a large tribal coalition that killed any bill which was put forward, while the Morongo Tribe made certain California iPoker bills with bad actor provisions would be squelched.
At one point, PokerStars’ allies had a bill which would have banned the world’s largest poker site from California online poker for 5 years, unless it paid a $20 million special fee. PokerStars’ opponents want a 10-year stipulation and a $60 millioin fee, which effectively killed the deal.
The Odds That New York Online Poker Bill Passes
The New York poker legislation might not be as complicated. At present, PokerStars wisely has not signed any deals with New York land-based operators, so a legislative logjam might not occur, as it did in California. The news might be bad for PokerStars, but the bill might pass in the General Assembly. The New York online poker bill passed in the state senate, but due to the bad actor clauses, a second vote likely would need to occur.
The summer legislative session in the New York State Legislature ends in a few weeks, so John Bonacic and the pro-online poker lobby have only a few weeks to pass the legislation. The amendment could increase the amount of lobbying effort that will take place against the bill, especially from Amaya Gaming.
