Online Poker's High Stakes Game in California

Casino moguls and their powerful interests are feigning moral outrage to crush competitors.

SACRAMENTO — My favorite way to explain the regulatory process, at least when it comes to regulating vices, harkens back to Prohibition. The two groups that lobbied most heavily to keep alcoholic-beverage sales illegal were the "Baptists and the bootleggers" — the former for moral reasons and the latter for financial ones.

A similarly odd alliance has emerged as the California Legislature moves forward on a bid to legalize online poker. Various groups, from online poker companies to Indian casinos to a billionaire owner of a Las Vegas casino company, have been taking positions that they say are based on protecting the public.

We're dealing with pros who have mastered their poker faces, so they will no doubt feign shock at the suggestion that this debate really is about using the government to carve out market share.

Currently, online poker faces a prohibition in California. New legislation would legalize the game, but with myriad restrictions. The always cash-starved state wants to profit — and sees a potential $800 million in additional revenues by 2020, based on a recent study circulated by a pro-poker group.

Advocates for online poker argue that people are making wagers on poker sites now, but they are doing so on unregulated offshore sites. Allowing poker in California, they argue, would expand government oversight and consumer protections. But different groups — mainly Indian casinos, card-rooms and their online partners — argue over how the law should be structured.

Some of the "Baptists" are funded by a Las Vegas casino mogul, Sheldon Adelson, who has enlisted the help of flamboyant former Assembly Speaker Willie BrownTheir website makes a moral argument: "Targeting the young, the poor and the elderly where they live, Internet gambling takes gambling too far."

No doubt, Prohibition-era rum-runners were appalled by the evils of drunkenness, too.

On Tuesday, a group of 12 tribal leaders announced a deal with one member offering this statement: "We are proud to announce that we have reached a consensus that builds upon the pillars of previous legislation. It provides strong consumer protections against fraud, ensures that no one under the age of 21 can play and bars those who have violated federal online gaming laws from offering Internet poker." The letter says the groups support a bill that "safeguards consumers and the vulnerable from dishonest and unsuitable operators."

That "consensus," however, doesn't include one major tribe, the Morongo Band of Mission Indians, or a handful of Los Angeles-area card clubs, or their partner, PokerStars, an Isle-of-Man-based company that says it is the largest online poker site in the world. The bottom line: The bill's language would cut PokerStars out of the market.

At issue is what is called "bad actor" language. As the proposed bill explains, "There shall be a rebuttable presumption that an applicant for a service provider license is unsuitable if the service provider or any corporate or marketing affiliate of the service provider, accepted any wager or engaged in transactions related to such wagers from persons in the United States in any form of Internet gaming after December 31, 2006 … ."

That date is far from arbitrary. It's when the federal Unlawful Internet Gambling Enforcement Act went into effect. The law didn't ban Internet gambling but restricted companies from accepting online gambling payments. PokerStars argues that the law only applied to already banned games of chance, not to games of skill such as poker.

But the U.S. Department of Justice then indicted three online poker companies including PokerStars and some of their executives for violating the new law. The two sides reached a $731 million settlement, in which PokerStars admitted no wrongdoing.

In a statement following the announced "consensus," the group that includes PokerStars called the bad-actor language "nothing other than a blatant attempt to provide certain interests with an unfair competitive advantage by arbitrarily locking out trusted iPoker brands.…"

We'll see how this all plays out — but you can always bet that the most financially well-heeled and powerful interests will get the most say in how to "protect" the public.

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  • Francisco d'Anconia||

  • Almanian!||

    ANARKY!! KAOS!! THE TERRORISTS HAVE WUN!!!!

  • gaoxiaen||

    K.A.O.S.? Don't worry C.O.N.T.R.O.L. is on the case.
    http://www.youtube.com/watch?v=HWtPPWi6OMQ

  • Jerryskids||

    As I pointed out elsewhere, a warrant is about as useful as a rapist with a condom. Yeah, technically you've got protection but it ain't gonna stop you from getting fucked.

    Warrants are supposed to be issued on probable cause and particulary describe the places to be searched and things to be seized, but 'Everybody for everything because terrorism' contain none of those elements. And when you consider that judges often rubber-stamp warrant applications anyway, a warrant ain't much.

    And, of course, the feds are putting the word out to the local gendarmes not to be telling anybody about their data collection programs - for national security purposes. It would be downright treasonous of the cops to seek a warrant and thereby reveal top secret information to our enemies. (See the US marshalls seizing the Sarasota PD records.)

  • SusanM||

    OT: Top 10 corrupt states in the US.

    http://wnep.com/2014/06/12/pen.....pt-states/

  • ||

    How are New York and New Jersey not on that list?!?

  • PD Scott||

    They paid the right people to keep them off?

  • Francisco d'Anconia||

    Damn you. I was just about to post this.

    WNEP? That brings back unpleasant memories of NEPA.

    SO here is the criteria for the index:

    Our corruption index is based on the number of public officials who were convicted for violations of federal corruption laws (more than 25,000 convictions are included in our panel). The Public Integrity Section of the U.S. Department of Justice has published the conviction numbers on a consistent basis. In contrast to other subjective, perception-oriented indexes of corruption, our corruption variable is concrete, objective, and consistent.

    If a state is convicting more people of corruption, isn't the state LESS corrupt?

  • Jerryskids||

    Didn't Cuomo or the Blasio just point to the increased amount of heroin cops are seizing as evidence of more heroin coming into New York? You might think if cops are seizing more heroin that that's evidence there is *less* heroin coming into New York. If you argue as shithead did, that more heroin seized proves more heroin coming in, aren't you arguing the cops are seizing some fixed percentage of what's coming in and it therefore doesn't make a rat's ass bit of difference how much they seize?

    I'm assuming the index is using the same logic - you're only catching some fixed percentage of the crooks so the more crooks you catch the more there are that you didn't catch.

  • SusanM||

    Sorry :) I was so impressed that PA's even mediocre in being corrupt that I couldn't wait to share.

  • Jerryskids||

    Online ganbling in California? What's the over/under on what the vig's gonna be?

  • np||

    A scary reminder about the case against the 3 gambling companies is that they were all headquartered outside the US. Of course that didn't matter, nor did Antigua and Barbados's protestations to the WTO. The sites were still seized and people (including non-US) were still arrested. And despite the settlement, the criminal indictments for the individuals still remain and they still face lengthy jail time. One of them did manage to get out of it by settling for $300 fucking million from his own wallet, in addition to his company's settlement.

    Nearly all gambling sites now forbid US players.

  • Jerryskids||

    I just saw that the feds are auctioning off the Bitcoins they seized off the Silk Road servers, and I'm still not sure how they did that. Is it really a theory that US law and jurisdiction covers the entire planet? You can't weasel out of being convicted of breaking US laws on the flimsy excuse that you're not a US citizen, your activities took place outside the US, and the FBI can't just waltz into foreign countries to investigate and arrest people?

  • Dances-with-Trolls||

    Various groups, from online poker companies to Indian casinos to a billionaire owner of a Las Vegas casino company, have been taking positions that they say are based on protecting the public.

    I have seen this protectionist, crony driving show so many times in the PA alcohol wars that I can only assume that if CA politicians are anything like their PA brethren then whatever CA comes up with as a solution will be the worst of all possible answers for the citizens they are trying to "serve"

  • KenP||

    Poker Stars is no more. ...or is it.

    It is just announced that it has been acquired by the AMAYA group. AMAYA does not carry the P* baggage.

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