Why California is the Key to a Healthy Online Poker Marketplace in the United States and Internationally

Henry Jacobson, Bear Hug Poker
Contributing Journalist: Jocelyn Wood, Pokerfuse

As we survey the prospects for a healthy online poker resurgence in the U.S., there are three critical elements that make the whole thing float. They are:1)     California: I am a Californian and can tell you based on personal experience that there is more poker being played in California than any other state by far, including Nevada. A healthy online poker market domestically or internationally relative to the rest of the online poker industry becomes more challenging absent California’s participation.2)     PokerStars: An online poker market without Poker Stars isn’t a serious market based on the sheer size of Poker Stars. .

3)     The absence of “bad actors” clauses in any regulatory agreements. Bad actors clauses refer to any individual that the gaming authorities consider a “bad actor” and California certainly has its share. This is why there must be no references to “bad actors” in any of the regulations governing online poker in California. Such a clause is what is currently neutering New Jersey’s chances of becoming a meaningful participant in the emerging online poker market in the U.S. Because New Jersey’s legislators don’t understand the online poker marketplace, they effectively killed New Jersey’s chances for being a meaningful player by including a “bad actors” clause in their legislation and then identifying an individual within the PokerStars organization that they consider a “bad actor”.

The following is an article written by Jennifer Wood that recently appeared in Pokerfuse and represents the latest and greatest on what’s happening in California. The bottom-line is that if California breaks in the right direction, it will be done in a way that will make sense, and crafted by legislators who understand the online poker industry. This includes how to structure the industry in California in a way that optimizes California’s opportunity for fair levels of taxation through regulation with the knowledge that the bigger the marketplace internationally, the more they have to gain. With its 38 million poker savvy residents, representing 15% of all U.S. residents, California will understand that the size of the online player pool and corresponding liquidity pool internationally is the key to a healthy online poker marketplace and to optimizing their piece of the online poker pie.

PokerStars, Tribes and Bad Actors and California

Jocelyn Woods, Pokerfuse 

Recent rumors hint the PokerStars and the Morongo Band of Mission Indians are working together to ensure that California law contains no “bad actor” clauses.

Rumors abound that PokerStars and the Morongo Band of Mission Indians in California are working together to oppose any new law which includes a “bad actor” clause that might exclude PokerStars from a state regulated market.

The latest indication comes from a tweet put out by iGamingPlayer.

PokerStars and the Morongo tribe close to a deal in CA. No wonder there is no “bad actor” clause in the bill supported by Morongo.

— iGaming Player (@iGamingPlayer) March 14, 2014

iGamingPlayer is “the leading licensed affiliate marketing platform in the US,” according to the site’s twitter profile. It operates in all three regulated markets in the US. It later clarified that the information came from “a very good source close to the situation.”

The tweet was followed by a report from Gambling Compliance which reported that PokerStars, Morongo and two cardrooms were in partnership to block online poker legislation with “bad actor” provisions.

PokerStars has not yet been able to secure a New Jersey license, but its attempts to do so indicate that it has a strong interest in gaining a presence in the nascent US market.

California is in many ways the “grand prize.” Its population of 38 million, with an average household income of over $61,000 make it the largest potential single-state market in the US. A “bad actor” clause in a future law could exclude Rational Group from this market.

There are two bills currently on the table in California: AB 2291, from Assemblymember Reginald Jones-Sawyer, and SB 1366, sponsored by State Senator Lou Correa. Competing interests from politicians, existing business and tribes will all need to be reconciled before either bill could pass into law.

Back in 2009, the Chairman of the 1000-strong Morongo Band of Mission Indians Robert Martin set out the tribe’s position on internet gambling in testimony which roundly condemned previous attempts to legislate for online gambling in California.

Since then, the fears that land based casino businesses will be cannibalized by regulated online gaming have been partly dispelled, and the prospects for new opportunities for tribal nations have been increased. The Pala Band of Mission Indians in California is well advanced, having hired former bwin.party CEO Jim Ryan and picked up Phil Ivey as a brand ambassador.

Legislators have also developed a better feel for balancing competing interests—for dividing up the potential pie—and there is now a mood that the onset of California regulated online gaming has become inevitable.

A Rational Group spokesperson was not immediately available to comment on the rumors.

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