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    Poker World Report Card: Week of May 12, 2013

    Posted by Mark Gahagan May 21, 2013

    New Jersey and California played the biggest role during this week’s news cycle, so it’s only fitting that they dominate this week’s Report Card. We look at the results of the first hearing in the Pokerstars vs. ACC case, New Jersey’s draft online regulations, and the online poker draft California tribes want to see become law… maybe.

    Pokerstars Loses First Battle in ACC Litigation Fight

    Up to this point we only had PokerStars‘ side of the story in the aftermath of the Atlantic Club deal collapse. Then the Atlantic Club fired back to try to get the Temporary Restraining Order removed, alleging that a termination date was not the same thing as a closing date, so ACC owners were well within their rights to terminate when they did. If anything, it was the Rational Group‘s fault for agreeing to the deal if they find it unfair now. But that’s not all lawyers from the Atlantic Club said, not by a long shot. In what can reasonably be described as trying to swing opinion back in their court, the ACC also included allegations that PokerStars was/is engaged in serious criminal activities, that Isai Scheinberg was involved in the proceedings, and that the money that was given as an advance was nothing more than a consideration fee; something that PokerStars just has to deal with as the “risk they took for the opportunity of being at the forefront of online gaming in New Jersey.”

    There was more stated in their response, but these three particular claims stood out. The “PokerStars has serious criminal activities we didn’t know” almost parrots lines given by the AGA, which were also concerns that were waved off when the AGA had first filed their opposition brief. It seems like this was stated more to swing a judge to think that they are the victims, not the suspects. This is backed up by the second claim, which implies that Stars is thumbing its nose at the DOJ by having Scheinberg involved in this sale. While I don’t know the extent to which “management” is being used with regards to the DOJ settlement, either Stars is both extremely cocky and stupid at the same time, or this claim doesn’t hold up as well as the ACC thinks it does. Think about it, would Stars really try to enter a U.S. market with Isai anywhere nearby and not expect the DOJ to eventually get wind of this?

    The stakes were high on this one. While the first hearing was merely about whether the TRO should be lifted, it sets a precedent for how the rest of the case might go. In the end, well, we kind of all know how it turned out. While this isn’t the end for Stars, they were dealt a crippling blow, and the Atlantic Club is free to entertain offers from other casinos now. (I wouldn’t be all that surprised if the ACC suddenly found a middle man from someone at the AGA to try and help facilitate a Stars-less deal in the near future.)

    Final Grades

    • Pokerstars – D: Let me be clear here. You cannot deny that the week couldn’t have gone much worse for them. They effectively lost their bid for the Atlantic Club, and I’m not entirely sure they have a chance at getting it back. Still, it’s not like public perception of Stars is any lower now than it was a week ago. But their legal team is probably getting an earful from… well… one of the Scheinbergs.
    • Atlantic Club – C: Then here’s an example from the opposite end of the spectrum. They got everything they wanted, but they can’t get a completely good score either. The trouble here is that at the end of the day they are still a financially unstable casino that is gambling their employees’ livelihoods on the fact that U.S. casino interests would rather overpay for the Atlantic Club than see Stars buy it for a bargain. Is it a gamble that will pay off? We’ll see.
    • The AGA – I (still): OK.. yeah, it’s still justified. The AGA’s only goal here was to see Stars get shafted, and the judge was happy to oblige. BUT, the Atlantic Club is in fact still looking for a buyer, and there is no telling whether Stars will double down or not. Still an incomplete, with really a binary A or F depending on who owns the Atlantic Club in a year.

    New Jersey Online Regulation Draft Hits the Internet

    Staying in New Jersey for a moment, the new New Jersey online gambling regulations have hit the internet and poker legal buffs looking to see what we can learn from them (including PokerXanadu, whose cliffs I will shamelessly plug for ourselves). You need to be in New Jersey or be in an affiliated market to play, those with a license have to have their servers on casino grounds, etc. What stands out is that this will be the first set of U.S.-based regulations on the full spectrum of casino gambling. Nevada’s regulations purely involved online poker, whereas New Jersey has to monitor everything as well. While it is suggested in the regulations that they will merely expect the same standard in an online setting as at a land casino, it doesn’t change the fact that this will be a unique challenge for New Jersey.

    On top of this are the efforts going toward “responsible gaming” in the state. On top of the annual tax and permit fees, casinos with online gambling licenses have to contribute $250,000 as a Responsible Internet Gaming Fee. This isn’t necessarily out of the ordinary, but it serves as a check against suspected problem gambling that (like it or not) may occur now that you can gamble from the comfort of your home. On top of this are the self-exclusion rules, which again, not that much of a surprise. That said, once deposits cross a certain threshold ($2,500), a player has to acknowledge this with the casino before proceeding, and  there is an option to give yourself a state-wide self-exclusion by contacting the New Jersey DGE. All in all, this looks like a solid set of regulations from all fronts, able to give a decent look at what New Jersey is thinking regarding online gambling while simultaneously protecting players in more ways that just regulating the game (which, I believe, is acceptable as long as such systems are opt-in, not mandatory)

    Final Grades

    • New Jersey – A: Should come as no surprise, but these regulations thus far look pretty good. New Jersey has set out a concrete list of guidelines for all casinos to follow and protection in place for the player, which is why:
    • Players of Future New Jersey Sites – A: You should be pleased with the way things are shaping up.

    OK, I think this is the first time I’ve been really positive about a story. Well… fortunately, there is the final big story of the week:

    California Tribes Publish Wishlist Draft Legislation for Online Poker

    So there are already two bills out in the California state legislature, SB 51 and SB 678. These bills (of greatly varying length) attempt to legalize online poker in California while battling a myriad of different interests, from “wealthy” gaming tribes, to “poorer” non-gaming tribes, to card clubs, to racetracks, etc. The bill that is circulating throughout the poker media is actually not a bill at all, but a piece of draft legislation conjured up by Indian tribal interests in the state. Once again PokerXanadu has a more even-keeled analysis of the bill, but as a concerned citizen of the state I’ve decided to speak for myself and hope this helps form some opinion on the matter.

    This is a terrible bill as it stands right now, and nothing even remotely like it should ever pass.

    Now it’s pretty well understood that this bill is supposed to get people talking, and it’s highly unlikely that the bill in its present form will pass, but it has me thinking about other poker bills and the definition of “good enough.” When Reid/Kyl was floating around (with a snowball’s chance in hell of passing but that’s a different discussion), there were a lot of “this is our best chance” and “this bill is good enough” from the poker media. And while it might be a healthy discussion for a federal bill, a state-level bill like this would likely cripple any California online poker scene in the long term. Sure, the state has 37+ million people, but as countries like Spain and France are finding out, having “walled gardens” for their gambling industry does not always work out for the best. And requiring that California opt-out and/or not opt-in to a federal bill is exactly what the AGA feared when they talked about a patchwork of state regulations. And that’s not even getting into suggested provisions of the bill that allow the California FTB (California’s state IRS) from taking income tax directly from poker bankrolls, or criminalizing the mere playing on an unlicensed site a-la Washington state.

    Add to all of this the bad actor’s clause, which is probably the most sweeping any state has seen yet (but ultimately probably the most fair). Prior to enactment of the bill, if the site ever took a bet from a single Californian they would be permanently blackballed. There was a Twitter discussion over the weekend about the UIGEA being a bad line to draw for “when online poker became illegal” because all that bill contained was enforcement measures for existing law. If it was illegal before the UIGEA, it was illegal after it. California tribes get around that dicey prospect by blacklisting everyone, which, if you are going to do it, that’s the way to do it. Still, I highly doubt this provision would survive, as wealthier tribes would want to partner with existing providers to get their sites off the ground faster.

    Taking a step back, it seems unlikely that even the tribes want to see this bill passed without changes, and merely highlights the tribes’ desire to maintain their sovereignty in any state-level legislation on the matter. This, realistically, I don’t think should be questioned, as both the federal government and California voters already gave them that ability years ago, and I’d be okay with expanding it to the online realm as well. That said, most of the rest of the bill is not something I personally would like to see, and I would need a lot of convincing before I would consider it “good enough.”

    Final Grades

    • The People Who Wrote This (if they were serious) – F: No, no, a million times no. Just the provisions not allowing California to form interstate compacts and avoid joining a federal system are enough to get me away from this bill.
    • The People Who Wrote This (if they were trying to foster discussion) – A: While I wouldn’t know what the end-goal is, I do feel like this bill is tailor-made to be talked about and compromised over. There are too many interests in California to try and make all of them happy so if you can get most of them happy (citizens included) that would work.
    • Every Tribe that Signed This – B: What? At least they tried instead of just saying no the whole time. Minus points for publishing an extremist bill, but at least they did it.

    QuadJacks – May 21, 2013

    About Mark Gahagan

    Mark is a co-host and producer of the Cardrunners news podcast Rabbit Hunt as well as a poker columnist. You can find his podcasts over at Cardrunners, and you can follow him on twitter @Mark_Gahagan.

    View all post by Mark Gahagan

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