John Mehaffey

Assemblyman Mike Gatto introduced AB 9.  The bill would permit online poker to be spread by card clubs and tribal gaming operators in California.  While it is great to get the ball rolling on the important topic of regulating online poker in a key state like California, there is one section that will become a burden on players and will affect the ability to market the product.

The bill requires new California online poker players to appear in person at a licensed brick-and-mortar gaming establishment or satellite office to create an account.  Satellite office is not clearly defined, but it appears to be a licensed card club or tribal casino that processes payments and does not have its own interactive brand.

This language debuted in AB 9.  It has not been included in previous California online poker bills.

The intent for this clause may be to appease opponents that are concerned about minors creating accounts and identity theft.  There may also be a hope to converging online and live gaming experiences.  Regardless, this inconvenience will make it difficult to attract depositing players.

One of the draws of online poker is that a player does not have to leave the comfort of his own home.  This potential customer may get home from a day of work and want to relax by playing some cards.  The player may not want to deal with traffic or drive across town to create an account.  He may not have transportation available at all.  Some people are unable to leave their home for various reasons, such as having children at home or falling ill.  The entertainment may not be worth the hassle of going to a large casino and dealing with the parking and cashier lines for the sole purpose of putting $20 on a poker site.

All of the potential players in these and many other scenarios will not be able to participate in California’s online poker market, at least at their convenience.

There is also a problem with the ability to play at multiple sites.  A player may not be happy with the traffic or promotions of the site operated by the card club closest to his house.  If the next closest establishment is an hour drive away, he is unlikely to go to the trouble of creating an account at a competitor’s site.  This gives players a reason to continue giving action to offshore sites.

If California lawmakers are unwilling to support a process that works without error in existing regulated states, the solution may be to require a webcam session with a site representative.  The player could produce an ID on camera and get verified that way.

Affiliate Situation

The affiliate barrier to entry is extremely high.  There is certainly a reason to investigate potential marketers to prevent those unsuitable to work as vendors from slipping through the back door.  On the other hand, making affiliate licensing an expensive and invasive process will keep many from participating in the state.

Online poker sites need affiliates.  Operators have enough to do without trying to create news sites and related portals.  This also creates a conflict.  Putting poker sites in the position of having to create content may hurt the exchange of important information in the industry.  Players are already wary of affiliate news sites as it is, just imagine if the people making the news were also the ones producing it.

Another disincentive for the proposed affiliate process is having players create accounts in person.  That will make it nearly impossible to properly track referrals.  Most affiliate programs work by either sharing revenue or paying a one-time fee per player referred.  This will not be possible in a scenario where players are not clicking links to create an account.

Bad Actor Clause

The bad actor clause looks to be the biggest sticking point to regulating online poker in California.  It is time for everyone to find a middle ground.

Proponents of the bad actor clause point to PokerStars having an unfair advantage due to its operating in California through April 2011 when local gaming interests were unable to do so.  PokerStars supporters feel that the issue has been resolved through the settlement with the federal government and sale to Amaya Gaming.

It is time to admit that both sides are right.

Would it devastate PokerStars and its partners to sit in the penalty box for six months while its future competitors have a head start if it kept them from getting completely shut out of the market?  If so, what is a fair amount of time to give companies that were forced to sit on the sidelines to offset what is perceived as an unfair advantage held by PokerStars?  At what point is it better to compromise so that an industry potentially worth over $300 million a year can be tapped?

These are the questions we need to be asking.

Players are waiting and offshore sites are siphoning thousands of dollars a day out of California without paying a dime in taxes or creating any jobs.  These unlicensed sites cannot be legislated out of business.  The only way to put an end to it is to produce a better product and bring it to market as soon as possible.  It is time to work together to make that happen.


John Mehaffey
John Mehaffey - John is a writer for multiple online poker publications and is the author of the popular Online Poker Payment Processing Report. Read more from John by following @John_Mehaffey on Twitter.