Steve Ruddock California online poker progress erased 2017

Despite progress on several key issues, an online poker bill has once again failed to make it out of the California legislature. A solution to the prickly issue of suitability continues to flummox lawmakers and stakeholders.

Finding a compromise over suitability will be a top concern when online poker is invariably revisited next year, but it’s unlikely to be the only problem that needs addressing.

Not only could new problems emerge, but the solutions contained in California’s 2016 online poker bill, AB 2863, may not carry over to the next session.

Is there a solution to suitability?

Suitability, specifically the suitability of PokerStars, continues to be a polarizing issue.

As this year’s efforts went down in flames, we learned that there isn’t a middle ground between the Pechanga and PokerStars factions when it comes to suitability, as neither side’s version of a compromise comes anywhere close to satisfying the other side.

The Pechanga coalition is demanding a sit-out period, while PokerStars and its allies have staunchly opposed any sit-out period, preferring those decisions be left to regulators.

Still, there are three possible scenarios that could tip the suitability balance one way or the other. None of these options are likely, but they’re not exactly pipe dreams either:

  1. Major defections from the PokerStars or Pechanga coalitions;
  2. PokerStars throwing in the towel;
  3. A change of heart by the Pechanga coalition.

Here’s a closer look at each of these scenarios.

Defections

With the bill a rumored dozen votes shy of passage in the assembly, nothing short of a major defection within the coalitions seems likely to meet the two-thirds vote threshold required. Without defections, there doesn’t seem to be a way to whip the necessary votes, or gain support with minor tweaks and concessions.

Defections aren’t unheard of — before joining the PokerStars coalition in 2014, San Manuel was originally aligned with Pechanga — but the two coalitions were resolute throughout 2015 and 2016.

Throwing in the towel

California is a time and money sink for PokerStars, and with no end in sight the company could just throw its hands up and move on.

It wasn’t broken down by the state, but in the company’s most recent earnings report, Amaya noted it had spent $1,173,000 on US lobbying efforts in 2015’s second quarter (Q2). In Q2 2016, the company spent $3,473,000.

Pechanga softens

When the New Jersey Division of Gaming Enforcement green-lit PokerStars last September, Stars was expected to quickly rise to the top of the online poker market in the state and grab a majority market share soon after launch.

PokerStars did start with a bang, but the massive market share never materialized and New Jersey is essentially a three-horse race, with PokerStars holding a narrow lead.

PokerStars performance in New Jersey could cause Pechanga and its allies to reassess the situation and reach the conclusion that their fears of a PokerStars-dominated market may be unfounded. They may have just as much to fear from the likes of 888, partypoker, and the other online poker operators.

For Pechanga to even consider softening demands on PokerStars two things need to occur:

  1. The members of the tribal coalition need to find a committed and capable online poker partner.
  2. The tribal coalition strongly believes regulators will impose their own penalty box period on PokerStars, much like what occurred in New Jersey.

Could the horse racing solution dissolve?

When Assemblyman Adam Gray solved the longstanding issue of what role horse racing would play in the state’s prospective online poker industry, it was seen as a breakthrough. But not everyone was enthusiastic about the compromise, and it took a lot of backroom wheeling and dealing to pinpoint the precise numbers.

Some stakeholders continue to question the subsidy.

Essentially, the horse racing solution was a broken lamp cobbled together and held in place with glue — so long as you don’t touch it, everything appears fine. But, if one coalition or another decides the horse racing industry’s piece of the pie is too large, and wants to revisit the percentages and numbers, it would be like taking a baseball bat to that lamp.

The only reason suitability came to the forefront in 2016 was because the horse racing issue was dealt with, but if that changes, it will once again become the number one issue.

Has lasting damage been done?

Gray did yeoman-like work to get California’s online poker bill as far as he did in 2016, but his final, last-ditch effort to push it across the finish line didn’t sit well with the PokerStars coalition. They saw Gray’s adoption of the Pechanga coalition’s point of view as an abandonment. These hurt feelings could carry over into 2017.

First, it will be harder for PokerStars and its allies to place their trust in Gray. His flip-flop on what is thought of as a key policy point makes him seem less concerned with any specific policy position and more interested in just passing a bill.

But perhaps more importantly, with his reversal, Gray threw PokerStars and its allies under the proverbial bus. The Stars coalition’s opposition to the final version of AB 2863 painted them as the obstructionists preventing online poker legalization, even though they supported the bill up until that point, and would have continued supporting the bill were it not for the eleventh hour amendments.

Here’s an analogy I’ve used before: Gray took PokerStars to the prom, where they danced and laughed together, but at the end of the night he left with someone else. If this is how the PokerStars coalition feels, it’s hard to simply forgive and forget that betrayal.

Steve Ruddock
Steve Ruddock - Steve is one of the most recognizable names in the online poker media space. He brings his deep knowledge and equally deep well of opinions to his coverage at CaliforniaOnlinePoker.com.