John Mehaffey

The 50-page California online poker tribal bill sent to sponsors contains some very interesting language buried at the bottom. A clause that would force PokerStars and its partners into a corner is buried on page 49 under Article 11, “Partial Severability”.

Under 19990.1101 (b):

The provisions of this act that are not separable are those:

(1) establishing internet poker as the only permissible internet gambling game,

(2) prohibiting persons or entities who have knowingly and intentionally engaged in internet gambling or related financial transactions in violation of federal or state law from being licensed under this act or selling their assets used in unlawful internet gambling for reuse by entities licensed under this act, or

(3) limiting the entities eligible for an operator license.

If any of the listed provisions or the application thereof to any person or circumstances is held invalid, the entire act shall be invalid.

If anybody challenges any of those three terms in court and is successful, the entire law would die. There are some interesting scenarios to think about here.

Poker Only

The first clause does not seem to be an issue. Nobody has come out against having only poker so this makes it appear unlikely that an opponent would try to force house-banked casino games through a legal battle. Just in case that were to happen down the road, the 13 California tribes made sure a win would really be a loss for the plaintiff. This protects the slot monopoly that California tribes enjoy.

Bad Actor Clause

The second clause is the most interesting. It is aimed at PokerStars and its alliance with the Morongo Band of Mission Indians, Hawaiian Gardens, Bicycle Casino and Commerce Casino.

This group has threatened legal action if a bad actor clause is added to a California online poker law. The bill’s current language would put this group in a difficult position should it pass. This partnership would either have to remove PokerStars as its software provider or challenge the law with the best outcome being that they could ruin online poker for all Californians if they win, assuming the partial severability clause held up in court.

Before that could ever happen, this group could be made to look like the bad guys as they fight to get the bad actor clause removed from the bill. If the bill dies due to a lack of agreement, it may be easy for poker proponents to point the finger at those fighting for the removal of the bad actor clause.

Horse Racing Industry Left Behind

The third term is also interesting. It appears that it is designed to keep the racetracks out of the California online poker industry. One could argue that since they do not have live poker, giving the tracks online poker would be an expansion of their gambling. The horse racing industry’s defense is that their action has suffered substantially since casino gaming was legalized on reservations 15 years ago. If the bill becomes law, the only recourse the horse racing industry would have is to try and ruin it for everyone else.

As always, the language in bills can change. In fact, the language described is simply what that has been suggested by 13 California tribes without any committee or legislative debate. It is basically an all-in bet by many California tribal gaming interests. Their opponents are on the clock.

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.