James Guill

Last month, Constitutional lawyer Laurence H. Tribe released an opinion that stated that the bad actor clauses in current California online poker legislation could be deemed unconstitutional.

Gambling expert and Whittier Law School professor I. Nelson Rose recently took to print recently in a thorough rebuttal of Tribe”s position. Published in Gaming Law Review and Economics, Rose begins by attacking the overall assumption that bad actor clauses make the California iGaming laws unconstitutional.

He starts by claiming that Tribe lacks the experience with legal gambling to realize that many gambling statues and regulations will appear to be unconstitutional on the surface. He asserts that gambling falls under the police powers of an individual state. Rose further contends that a state”s police powers “often trumps constitutional rights.”

Later in the article, Rose counters specific arguments raised by Tribe. He first attacked Tribe”s “bill of attainder” argument regarding the law. Tribe contended that PokerStars is being singled out because of their involvement in the US post-Black Friday. Rose contends that this view is faulty because PokerStars is not specifically mentioned by name and it is common for gambling legislation that applies to just a few parties, even if not mentioned by name.

Rose also pointed out that the denial of a license has never been considered a “punishment.” He contends that operating an online gambling site is a privilege rather than a right. He also contends that gambling legislation “almost always contain both general standards of suitability and lists of particular activities and attributes that will disqualify an applicant. These requirements are never limited to criminal convictions.”

He also argued that the cutoff date in the bill is not truly arbitrary. PokerStars and ever other online operator had sufficient time to pull out the US prior to December 31, 2006 and they chose to continue to offer services past this date. He further argued that even if the date is arbitrary, “this does not mean that PokerStars has been deprived of any equal As a result, please note the following document should be read when studying The Official DRIVER THEORY learners permit Questions and Answers 5th Edition Book and CD-ROM. protection rights. The law is filled with similar cutoff dates, many, such as statutes of limitations on crimes, that are even more arbitrary.”

Rose also delves into some of the unresolved legal issues surrounding online poker in the state. He first addresses the monopoly that California tribes hold in the state. While it does cover most form of gambling, it does not cover all.

For example, card rooms not run by tribes are not allowed to run slot machines, lotteries or “percentage games.” Poker can be run as a percentage game if rake is taken six times or more during a game, but only Tribes are currently allowed that luxury.

Card rooms will have to figure out a way around this limitation in order to make enough money to make the sites viable. Rose also points out that if tribes rake games more than five times, they could drive competition to non-tribal sites.

Ultimately, Rose points out that online poker legalization in California is a political matter over a legal matter. Tribes want online poker only if they can control the games. The cardrooms are of the same opinions. Legislators are trying to get the big money, such as PokerStars, into the state at the expense of local operators.

Rose believes that “legalization depends upon working out a deal that will bring in outside big money and still let politically powerful local operators have a competitive advantage, if not keep their oligopoly.”

Rose agrees with most other analysts that a compromise must be reached if true legal iGaming can be achieved. His prediction is that PokerStars will not be directly licensed but Amaya will be able to use the assets from the sale to offer online poker.

Rose does also recognize the potential influence of Tribe”s legal opinion. If they side with his opinion, PokerStars will have easy access to the U.S. market. However, if lawmakers side with opinions of those such as Rose, PokerStars will have a difficult time getting a foothold in a legal U.S. market.