John Mehaffey

The dust is starting to settle on the PokerStars takeover by Amaya Gaming. The stock shot up 40 percent today on nearly 20 times its average daily volume. It is clear that investors are excited about the prospects of PokerStars becoming a publicly traded company through Amaya Gaming.

This sale does not resolve the issues bad actor clauses present PokerStars. The company and its partners have been adamant about fighting to remove the bad actor clause from proposals in California and fight that position in court, should it become law.

This position is likely to carry over into other states that add this language to bills. Pennsylvania and New York proposals already include this language.

It seems likely that there is an alternative plan behind the scenes.

PokerStars is often described as the best online poker platform in the world. Full Tilt Poker, a sister site of PokerStars, is another site that receives high marks from players for its software. Unfortunately for Amaya, both of these platforms would be banned under current bad actor proposals. That may not keep the company away from the market.

The bad actor clauses in states that have proposed one cover more than just site owners and operators. The intellectual property used after December 31, 2006, is also covered. This includes software, player lists and trademarks.

The legal fees involved in fighting a bad actor clause in court might be better spent developing a new product.

The software developers for both of these clients are some of the best in the industry. They know the ins and outs of these products that receive rave reviews from players. They also know what players want and do not want. This is great experience when it comes to building a new platform. Clearly that is not cheap or fast. But if anyone can do it, PokerStars and its parent company can.

California online poker is at least a year away, even if it were to pass this year. The company does not have to worry about a bad actor clause in New Jersey. If the Division of Gaming Enforcement is satisfied that this sale removes the liabilities that prevented PokerStars from entering the market at launch, the current platform could be used there in the ring fenced market. In the meantime, a new platform could be under development to use in new U.S. markets that are insistent that a bad actor clause. New Jersey could be moved to the new platform as interstate poker becomes available.

There would be one noticeable difference between PokerStars and the new platform. The site and software would need a different brand. This should not be hard to build, especially if strong live operators are partners. Word will quickly spread that the new brand is in fact a reincarnation of PokerStars and the company’s opponents would not be able to do anything about it.

PokerStars has spent a fortune market in an attempt to reenter the U.S. market, only to have it go nowhere to this point. The idea of investing in the development of a new platform to put an end to the bad actor debate is not a stretch.

The sale is expected to close on or about September 30, 2014. The deal requires Amaya Gaming shareholder approval.

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.