James Guill

With the recent acquisition of PokerStars and Full Tilt Poker by the Amaya Gaming Group, speculation abounds as to the impact of the sale on the U.S. online gambling market. The 2014 Global iGaming Summit and Expo (GiGse) is less than a month away and this will naturally be a major focus during the conference. Prior to the event, GiGse.com polled some of the speakers for the upcoming conference for their opinions on the sale.

Global Poker Index CEO Alexandre Dreyfus plain stated what we already know about the future of online and live poker. PokerStars will be a live player, but it will help the industry grow. According to Dreyfus, “This deal will reshape poker, not only online, but live in the US. Bringing back Pokerstars and FTP on US soil, will bring talent and innovations and will help poker to grow and reach another level.”

“The US poker market is steady, but we can see a real competition and a proper battle, it’s going to be for the benefit of players/customers. It will help to bring new players and help the poker category to expand, in US and globally. Competitors that are afraid of PokerStars, should be – yes. But they should see that it will help to expand the size of the market. It could reduce their market share, but should allow them to have a good piece of a bigger market.”

Richard Schuetz, Commissioner of the California Gaming Control Commission, is looking forward to the impact of the new company on the US online poker market. With California on the cusps of legalizing online poker, they are perhaps the most interested party in what will unfold with an Amaya run PokerStars.

According to Schuetz, “Dave Rebuck and his team at the New Jersey Division of Gaming Enforcement (DGE) will be one of the first to evaluate this contemplated new entity. This is one of the finest regulatory agencies in the world, with sophisticated investigatory assets and a strong commitment to maintaining a positive image for the industry. One would have to think that their view would be a powerful voice in how this new entity fits within the US regulatory model.”

Spectrum Gaming Group Managing Director Michael Pollack agrees with Schuetz that New Jersey will play a major role in vetting Amaya. However, he also cautions that an expedited PokerStars reentry is not a guaranteed proposition. He cautions, “Notably, Amaya has stated that the principal goal of this transaction is to “expedite the entry of PokerStars and Full Tilt Poker into regulated markets in which Amaya already holds a footprint, particularly the U.S.”

“This may very well help in their efforts to achieve that goal, but no one should assume that as a foregone conclusion. Regulators in various markets will examine the details of this transaction in depth, and will ask a lot of tough questions, including questions related to the value of any tangible and intangible assets, and how that value was developed. They will also examine issues related to the control and structure of the organization, and then reach their own conclusions. No one can state with certainty, based on these initial reports, what those conclusions may be. New Jersey will clearly be the most critical state, as it has a reputation for comprehensive investigations, high standards and leadership in iGaming.”

California is the largest shareholder in a developing U.S. and are facing their own unique set of challenges, the largest being the much debated bad actor clause in current legislation. While GiGse speakers were focusing on the PokerStars deal at a national level, a recent opinion issued by Harvard University Constitutional Law Professor Laurence H. Tribe raises questions whether the bad actor clauses in SB 1366 and AB 2291 could withstand a constitutional challenge.

PokerFuse reported on Tribe’s opinion, one that highlights several flaws with the language of the bad actor clause. As currently written, the clauses would ban companies that took wagers after an arbitrary date of December 31, 2011. He believes that the bad actor clause effectively acts as a bill of attainder, a practice outlawed by the Constitution.

A bill of attainder declares an individual or group of individuals guilty of a crime and punishes them without the benefit of a trial. This was a common practice in England from 1300 to 1800 but was specifically banned in the United States Constitution.

Article I, Section 9 of the United States Constitution clearly states, ” No Bill of Attainder or ex post facto Law shall be passed.” Section 10 references addresses the same issue at the state level, declaring, “No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”

Tribe contends that a bad actor clause would effectively declare PokerStars or any violator of the UIGEA as guilty without the benefit of a trial. It should be noted that while PokerStars and Full Tilt were both charged of violations of the UIGEA, neither company was officially convicted.

Tribe also contends that the bad actor clauses violate the Fifth Amendment’s “Takings Clause.” The clause essentially protects individuals and businesses from having private property taken without just compensation. He contends that PokerStars is having their intellectual property declared worthless and inaccessible because of the bad actor clauses, therefore violating the takings clause.

Finally, the December 31, 2011 date itself could be basis for a challenge based on the 14th amendment. He believes that the date effectively discriminates against PokerStars in such a way that one could argue that it violates the Equal Protection Clause under the 14th amendment.

Lawyers for the Morongo Tribe have been threatening a legal challenge to the bad actor clause should the current legislation move forward to legalize online poker. These recent arguments shed light on their potential plan of attack on the bill. Knowing that the bill may not stand a constitutional challenge, lawmakers may be forced to compromise on the clause or remove it entirely.