New York Online Poker Bill

Bad Actor Language Emerges in Amended New York Online Poker Bill

New York’s battle to legalize and regulate intrastate online poker encountered has encountered an additional legal hurdle in the form of “bad actor” language designed to target the world’s largest poker site, PokerStars.

The amended language was inserted into the carrier bill for online legalization, NY State Sen. John Bonacic’s Senate Bill 3898 (S3898), just prior to a third and final reading yesterday of the bill before New York’s State Senate. A full Senate vote on the measure is expected in the near future.

As with other state-level bills that have attempted to preemptively bar PokerStars from returning to the US market for that state, the language in the amended S3898 employs a cutoff date based on the 2006 passage of the US’s federal-level UIGEA (Unlawful Internet Gambling Enforcement Act).

Here’s the segment of the amendment to S3898 that deals directly with the bad-actor ban, found in the section of the amended bill language regarding operator suitability. The section indicates that regulators may determine suitability “at [their] discretion, but the specific implication of a defined cutoff date can’t be understated.

Among the conditions on whether the applicant for an operator’s license might be deemed unsuitable:

(f) Whether the applicant:

(i) has at any time, either directly, or through another person whom it owned, in whole or in significant part, or controlled:

(A) knowingly and willfully accepted or made available wagers on interactive gaming (including poker) from persons located in the United States after December thirty-first, two thousand six, unless such wager were affirmatively authorized by law of the United States or of each state in which persons making such wagers were located; or

(B) knowingly facilitated or otherwise provided services with respect to interactive gaming (including poker) involving persons located in the United States for a person described in clause (A) of this subparagraph and acted with knowledge of the fact that such wagers or interactive gaming involved persons located in the United States; or

(ii) has purchased or acquired, directly or indirectly, in whole or in significant part, a person described in subparagraph (i) of this paragraph or will use that person or a covered asset in connection with interactive gaming licensed pursuant to this article.

The clear targets of the language, PokerStars and its corporate parent, Canada’s Amaya, Inc., will face another state-level battle should this language remain within S 3898. However, the bill’s overall passage is far from assured, as it faces a probable battle in New York’s Assembly, where primary bill sponsor Gary Pretlow has run hot and cold on both his support and the overall chances of the measure.

One additional complication is that PokerStars is already a licensed, active brand in New Jersey, were it was approved after a lengthy, two-year suspension of application. PokerStars’ approval in New Jersey, however, complicates the possibility of liquidity-sharing agreements between New Jersey and other US-approved, state-level online poker markets.

This state-by-state battle involving PokerStars and bad-actor language is believed to be a contributing factor in why New Jersey has been unable to reach a liquidity-sharing deal with Nevada, another of the US states that allows state-regulated online poker. However, Nevada currently has similar Stars-blocking bad actor language on the books. Should New York approve similar bad-actor language, one long-range possibility is that New Jersey itself could end up as something of an online-poker island within a nascent US market.

PokerStars was one of several large online sites to continue serving most US players in the years following the UIGEA’s passage, while other sites – particularly those that were based in the UK or traded on the London Stock Exchange – were forced to exit the market. Those sites included then-global market leader PartyPoker.

An Amaya representative was unable to return a request for comment before this story’s publication.

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