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GIGse Spat Erupts Between Caesars, PPA

The currently running GIGse (Global iGaming Summit and Expo) in San Francisco kicked off yesterday with an energetic battle of words between friends and foes of PokerStars, with that company’s attempts to re-enter the US poker market center stage in the debate.

gigse-logoOn one side, Jan Jones, Caesars Entertainment’s Vice President of Government/Communications, and on the other, John Pappas, Executive Director of the Poker Players Alliance.  They occupied two thirds of the panelists’ chairs in a GIGse discussion on “Licensing suitability – discussing legal and commercial rationale of excluding off-shore operators.”  The third panel seat was occupied by Seminole Hard Rock’s (FL) Michael Rumbolz, who previously served on the Nevada Gaming Commission.

At least three first-hand reports about the Caesars/PPA skirmish have already surfaced, at CalvinAyre.com, LegalPokerSites.com, and Gaming Intelligence (behind a paywall).  The CalvinAyre one contains a bonus, a video interviewing both Jones and Pappas in the wake of their skirmish.

And that skirmish?  It got underway after Pappas opined that the return of PokerStars to the US market would be good for the American consumers.  This is probably true, taken in a vacuum, but it opened the door for Jones to attack.

“PartyGaming pulled out. 888 pulled out. Not one US company would operate because it would imperil their licence,” said Jones, according to the Gaming Intelligence piece. “You can call it grey if you like. I call it black.”

The exchange marks one of those instances where both participants are clearly and blatantly skewing the arguments in favor of their own corporate masters, even if the results of the exchange entertained onlookers.

According to GI, Pappas retorted, “Congress has enacted no legislation that makes iGaming illegal,” which is a quip borrowed from the American Gaming Association’s overview. And as Caesars is a major component of the AGA, which is the group that is protesting against PPA’s primary funder, PokerStars, and is attempting to intervene (and possibly block) PokerStars’ attempts to purchase New Jersey casino and be licensed in that state, the retort was clearly designed to say, “Don’t throw stones when you live in a glass house.”

Caesars’ and Jan Jones’ attack was further complicated by the fact that Stars’ legal representatives here in the US recently released evidence that Caesars themselves approached Stars in an attempt to sell off one of its Vegas properties, the Rio, where the World Series of Poker is held.

The WSOP brand didn’t seem to be part of that brief discussion, and Caesars wanted $500 million for the property itself, with the implied intent, according to the Stars attorneys, that future licensing attempts in the US would go easier if Stars bought the property.

Caesars, as many of you know, remains shackled under a deep debt load caused by its highly leveraged buyout and restructuring at the height of last decade’s investment bubble, and it’s spent several years since finding ways to dodge bankruptcy. Success of the WSOP brand aside, the Rio isn’t that profitable a property but remains one of Caesars most sellable physical assets.

With all that considered, Jones’ attack on PokerStars on behalf of Caesars is clearly shallow and on shaky foundation. The comments about PokerStars’ purported illegality are just as questionable.

While it’s true that PokerStars operated in an unregulated area of the law, they were strictly a poker-only site, whereas the sites Jones mentioned offered casino games as well, to US players. Online casinos are more rigidly defined to be illegal in the eyes of the US, and of course, the late-2011 opinion by US Attorney General Eric Holder that the 1961 Wire Act applied only to sportsbetting effectively neutered the whole UIGEA argument.

The UIGEA, you see, never mentioned poker, but it did mention the Wire Act, being an extension of the rules enacted in that earlier law, to reach into the area of online banking transactions.

PokerStars continues to assert that it’s never violated US gaming laws, and technically, that is true. Stars’ celebrated 2012 settlement with the DOJ for more more than $700 million (including the purchase of Full Tilt assets), was instead tied directly to banking-system violations. Stars paid the settlement without an admission of guilt as well.

That means that collectively, the argunents of Jones, Caesars and the AGA remain just as shallow and protectionist as always.

Yet the PPA and its executive director, Pappas, weren’t 100% in the right either. Going back to the GI piece, their reporter wrote, “Pappas was speaking for the players, you understand, not for PokerStars…”

That remains silliness as well, and if the Gaming Intelligence blogger believes that, he’s not been paying attention. In recent years, the PPA has received as much as 99% of its funding from corporate sources, with most of that money in turn coming from PokerStars.

The PPA adamantly denies that it serves any interest but those of American players, but its actions speak a somewhat different story, including its insistence upon backing and defending the horrid provisions of a Reid-Kyl bill that didn’t serve the players’ interests well at all.

Then there’s this silly New Jersey poll. Right after indirectly skewering the AGA, Pappas referred to a PPA-conducted poll that purports to show that between 92 and 97% of New Jersey poker players like PokerStars and/or would want to see it licensed there.

Unmentioned in any of the PPA’s statements is that the PPA’s own official membership was drawn largely from a series of online freerolls… at PokerStars. The poll might not be completely invalid, but it is ridiculously biased, and Pappas citing it as a fact is every bit as ludicrous (if not as fiscally important) as Jones assertions of Stars’ illegality after Caesars tried to get half a billion from them to re-enter the Nevada market.

Then again, Pappas and the PPA are lobbyists, not reporters. If you expect them to play fair with the facts, you’re likely to be disappointed.

All in all, it was a fun opening day at GIGse. Early Day Two reports suggest no repeat of fireworks, but the pending advent of US online-poker situation suddenly makes these GIGse meets something more than just theoretical symposiums. Because of that, the gloves are starting to come off.

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