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Online Poker Bill Introduced in New York State Assembly

Five weeks ago, New York State Senator John Bonacic introduced Bill S6913 in the state’s Senate in order to get the ball rolling on the legalization and regulation of intrastate online poker. On Monday, Assemblyman J. Gary Pretlow submitted what amounts to effectively the exact same online poker bill, A09509, in his house.

New York State Assemblyman J. Gary Pretlow

J. Gary Pretlow

In the bill’s justification, Pretlow states that New Yorkers are currently participating in “illegal, unregulated and unsafe gaming operations which offer games of chance over the Internet” and that this bill would remedy that.

It specifically addresses the difference between poker and other forms of gambling, explaining that while games of chance, defined as games in which “the outcome depends in a material degree upon an element of chance” are illegal in New York, there is precedent in the courts for a contest which “pits the skill levels of the players against each other” to be declared games of skill and therefore not in opposition to the law. Specifically, the bill cites the Lawrence DiCristina case as a federal case in which poker was determined to be predominantly a game of skill.

Hold’em and Omaha poker, the bill states, are “complex forms of poker which involve player strategy and decision-making” and therefore do not fall under the legal definition of gambling. It is unknown why forms of poker such as Stud were not included, but the bill’s language does allow for further evaluation, leaving open the possibility of other poker variants being added to the list of permitted games.

The bill adds logical and strong language:

The legislature further finds that as the internet has become an integral part of society, and internet poker a major form of entertainment for many consumers, any interactive gaming enforcement and regulatory structure must begin from the bedrock premise that participation in a lawful and licensed gaming industry is a privilege and not a right, and that regulatory oversight is intended to safeguard the integrity of the games and participants and to ensure accountability and the public trust…

Should the bill pass, as many as ten online poker operators could be granted licenses with an upfront fee of $10 million each. Each license would be good for ten years and licensees will be assessed a fifteen percent tax per year on their gross internet gaming revenues.

Most anyone is eligible to apply for a license (though the vetting process will be strict, so most anyone will not actually meet the requirements to be granted a license), with one noteworthy exception. Any vendor that “knowingly and willingly” accepted wagers from people in the United States after December 31st, 2006 (i.e.: ignored the UIGEA), are blacklisted. They are the “bad actors.” Therefore, New Yorkers should not expect to have the pleasure of playing on PokerStars or Full Tilt Poker. Operators such as partypoker and 888 don’t count as they withdrew from the U.S. market in a timely fashion and only recently came back to setup shop in states where online gaming is legal.

And while the bill does not actually set forth detailed regulations for New York’s potential online poker industry, it does state that licensees will be required to implement various safeguards. None of them should come as any surprise; safeguards to combat underage (under 21) and compulsive gambling must be in place, as must systems to prevent cheating, including bots. All player funds must be kept in segregated accounts to ensure that if an operator goes under or runs into gigantic legal problems (I’m looking at you, Full Tilt), customers will have no problem getting their money back.

Of particular note in Assemblyman Pretlow’s online poker bill is that the Empire State will be permitted to enter into interstate gaming compacts. If the bill actually becomes law, operators would initially be restricted to offering games only to people within state borders, but the state could make deals with other states to allow each other’s residents to play on sites from any state covered by the agreement.

For New York, interstate online poker would not be of the utmost importance, as the state’s population could easily support multiple poker rooms. With an estimated 19.7 million residents, New York is the third most populous state in the country behind California (38.3 million) and Texas (26.4 million). It certainly wouldn’t hurt, though, to team up with other states, as poker games only get better with larger player bases. Of the states currently with legalized online poker, it is Nevada and Delaware who would be sending flowers to New York should New York get poker up and running. Nevada’s population is just 2.8 million and Delaware, which has registered as barely a blip on the internet gambling radar, sits at less than a million. Those two states have already signed a compact with each other (it has yet to take effect), but would likely do whatever they can to team up with New York. New Jersey, at about 8.9 million residents, is managing fine on its own to this point and though its law also allows for interstate agreements, those in charge have not shown much interest in forming partnerships yet. New York’s attendance at the party might change things, though.

Bill A09509 has been referred to the Committee on Racing and Wagering, of which Pretlow is the Chair, and can be read here.

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