Online poker allows regulatory clout, safeguards

After years of deliberations, the California legislature seems closer to licensing and regulating online poker. Now, only a few, yet significant, outstanding issues stand in the way as California poker players wait patiently on the sidelines for state lawmakers to pass much-needed legislation.

Though millions of California poker players lost access to online poker years ago, thousands of residents have chosen to continue to play on unlicensed, unregulated websites that lack the protections that a regulated market would provide.  Unfortunately, because online gambling isn’t authorized in California, the state has no ability to enforce consumer protections or collect any of the millions of dollars in revenue wagered on online poker websites by California residents.

Importantly, the “bad actor” provisions arbitrarily reference the 2006 Unlawful Internet Gaming Enforcement Act (UIEGA) as a benchmark for suitability. This benchmark is not grounded in the actual law.

As state legislators inch closer to authorizing online poker, perhaps the single largest impediment to passing legislation this year are so-called “bad actor” provisions currently in the two proposed bills, SB 1366 (Correa) and AB 2291 (Jones-Sawyer). Essentially, the provisions seek to politicize the regulatory process by determining if an operator is suitable for a license before they even apply.

Not every online operator deserves a state license, which is why there must be a process in place for appropriately vetting potential licensees. Regulations governing Internet poker must require all licensees and their partners to prove to regulators that they live up to the highest levels of accountability and ethnics. But precluding one operator from even applying for the license in the first place, as the so-called “bad actor” provisions seem to suggest, is a political overreach which will only limit competition and choice.

In fact, at a recent gaming conference sponsored by Capitol Weekly, many participants openly admitted that the “bad actor” provisions were intended to lock out one sole operator, PokerStars, despite its popularity among players.

Players from across the state have spoken very clearly that they want PokerStars as part of the market. A recent Poker Players Alliance survey of our members found that more than 95 percent wanted the opportunity to play on a PokerStars site or platform.

Importantly, the “bad actor” provisions arbitrarily reference the 2006 Unlawful Internet Gaming Enforcement Act (UIEGA) as a benchmark for suitability. This benchmark is not grounded in the actual law. As both the US Department of Justice and the United States Court of Appeals for the Third Circuit have opined, UIGEA did not make any form of gaming illegal. Therefore, the guidelines for what constitutes a “bad actor” are baseless.

Beyond the impact on consumer choice, if legislators arbitrarily exclude the most preferred online poker brand, the market will be smaller and so will revenues and jobs available to the state.

According to a recent economic analysis released by a coalition of California tribes, a legal intrastate online poker market would bring $845 million in state revenue to California and an additional 2,657 jobs within five years.

Regulators are in the strongest position to conduct a thorough vetting of potential licensees and their business partners, audit companies to ensure their technology protects the integrity of the game and set technological standards to protect against underage gambling while monitoring those with excessive gaming habits. Regulators are also the most qualified to set high standards to thwart fraud and abuse of customers, and enact regulations to prevent money laundering and ensure tax compliance, among other standards.

California regulators are not different. Through the California Gambling Control Commission as well as the State Department of Justice, our state’s regulators have a strong history of effectively regulating gaming, and that important role must be upheld.

Americans have played poker throughout history, a game that has been enjoyed by presidents, Generals, Supreme Court Justices, Members of Congress and average Americans for more than 150 years.

It’s time for California to embrace the 21^st Century and authorize and regulate Internet poker so that we can continue this American pastime in a way that protects consumers and ensures the state receives maximum benefits.
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Ed’s Note:  Steven J. Miller is California state director of the Poker Players Alliance, which represents more than 1.2 million poker players and enthusiasts.