New York Senate Approves Online Poker Bill with Bad Actor Provision

Updated: June 11th, 2017 by Haley Hintze

Will NewYork State become the fourth US state to formally authorize and regulate online poker? And if it does, will the populous state’s legislature include bad-actor language that’s designed to block international online-poker leader PokerStars from the US market?

Both questions are suddenly in play this week after the New York Senate approved, following rapid second and third readings, an online regulatory measure. Senate Bill 3898 (S3898) was brought to NY’s full Senate floor this week amid that body’s rush to consider all matters related to next year’s fiscal budget. S3898, sponsored by online poker supporter State Sen. John Bonacic, had already cleared two committee-level votes.

As with an earlier online-poker bill sponsored by Bonacic last year, S3898 is expected to pass a full NY Senate vote with ease. Yet that’s not the whole story. Instead, two other major topics have emerged concerning New York’s legalized online-poker future.

The first point has been well known for some time. The biggest legislative hurdle for any online poker in New York remains its state Assembly, where support for such a measure is weaker. That’s why NY Rep. Gary Pretlow continues to waffle on the topic, much as he did last year, with Bonacic’s previous bill. Pretlow prevented last year’s bill from even coming up for a vote, because – so he claimed – the votes weren’t there.

How that intra-Assembly battle plays out regarding S3898 remains to be seen… but it’s no sure thing.

Then there’s the attention-grabber, the new element in the mix, the “bad actor” language that was suddenly inserted into S3898 prior to its third reading. Here’s the relevant text, direct from the amendment:

(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.

“December thirty-first, two thousand six” is the date that the US’s federal-level UIGEA (Unlawful Internet Gambling Enforcement Act) went into effect. Most US-facing “offshore” sites left the US in late 2006, prior to the UIGEA coming into effect, but a handful of sites remained. Among them was PokerStars, which eventually became the world’s dominant online poker brand.

Stars would love to return to all US states, but to date the site has only succeeded in being approved in New Jersey. The battle over bad-actor provisions remains pivotal to Stars’ future US plans, yet in state after state, its competitors have tried to throw preemptive roadblocks in PokerStars’ path, based on Stars’ post-UIGEA services to most of the US.

That battle has been most fierce in populous states where tribal gaming operations have a significant operation, as California, where a hardline tribal alliance has, to date, stymied all online-gambling legislation; bad-actor provisions targeting PokerStars are at the heart of that stalemate.

New York State, too, has a powerful tribal-gaming lobby. Given that reality, it’s not a surprise to see such bad-actor language appear.

As for PokerStars and its new corporate parent, Amaya, New York may well be the showdown state. California appears stalemated for the foreseeable future, but New York or neighboring Pennsylvania may move forward with online-poker legalization soon. The “PokerStars” question has other implications as well, such as whether the site will be on the inside or outside of liquidity-sharing deals between two or more US states, at some future date.

An Amaya representative did not return a request for comment before this story’s publication.

Comments are closed.