Three Possible Suitability Paths for AB 2863

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AssemblyChambersLately there has been a lot of talk regarding “suitability language” in AB 2863. For those that have only been following iPoker regulation lightly, this is essentially the bad actor clause revisited.

Assemblyman Adam Gray has promised that a fully viable bill will be ready sometime next month and will include suitability language. While most think that the matter is clear cut, there are multiple angles that lawmakers and stakeholders can take regarding bad actors.

At this point, it is hard to see a bill going through without some type of restrictions or banning of bad actors. Below are three possible paths that the suitability clause could take.

Short Term Ban from Market

One option that’s yet to be seriously discussed is a short-term ban of PokerStars (or other bad actors) once iPoker officially launches. For example, lawmakers could establish suitability language that states that any company that took bets post 2006 will be banned form operating in California for a preset period of time.

Five years would be a default term that would give other stakeholders ample time to establish themselves in California. An alternative would be a ban of around three years. This would give other stakeholders a chance to get a footing but wouldn’t delay PokerStars so long that it cannot help the market.

This means that Pechanga and other operators would be by themselves in initially establishing iGaming without having to worry about PokerStars immediately swooping in and taking the lion’s share of the market.

Impose Restrictions / Additional Penalties to Bad Actors in Lieu of Ban

Another option that would allow PokerStars or other bad actors to still participate right away would be some form of restriction as a punishment for post-UIGEA operations. For example, PokerStars would be prohibited from engaging in any direct marketing to players on file pre-Black Friday. Furthermore, they should also be required to forfeit said database to the state to ensure that the playing field is level.

Next, the state could impose extra penalties or fines on bad actors. This penalty does not necessarily have to be monetary. It could be as simple as a short-term delay in launch. If iPoker were to launch on January 1, 2018, PokerStars would be delayed by up to a year. Yes, this is similar to the ban but would allow PokerStars to acquire a license and prepare for launch during the time of their ban.

PokerStars will certainly balk at restrictions placed on the company initially but if it comes down to taking restrictions or becoming black listed, they will probably take the restrictions.

Complete Ban of Bad Actors

The option that the Pechanga Coalition wants is a complete ban of bad actors in California. Prior to 2016, we would have said that this wouldn’t happen due to the changing attitudes towards PokerStars and the licensing of the company in New Jersey.

Then David Baazov was charged with insider trading and the bad actor clause received new life. If Baazov comes out on the wrong end of this investigation, it could serve as a death knell for PokerStars because then tribes can simply point to everything that has happened since 2014 and say that happened under false pretenses.

This is the least ideal scenario for bad actors, but one that should not be totally discounted. However, even if PokerStars is blocked, that does not mean the death of California iPoker. Not by a long shot.

California is still the largest market in the United States and they will still be able to generate plenty of income from iPoker with the World’s Largest Poker Site. It might change the landscape of iPoker in terms of interstate compacts, etc, but the market will still be viable and will thrive.

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