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Bad Actor Clause Added to NY Online Poker Bill

Posted on by John Lathram

New YorkA clause excluding operators who provided online gambling services to United States residents after UIGEA has been added to the NY Online Poker Bill.

Despite Senator John Bonacic´s proposals to regulate online poker in New York skipping through the Senate Finance committee last month, the passage of his bill through both the full Senate and Assembly before the 2017 legislative session ends on June 21st was always going to be a longshot. Now the odds have just got longer.

Language added to S.3898 prior to its third and final reading in the Senate includes suitability criteria that would exclude bad actors from the New York market. The language is particularly targeted at PokerStars´ parent company Amaya, as it refers to applicants who acquired covered assets used for the provision of online gambling after 31st December 2006.

The introduction of the bad actor clause will likely result in Amaya/PokerStars lobbying against the bill, especially as no specific exclusion period is mentioned (Nevada, for example has a ten-year exclusion period in its bad actor clause). No official statement has been released by the company, but it is not difficult to guess the nature of the language going on behind closed doors.

Why a Bad Actor Clause? Why Now?

This is not the first time a bad actor clause has been included in proposals to regulate online poker in New York. A bill introduced by Senator Bonacic in 2014 included language excluding operators that had provided online gambling services post-UIGEA. That language was dropped in the 2015 version of the bill after PokerStars was acquired by Amaya.

The reason for its return now is unclear. Concerns have been expressed in Albany that a potentially dominant online force with a substantial marketing budget could jeopardize the success of the state´s recently-opened brick-and-mortar casinos or delicately-balance racing industry. Possibly the amendment has been introduced to appease those concerns.

There is also speculation over at OnlinePokerReport that the amendment is a reaction to an allegedly illegal gubernatorial campaign contribution made by former Amaya CEO David Baazov to Governor Cuomo in 2014. The timing of the allegedly illegal contribution happens to coincide with the removal of the bad actor clause from Senator Bonacic´s 2015 proposals to regulate online poker in New York.

Just another Obstacle to Overcome

The bad actor clause, and Amaya/PokerStars´ likely objection to it, is just another obstacle in the way of regulated online poker in New York. As well as the concerns about cannibalization of the fledgling brick-and-mortar casinos and delicate racing industry (voiced by Governor Cuomo among others), tribal groups excluded from applying for operating licenses are lobbying against the proposals.

There is also opposition to a further expansion of gambling by anti-gambling campaigners led by the organization Stop Predatory Gambling (SPG). Last year SPG filed a lawsuit challenging the constitutionality of the state´s Daily Fantasy Sports legislation. The organization claims the legislature had no right to classify DFS as a game of skill in order to circumnavigate the state´s anti-gambling laws.

The SPG´s legal challenge to Daily Fantasy Sports legislation is relevant inasmuch as a similar re-classification of NL Texas Hold´em and Omaha as games of skill is being used to push through Senator Bonacic´s online poker bill. Legislators in Albany may well be reluctant to pass further legislation until the DFS case is resolved – especially as operators may be unwilling to shell out $10 for a license they may never be able to use. At least that doesn´t look like being PokerStars´ problem any time soon!

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