Senator John Bonacic´s bill to regulate online poker in New York passed the first stage of the legislative process unopposed on Tuesday.
There was a feeling of déjà vu on Tuesday, when the Senate Racing, Wagering and Gaming Committee unanimously voted in favor of John Bonacic´s Bill S3898. It was around the same time last year that Bonacic´s previous attempt to regulate online poker in New York also passed the committee by a unanimous majority, and without any discussion.
The lack of any discussion is curious. Although Bonacic´s proposals are an improvement on last year´s effort, one vital factor could possibly obstruct the Bill´s progress – an ongoing lawsuit filed by opponents to DFS legislation passed last year. The outcome of the case will have significant implications for the chances of regulated online poker in New York in the near future.
What Connection Does the DFS Lawsuit have with Online Poker?
In New York, any expansion of gambling requires a constitution amendment that must be approved by voters. The passage of DFS legislation last year circumnavigated this requirement by classifying DFS as a game of skill. Opponents to the legislation argue the state has no right to decide what constitutes gambling and what does not, and that the regulation of DFS violates the constitution.
The connection between the DFS lawsuit and online poker is that, in order to circumnavigate the constitution again, Bonacic´s Bill S3898 proposes that online poker is also classified as a game of skill. If opponents to the DFS legislation are successful in their legal action, the state will have to delay the regulation of online poker in New York until after it has been approved in a statewide ballot.
DFS Shortcomings will Influence Regulated Online Poker
Two recent events in the world of DFS will undoubtedly influence regulated online poker in New York. The fines imposed on DraftsKings and FanDuel ($6 million each) for false and misleading advertising were no more than a slap on the wrist for the industry leaders, who – among other misdemeanors – had promised substantial first deposit bonuses without explaining the investment needed to clear them.
The second shortcoming was the failure of Fantasy Aces – a New York licensed DFS site that collapsed owing more than $1.3 million to players. Although Bonacic´s proposals charge the NY State Gaming Commission with introducing mechanisms that protect player funds from
corporate insolvency, financial risk, or criminal or civil actions against the licensee, the existing lack of player protection will likely be of concern to members of the Assembly, where a companion bill was introduced last week.
Will the Assembly Act on Online Poker This Year
The failure to regulate online poker in New York last year was attributable to “issues” according to Gary Pretlow – the Chairman of the Assembly Committee on Racing, Wagering and Gaming. Although Pretlow did not elaborate on the “issues”, they were widely believed to concern the expansion of gambling, the lack of player protection, and the limited revenues that could be generated by a poker-only bill.
There are also concerns that a re-interpretation of the Wire Act at federal level could result in legislation passed in favor of online poker being repealed. The same concerns do not apply to DFS, as that particular format of online gambling has a carve-out under UIEGA. Uncertainty about how Attorney General-elect Jeff Sessions might act
after a careful study of the DoJ´s interpretation of the Wire Act might influence the willingness of the Assembly to push legislation through in 2017.
As Usual, Wait and See – But Don´t Hold Your Breath
Bonacic´s Bill now heads to the Senate Finance Committee, where it will likely get the green light before heading for a full hearing on the Senate floor. If the timeline mirrors that of last year, the full Senate hearing would take place in June. However, last year was an election year and the process could drag on longer this time around – especially if there is no resolution of the lawsuit against DFS regulation.