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A New Year. A New NY Online Poker Bill

Posted on by John Lathram

New YorkFor the sixth year in succession, an attempt is being made to regulate online poker in New York even though the concerns from previous years still exist.

Yesterday Senator Joseph Addabbo pre-filed a bill to regulate online poker in New York. The bill – S.0018 – will be formally introduced into the Senate tomorrow, when it will be referred to the Racing, Gaming, and Wagering Committee, which Addabbo chairs.

If this all seems familiar, it is because if you replace the name “Senator Joseph Addabbo” with “Senator John Bonacic”, the same thing has happened for the past six years. Bonacic – now retired – was online poker´s biggest fan in New York; and – as the Chairman of the Senate Racing, Gaming, and Wagering Committee – oversaw multiple efforts to pass an online poker bill, but with no success.

So, will it be any different this time? Probably not. Addabbo´s primary goal for 2019 is to pass a sports betting bill, and he will find more support for sports betting in the Assembly, which has not even bothered to debate the merits of regulation for the past three years. Furthermore, the concerns that have prevented a bill from passing previously still exist.

Oversaturation will be Conveniently Ignored …

One of the concerns that has prevented the progression of an online poker bill in New York is that the market is already oversaturated with gambling opportunities. As well as the state´s underperforming commercial casinos, New York´s gambling community have plenty of tribal casinos, video lottery casinos, and racetrack casinos to choose from, plus (currently) regulated Daily Fantasy Sports.

Concerns have previously been expressed that the regulation of online poker will cannibalize revenues from the commercial casinos. This argument seemed to be justified when the opening of the commercial casinos was last year proven to cannibalize existing gambling opportunities by Moody´s Investor Services, but it might be conveniently ignored for the purposes of passing a sports betting bill.

New York´s constitution already allows the state´s commercial and tribal casinos to offer sports betting, but the legislature still has to pass a bill in order to allow mobile sports betting and to formally request the New York Gaming Commission to work out the regulations. All four of the state´s commercial casinos have already announced partnerships with big brand sportsbooks, so it´s only a matter of time.

… but the Constitution Probably Won´t Be

New York´s constitution states that any forms of gambling not explicitly allowed are prohibited, and that – for new forms of gambling to be allowed – there has to be a statewide referendum showing support for an expansion of gambling. Sports betting is allowed because the electorate voted for it in the 2013 ballot; but, in order to regulate online poker, another referendum would be required.

New York´s legislators know there is not enough statewide support to put the question of online poker on the ballot paper, so have tried to circumnavigate the constitution by reclassifying gambling as a contest in which the outcome “depends predominantly upon an element of chance” rather than the previous “depends in a material degree upon an element of chance”.

The change of wording might be subtle, but it´s not likely to be enough to prevent any online poker legislation surviving a legal challenge. Last October, the State Supreme Court found the legislature had no right to circumnavigate the constitution when it reclassified Daily Fantasy Sports as a game of skill, and the same outcome is likely if a legal challenge is made against online poker legislation.

Then There´s the Bad Actor Clause

PokerStarsOne recent addition to the New York online poker bill is a bad actor clause that prohibits PokerStars from ever holding an operating license. Originally there was a similar clause included in the proposals to regulate online poker in 2014, but this was withdrawn the following year following an allegedly illegal donation made by former Amaya CEO David Baazov to Governor Andrew Cuomo´s reelection campaign.

The original reason for the bad actor clause was to prevent an operation the size of PokerStars dominating the regulated market; which, it was felt at the time, would result in the cannibalization of the brick-and-mortar casino industry. As the issue of cannibalization is likely to be ignored during the passage of online sports betting legislation, it would be hypocritical to use it as an excuse to ban PokerStars from ever operating in New York; and you can be sure PokerStars´ lobbyists will be campaigning against the bill – further reducing the chances of it ever getting passed by the legislature.

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