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California “Bad Actor” Clauses May Violate Constitution

Posted on by John Lathram

California "Bad Actor" Clauses May Violate ConstitutionA renowned scholar with expertise in constitutional law believes that the bad actor clauses in California’s online poker bills violate PokerStars’ rights.

Laurence H. Tribe, who has taught at Harvard University Law School since 1968 and also helped write the constitutions of several jurisdictions, has found fault with SB 1366 and AB 2291 introduced by Senator Lou Correa and Assemblyman Reggie Jones-Sawyer, respectively.

Both of those bills are pending before the state legislature and both include provisions designed to keep out gaming companies such as PokerStars that continued operating in the U.S. market post-UIGEA. Tribe’s analysis revealed that the proposals lay guilt on PokerStars without the benefit of a fair and impartial judicial trial.

Citing the Bill of Attainder contained within the U.S. Constitution, Tribe found that the proposed legislation “inflicts punishment” upon PokerStars even though the company has not been deemed guilty of any infractions in a court of law. As is widely known, PokerStars admitted no wrongdoing in settling the Black Friday allegations put forth by U.S. prosecutors.

Another issue under attack by Tribe is language in the bills that would prevent PokerStars from using its intellectual property (software). Tribe points to the Takings Clause in support of this argument.

Tribe also concluded that the cut-off date of December 31, 2006 for leaving the U.S. market is arbitrary and discriminates against PokerStars. The constitutional law expert cited the Equal Protection Clause in the U.S. Constitution with regard to the post-UIGEA date.

While SB 1366 and AB 2291 have been formally introduced to lawmakers, another online poker bill has appeared at the behest of a coalition representing 13 of the state’s tribes. The tribal proposal also contains bad actor language designed to snuff out PokerStars from participating in the Golden State’s online poker regime.

PokerStars has partnered with three card rooms and the Morongo Band of Mission Indians in an effort to provide Internet poker in the country’s largest state. While progress has been made with regard to previous infighting among the state’s many tribes, this partnership continues to jeopardize the eventual approval of ipoker legislation.

However, PokerStars was sold to the Amaya Gaming Group last week in a deal that that was brokered to pave the way for the industry giant to enter the regulated U.S. marketplace. While the new PokerStars’ ownership will likely be looked upon favorably by state gaming regulators of other states such as New Jersey, the language of California’s pending online poker proposals still stands in the way.

The 72-year-old Tribe is highly-respected in the area of constitutional law and his opinions may go a long way in shaping California’s Internet poker legislation. His belief that the bills currently on the table would not survive a constitutional challenge must certainly be discussed and analyzed further before lawmakers reach the voting stage with regard to the pending legislation.

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