John Pappas´ response to an Op-Ed attacking regulated online poker in California is as incorrect, poorly constructed and incredulous as the original article.
Last week, the Sacramento Bee published an Op-Ed attacking proposals to regulate online poker in California. The article had several key messages that we described on Monday as inaccurate, poorly constructed and incredulous.
Yesterday, the Sacramento Bee published a response to the Op-Ed penned by John Pappas – the Chief Executive of the Poker Players Alliance (PPA). Unfortunately Pappas´ response was equally incorrect, poorly constructed and as incredulous as the original article.
Pappas Starts on the Right Note – Briefly
In his response – “Legislature needs to protect online poker players” – Pappas correctly begins by stating that the SacBee´s original Op-Ed
demonstrated a lack of understanding. He picks the SacBee up for failing to acknowledge that online poker in California already exists in unregulated form but, thereafter, his enthusiasm for Adam Gray´s Internet Poker Consumer Protection Act (AB 2863) gets the better of him and the credibility of his article deteriorates.
Pappas´ claims that players support AB 2863 – a claim that is nonsensical. One brief glimpse through the thread dedicated to this bill on the 2+2 forum demonstrates the volume of opposition to the proposals. Throughout the thread, the proposals are described as
I hope this thing fails miserably like every other year.
Even leading pro-regulation advocate Chris Grove believes that bill is flawed. In March he sent out a Tweet disagreeing with the proposal to make playing at unregulated sites a felony between the passage of the bill and the introduction of regulated online poker in California (a gap of 18-20 months):
Am disappointed to see @AdamGrayCA take what sounds like a hard line on making offshore play a felony. I follow logic but don’t agree.
— Chris Grove (@OPReport) March 11, 2016
Whatever You Do John, Don´t Mention Lock Poker
Despite the well-intentioned work of the PPA, it does seem to be a scratched record when it comes to Lock Poker. Sure, the theft of player funds by this untrustworthy poker site was a terrible thing – but there are no provisions in Adam Gray´s Internet Poker Consumer Protection Act to prevent the same thing from happening in a regulated market.
Clause 19990.506 (j) stipulates
A licensed operator shall segregate funds it holds in all registered player accounts from all of its other assets, but nowhere in the bill is there any mention of how the funds in players´ accounts will be protected from theft or fraud. In theory, an
approved online poker site could disappear into the sunset with millions of dollars of players´ deposits (a la Lock Poker), with players having no recourse against the site or either of the regulatory agencies.
It also has to be considered that hundreds of players continued to play on Lock Poker even though they were aware of the payment issues. Hundreds more now play on unregulated poker sites despite the lack of consumer protection. If consumer protection is such a big thing to Californian poker players, would they still be playing on sites such as Bovada Poker, Americas Cardroom and BetOnline? Probably not.
About those “Hundreds of Millions of Tax Dollars”
Pappas claims in his article that the state of California has lost
hundreds of millions of tax dollars over the past nine years due to the failure of legislators to approve the regulation of online poker. With speculation suggesting that a Californian regulated market would generate anything between $125 million per year (based on New Jersey revenues) and $729 million per year (Capitol Matrix research), that statement is probably true. However, where would the money have gone?
The current version of AB 2863 makes a provision for a $60 million subsidy to the horseracing industry and allows licensed operators to use their license fees as tax credits. There is also the question of how much money would be assigned to the California Gambling Control Commission and the California Bureau of Gambling Control to provide the much-needed resources to effectively regulate online poker in California. Once everybody has had their hand in the pot, there is not going to be a lot left from those
hundreds of millions of dollars.
AB 2863 May Pass – But it Doesn´t Guarantee Regulation
Pappas concludes his response to the SacBee Op-Ed by calling on Californian lawmakers to put consumers first and support AB 2863. Unfortunately the passage of the bill is meaningless without the issue of
suitability standards also being resolved – a clause in AB 2863 stipulating that the Act does not become operative until criteria are established
addressing involvement in Internet betting prior to the state´s authorization of Internet poker.
The clause has been inserted to appease potential stakeholders opposed to the participation of PokerStars in a regulated market, but what it effectively does is divide the Internet Poker Consumer Protection Act into two. Lawmakers can pass the first half of the bill (AB 2863 as it stands at present), but none of the provisions will become operative until a second bill has been passed establishing suitability standards. You might as well pass an Act that only comes into effect once the meaning of life has been resolved.
OMG – He´s Off to Michigan Today
Hopefully somebody points John Pappas in the direction of this article before he gives testimony to Michigan´s Senate Regulatory Reform Committee later today. The committee is scheduled to discuss Senator Mike Kowall´s “Lawful Internet Gaming Act” – an Act that would create a framework for online gambling in the Great Lakes State – and five of the committee members have been involved in the preparation of the proposals or have co-sponsored it.
If Pappas´ testimony to the committee is as full of holes as the piece he wrote for the Sacramento Bee, committee members will be able to see straight through it and the outcome could be that the regulation of online gambling in Michigan is delayed by years!