The drive to legalize online poker in New York has taken a dramatic turn with the inclusion of language that could block industry giant Poker Stars from operating in the state.
John Bonacic, legalization’s long-time champion in the Senate, gave no reason for the sudden addition of the so-called “bad actor” provision to his bill on the eve of an expected floor vote in the upper house in which the bill should pass easily, as it did last year.
Some observers point to continued opposition in the Assembly?where J. Gary Pretlow’s companion bill died last year without coming to a vote?and it could be Bonacic inserted the tougher language in hopes of swaying undecided lawmakers there.
Then there is Governor Andrew Cuomo, who hasn’t taken a public position on legalization, but his political machine has some questionable history with PokerStars, which is fueling speculation that keeping the company out of New York might be a requirement to secure the governor’s support.
“Bad actor” clauses are fairly common in online gaming bills put forward in other states. In essence they’re designed to deny licensing to operators who marketed to American players after the 2006 passage of the federal Unlawful Internet Gambling Enforcement Act. Prior to UIGEA most offshore operators were inclined to treat the U.S. as a gray market where they were free to offer their services absent positive legislation prohibiting them. UIGEA changed that. Not by prohibiting online gambling per se, but by making it illegal under federal law to accept or process financial transactions over the internet for gambling activities.
PokerStars was one of several offshore operators that continued to take bets in the country after UIGEA. That is until April 15, 2011, “Black Friday,” as it’s known in web gambling circles, when PokerStars and its ownership were indicted by the U.S. Justice Department, along with two other major operators, on a raft of criminal charges?illegal gambling, fraud, money laundering and conspiracy, among them. Its U.S. operation was shut down and the company pleaded guilty and accepted a steep fine.
The Cuomo connection came later.
In 2014, PokerStars was sold to Canadian web gaming operator Amaya. New ownership normally might have served to eliminate any “bad actor” taint. But this, too, has become a problem because last month a federal complaint was issued alleging that in 2014 a New York Democratic Party operative helped then-Amaya CEO David Baazov disguise a $25,000 contribution to Cuomo’s re-election campaign. According to the complaint, the money was made to appear as if it came from a third party, a Florida attorney, who later would be hired by Amaya.
Coincidentally, or not, a year after the alleged illegal contribution was made, Bonacic cut from his bill a UIGEA-related “bad actor” clause that likely would have barred Amaya/Poker Stars from doing business in New York.
Baazov is slated to be tried in Canada later this year on insider trading charges related to Amaya’s acquisition of PokerStars. He sold most of his holdings in the company after lenders blocked him from acquiring Amaya and taking it private.
In New York, meanwhile, legalization is running out of time. The legislature adjourns the end of this month with no Assembly bill reported to have made it to the committee stage.
