PokerStars Gets Ally Against "Unconstitutional" Bad Actor Online Gambling Clause

PokerStars was recently sold for $4.9 billion to the Canadian Amaya Gaming Group. After a 2011 indictment for bank fraud which shut down its US operations, this move by PokerStars is seen as a way to ease entry into the United States Internet gambling industry in the future. Such a substantial investment by the largest global gambling company in the world would certainly not have been made without due diligence. More to the point, California currently has two bills and a Indian tribal proposal which would keep PokerStars from joining any Internet gambling industry in California in the future. So why would an established and reputable company like Amaya make such a sizable investment if it cannot profit by the player pool in the largest US state through legal California online poker?

California AB 2291 and SB 1366 – Protecting Golden State Residents, or Unconstitutionally Harming PokerStars?

The company probably consulted counsel that agrees with Harvard University Law School Professor Laurence H. Tribe. The respected and well-known constitutional law expert has helped other countries formulate and shape their constitutions, and is also the author of a treatise on American Constitutional Law. After dissecting California AB 2291 and SB 1366, which represent current efforts at legalizing online poker in California, both containing bad actor clauses which would penalize PokerStars for past behavior, he has found both of those pieces of legislation to be in direct violation of the United States Constitution.

Bad actor clauses are not intentionally bad things. They are added to contracts and legislation to ensure that companies and individuals with shady pasts and industry relevant indictments do not enter back into the marketplace with the intent of doing harm. That would mean that the PokerStars/Morongo Indian tribe/California card room partnership which was formed earlier this year to allow PokerStars to deliver Internet poker in the Golden State if and when it is legalized would be all for naught. But Tribe points out that the U.S. Constitution allows for representation and a fair trial before judgment or penalization can take place.

PokerStars Deserves Representation Before Judgment

Since the 2006 UIGEA legislation which led to PokerStars' indictments has yet to be determined as legal in a court of law, Tribe says that PokerStars and any other companies negatively affected by California online gambling bad actor clauses are having their constitutional rights trampled on. A third Internet gambling proposal has been put together by a coalition of 13 powerful California Indian tribes, and contains the same restrictive, bad actor clause wording. Tribe also noted that there were two other areas where the bad actor language was incorrect. In the two proposed bills, property owned by PokerStars is deemed off-limits, and the cutoff date given for a departure from the US marketplace was listed as December 31, 2006. Tribe says that both those decisions were arbitrarily reached, and violate the Takings Clause in the U.S. Constitution and the Equal Protection Clause respectively.

After consulting with company attorneys back in 2006, PokerStars decided to continue offering its online poker product to the US marketplace. This is because their counsel probably noticed the discriminatory, unlawful, and possibly unconstitutional legislative wording which they were being ruled by. California is frequently referred to as the next possible entrant into the US online gambling marketplace. That could take place as early as 2015, and whether or not the bad actor clause verbiage stays in place, PokerStars and the Morongo Indian tribe have promised to fight for their rights to offer Internet gambling offerings in the state of California.