Several US states have been working towards to regulation of online poker in recent years. In New York, Assemblyman J. Gary Pretlow has spearheaded the movement to legalize and tax internet gaming in his home state. In a recent op-ed for the government journal Roll Call, Pretlow ridiculed the Restoration of America’s Wire Act (RAWA), explaining that “prohibition doesn’t work”.

Assemblyman Pretlow is the Chairman of the New York State Racing, Gaming and Wagering Committee, making him one of the most influential people in the state in terms of gambling related legislation. In May 2015, Pretlow introduced S 5302, a bill designed to redefine certain gambling amusements – particularly poker – as games of skill, and allow such skill-based games to be legalized and regulated by the state for real money play over the internet.

However, despite having personally introduced the online poker bill, Pretlow made it abundantly clear that he had no intention of pushing the measure at that time. Instead, his purpose was to raise awareness in New York and create a smoother path for future regulation.

Now, Pretlow’s number one goal in regards to interactive gaming seems to be the eradication of RAWA. The federal bill was introduced on dual levels by House Rep. Jason Chaffetz [R-Utah] and Senator Lindsey Graham [R-S.C.] in 2014, and again in 2015. If passed, RAWA would provoke a blanket ban of online gambling throughout the country, possibly exterminating the existing online poker markets in Delaware, Nevada and New Jersey along the way.

Pretlow Blasts RAWA in Op-Ed

Pretlow’s blog post on Roll Call, entitled “When Congress Shouldn’t Act: Let States Advance Economic Growth and Protect Consumers”, deemed the intent of Congress to pass RAWA “particularly troubling”, especially considering the political cabinet’s tendency to drag its feet on other, arguably more important matters designed to benefit the economy.

“The proposal currently being considered in the House —  the Restoration of America’s Wire Act — would prevent states from deciding for themselves how to regulate gaming and online lotteries, prevent us from capturing the potential for economic growth these systems offer and tie the hands of our law enforcement when it comes to protecting consumers online,” wrote Pretlow.

He said he’s observed closely the successful markets that have developed in three other states where they’ve “adopted well-regulated systems”. Pretlow noted that these states were able to capitalize on the taxation of online gaming, and that “the security technology they have employed has not only kept gaming safe within their borders, it has created a legal system where law enforcement can crack down on the fraud and any other illegal activity that currently runs rampant in the robust online black market.”

Pretlow scorned the fact that RAWA would ban online lottery sales, which were responsible for helping the NY Lottery to raise $3.11 billion in 2014-15. That equates to 14% of the state’s educational funds. “RAWA would ban online lotteries, risking education dollars in New York and over a dozen other states around the country,” reads the op-ed.

As for regulating online poker in New York, Pretlow said, “In addition to the economic benefits, we should be identifying the best possible way to protect online consumers. Simply banning online gaming will protect no one other than the criminals currently running a thriving online black market.”

Pretlow explained that an estimated “one million consumers spend upwards of $3 billion annually in this illegal overseas market,” and without regulations, “local and federal law enforcement officers are powerless to protect them from fraud and abuse.

“Prohibition doesn’t work,” continued Pretlow. He believes that the only way to promote safety in online gaming is to devise “A well-regulated and highly advanced system based on secure technology and fully integrated with our law enforcement’s needs.” He pointed out the success of geo-location technology in New Jersey for thwarting underage and out-of-state gambling over the internet, stating that RAWA’s passage would undermine the ability to “help keep vulnerable consumers safe.”

The odds of regulating internet poker in California just got worse as Assemblyman Mike Gatto has essentially given up on his CA online poker bill, AB 9. Mike said in a statement that, due to having found “no consensus” on the issue, he’s removing his measure from the committee hearing scheduled for next week.

Assemblyman Gatto was the first of several politicians in the Golden State to introduce a CA online poker bill in the 2015-16 legislative session. AB 9 hit the table in December of 2014 as one of the first measures presented in the state.

Key Features of Gatto’s CA Online Poker Bill AB 9

Gatto’s proposal provided a framework for authorizing, regulating and licensing online poker operations in California. When AB 9 was first introduced, the Assemblyman noted that his CA online poker bill would give both players and operators “certainty and security that will legitimize the game, support locally-owned businesses, and keep much-needed revenue in the state.”

AB 9 had several distinct parameters set in place to limit the state’s internet poker market to restricted operators. Only licensed tribal casinos and commercial card rooms would be permitted to participate (i.e. no horse racing tracks), and a ‘bad actors’ clause stated that any operator who accepted California players after December 31, 2006 (post-UIGEA) would be prohibited from obtaining a license.

While the horse racing industry and Amaya Gaming (owner of PokerStars & Full Tilt were opposed to AB 9, there were many tribal gaming operators and card rooms who supported Gatto’s CA online poker bill. The most significant among them was the Pechanga Coalition, a 7-tribe strong group of California tribes who are staunchly opposed to competing with PokerStars or the horse racing industry if and when internet poker is authorized.

Gatto says “No Consensus” means ‘No Go’ for AB 9

In a press release issued on his website yesterday, Mike Gatto explained why he’s giving up on his CA online poker bill.

“I am canceling next week’s hearing of my Assembly Bill 9.  I believe this is the right thing to do at this point because there is no consensus on the issue yet,” wrote Assemblyman Gatto.

He did point out, however, that “My bill has an “urgency” clause, and thus it can be resuscitated at any time.”

He went on to speak of the hard work he’s put into internet poker legislation since 2012.

“Over the past three years, I have met with representatives from nearly every software provider, card room, gaming tribe, racetrack, and internet-poker operator who has an opinion on the subject.  I gave my word to both supporters and opponents of AB 9 that my goal was consensus, and that I would not move forward with anything that achieved less than that,” Gatto said.

Although AB 9 is all-but dead at this point, the Assemblyman promised to continue his efforts towards establishing a framework for the authorization of online poker in California. “I will continue working to craft legislation on which the interested parties can agree, and which is good for the people and treasury of the state of California.”

Thanks to an all-inclusive PA online gambling bill introduced by Rep. John Payne earlier this year, the Pennsylvania House Committee on Gaming Oversight—Chaired by Payne—held a public meeting yesterday to discuss the pros and cons of regulation. As usual, Sheldon Adelson’s crony, Andy Abboud, was on hand to spread trepidation throughout the room, but testimony from industry experts and technologists prevailed.

Andy Abboud churned out his all-too-common, long winded fear mongering speech, warning of the harms online gambling would bring to society, the inability to successfully thwart underage gambling or regulate the industry, and of course, Sheldon Adelson’s favorite, ‘click your mouse, lose your house’ spiel.

He even tried insinuating that the reversal of the Wire Act opinion in 2011 by the Department of Justice was bought and paid for by the gambling industry. One must wonder how many attendants of the PA online gambling hearing had to hold back audible laughter at that ridiculous implication, ironic because the federal anti-online gambling bill, RAWA, would not be circulating congress right now if it weren’t for Adelson’s deep pockets.

But one after another, witnesses at the PA online gambling hearing shot down Abboud’s arguments. Heading up that campaign was John Pappas, Director of the Poker Players Alliance, who found so many holes in Abboud’s testimony that he produced an 8-page document refuting 18 of his claims, cleverly titled “Andy Abboud’s Testimony of Myths”.

“Sands’ testimony today is a house of cards that is more about fear mongering than providing the Committee with meaningful insights on how to best protect consumers,” Pappas told the panel. “It’s clear that they are not really concerned about Pennsylvania citizens’ safety, but rather the corporation’s bottom line.

“The PPA will continue to share the facts with Pennsylvania lawmakers on why a licensed and regulated online gaming market is the best and only way to ensure citizens are protected through a system that is accountable to regulators and the government.”

The Director continued pounding away at Adelson’s crony by pointing out that his Pennsylvania casino, Sands Bethlehem, has come under fire, and penalty of fine, on multiple occasions for permitting underage patrons to gamble at the establishment. Pappas went on to highlight the fact that Adelson’s Las Vegas Sands (LVS) properties in Nevada proudly advertise mobile sports and casino gambling to visitors.

Panelists were quick to respond to the numerous accusations against Abboud’s testimony. Rep. Tina Davis, who introduced one of three PA online gambling bills in 2015, inquired of the Sands’ representative what fines LVS has paid to state regulators.

In his response, Abboud made no effort to actually answer the question. In fact, side-stepping questions became a distinct pattern for Adelson’s crony, so much so that Rep. Payne eventually reprimanded him, requesting that he keep his responses specific to the subject of each question.

A representative of geo-location service provider GeoComply, Lindsey Slater, offered a stellar hands-on presentation of how her company is able to precisely pin-point the physical location of online gambling account holders. In a real-time demonstration of the high-tech systems, she validated the supreme accuracy of the technology by identifying two internet gamers at a Starbucks in New Jersey, seated on opposite ends of the coffee shop.

“We have it pretty much down to a building level. You can see what part of Starbucks you logged in from and, yes, we also know what you did last summer,” quipped Slater.

That raised another question aimed at Abboud in regards to how the Sands’ can promote mobile betting within its Nevada casinos, yet oppose online gambling in the rest of the country. In typical fashion, he avoided giving a straight answer, but did concede to the fact that Sands is able to use geo-location technology to determine without a doubt whether players are located within the boundaries of an LVS property.

Testimonies in favor of PA online gambling continued to flow in. Michael Pollock of Spectrum Gaming Group presented the panel with successful regulatory experiences from New Jersey, David Satz of Caesars Entertainment heralded online gambling for its ability to document, monitor and audit all aspects of the games, and Chris Sheffield of Penn National Gaming proclaimed the myriad job opportunities regulation would provide the state.

Kevin Mullaly, VP of Government Relations for Gaming Laboratories International, praised the strength of the online gambling industry’s security measures, identifying them as the same form of security implemented by online banking websites and other financially driven markets.

In fact, Mullaly offered one of the most rational assessments ever made at any state or federal hearing revolved around the issue when he said, “Online gambling is simply a modernization of the delivery of content that your land-based casinos already have the legal right to offer.”

When all was said and done, it was obvious that supporters of PA online gambling clearly won the day’s battle. A second hearing to discuss PA online gambling regulation is scheduled for May 6, 2015.

As long as California lawmakers have been debating the issue of online poker regulation, there have been those who opposed the entry of any operator who ignored the UIGEA of 2006. For the past few years, ‘bad actor clauses’ have been aimed at keeping illegal operators out of California—if and when a bill actually passes, that is—but now it seems like more and more vested interests are swaying their favor in the direction of PokerStars.

Every bad actor clause to date has been (theoretically) aimed at preventing PokerStars from participating in a California online poker market. The company was portrayed in many lights, from duplicitous for its acceptance of Californians after 2006, to a threatening entity far too difficult to compete with.

Now some groups are changing their opinions of the world’s largest online poker room. The latest confirmation of compromise came from Jan Jones Blackhurst, the Executive VP of Communications and Government Relations for Caesars Entertainment. Chris Krafcik of GamblingCompliance confirmed the company’s opinion yesterday on Twitter:

Caesars’ Jan Jones Blackhurst told me the company believes Amaya Gaming Group-PokerStars “should be considered for legalization in the U.S.”

— Chris Krafcik (@CKrafcik) February 13, 2015

Interestingly enough, the announcement from Caesars comes on the heels of the casino company’s California partner, the Rincon Band of Luiseño Indians, who made a similar declaration just days prior. The Rincon were previously sided with Pechanga and its allies, who were adamant that UIGEA-breachers like PokerStars, as well as pari-mutuel racing tracks, should not be permitted to hold an online poker license.

On Tuesday, three of those tribes shifted their focus when the heads of the Rincon, Pala and United Auburn Indian Community each signed a letter addressed to the authors of California’s two online poker bills, Assemblymen Mike Gatto (AB 9) and Reggie Jones-Sawyer (AB 2291).

In the letter from the California tribes, it was suggested that lawmakers take “an approach that looks specifically at personal participation in unauthorized gaming.” While they still believe companies that willfully defied the UIGEA, and continue to be headed by the same individuals, should be excluded, the letter advised: “If a company that engaged in unauthorized gaming changed ownership, regulators would be able to review the effect of that change in ownership under the bill’s standards.”

Where they have yet to compromise, however, is the matter of whether assets belonging to a company under new ownership should be permissible. To that end, PokerStars may be able to enter a California online poker market, but whether they should be allowed to use the original PokerStars software is another matter.

“While we have not yet identified a possible consensus position,” said the tribes, “we encourage continued conversation on this important issue to identify an approach based on considerations of fairness, regulatory integrity, and legal requirements at issue.”

The letter appears to reflect the results of a tribal gaming meeting that took place in California this week, where the subject of online poker regulation was highlighted. All tribes agreed that compromise is the key to getting online poker legalized in the Golden State. It certainly seems that some tribes are working diligently toward that end, and in doing so, the Rincon have harvested the support of their gaming partner, Caesars Entertainment.

On day 1 of the new legislative session in California, Assemblyman Mike Gatto made a bold move, introducing an internet poker bill to state legislators. Officially tagged AB 9, the new California online poker bill seems to be little more than the rehashing of previous attempts, but with a few unique paragraphs added. The Poker Players Alliance (PPA) offered its initial reaction on Thursday, which wasn’t appositive one, but said they need more details before choosing which side of the fence to hop down on.

The key issue for the PPA was a new element that would require online poker players to facilitate certain transactions in person. Once registered, a player would have to make their very first deposit, as well as their first withdrawal, at an authorized land-based facility. Gatto’s California online poker bill also obligates players making a substantial deposit or withdrawal –the actual amount was left blank, although Gatto estimated anywhere from $300 to $10,000 – to make that transaction in person.

AB 9 specifies that licensed casinos would be primary destinations for physical monetary transfers. However, in addition to California casinos and card rooms that hold a license to operate online poker, the measure would sanction smaller casinos around the state to act as “satellite service centers”. Gatto said that, in this manner, every person in California should be no more than 1 hour away from an eligible casino or satellite service center.

According to the Assemblyman, his online poker bill has two major benefits. First, he explained that the deposit/withdrawal requirements would help to boost the land-based gambling industry for both tribal casinos and commercial card rooms, especially supporting smaller, locally owned businesses that may fear cannibalization.

Secondly, the Assemblyman said that facilitating early and sizable transactions in person will help to eliminate underage gambling and money laundering. The Poker Players Alliance was less acquiescent to that second point.

“If [Gatto’s] doing it because he thinks it’s a way to get people into the casino, that’s one thing,” says John Pappas, Director of the PPA. “If he’s doing it because he thinks it’s a way to stop minors from playing or people from fraudulently withdrawing money, he needs to be informed that safeguards already are in place online that not only the Internet poker industry is using but all sorts of e-commerce.”

Pappas wasn’t exactly on board with the idea that Gatto’s online poker bill will increase foot traffic at small casinos and poker rooms either. The PPA believes gambling establishments would have more success if they use online poker to attract new customers that don’t already frequent cards rooms, then use special incentives to bring those new players into the live realm. Smaller casinos and card rooms who join forces with the bigger brands would also be able to increase patronage via similar incentives.

“The problem here,” Pappas explicated, “is that enthusiasts are likely to make that effort, but the average consumer isn’t going to, and I think for the health of the game we need both enthusiasts and the average consumer.” Pappas called the poker industry an “ecosystem”, saying Gatto’s online poker bill, as written, is an “unproven model”.

Furthermore, Pappas questioned the bill’s suitability. “The previous model of people being able to register, deposit, and withdraw all online is proven to work, so why are we creating one more barrier that could perhaps lead to an unsuccessful marketplace?”

Rather than opposing the new California online poker bill right out of the gate, Pappas admitted it’s too soon to take a side. “I think we have to better understand how this would work and get some feedback from the players themselves. From what I’ve understood about how online poker worked successfully in the past, the ability to deposit and withdraw from your computer was paramount.”

The race is back on in California as the first online poker bill has been introduced to the state government. Proposed by Assemblyman Mike Gatto, this new online poker measure contains some interesting key alterations compared to previous attempts. While the context would greatly benefit land-based casinos and card rooms, horse racing tracks won’t be permitted to participate, and neither will PokerStars.

Starting with the most important text for online poker players in California, we’ll examine the newly revised ‘bad actors’ clause. It reads much like the old one supplied by Assemblyman Reggie Jones-Sawyer, where any operators that accepted Californians since 2007, (thereby breaching the UIGEA of 2006), are prohibited from obtaining a license. However, the amended section also eliminates operators that were acquired by a new parent company after breaching that law.

In reference to bad actors, Gatto’s online poker bill reads:

Hence PokerStars, under the new ownership of Canada-based Amaya Gaming, would be excluded.

Racing tracks won’t make the grade either, according to Gatto’s legislation. The bill says regulators should license “only those entities that are otherwise eligible to offer real-money poker games within the state that have significant experience operating in a regulated land-based gaming facility environment.” Therefore, the state would license “only those entities in California that have experience operating card rooms and tribal gaming facilities that are currently permitted to offer live real-money poker games”.

The bad actors clause and exclusion of racing tracks from participation in a California online poker market have been two of the most debated arguments since the state first began discussing legalization years ago. However, Gatto did say in an interview with PokerNews that he is not opposed to amending the bad actors clause or exclusion of racing facilities.

To get more tribal casinos and card rooms on board, the online poker bill was designed to ensure that all land-based operations are not cannibalized by online poker, including the smaller operators around the state. The bill would require new players to make their first deposit in person at the website’s corresponding casino or an associated ‘satellite service center’ (smaller casino / card room associated with the operator). In addition, deposits and withdrawals that exceed a certain amount must be made in person at a similarly eligible location. Gatto explained that every Californian should be at least within one hour of such a location, and that it would ensure all establishments are still patronized all over the state.

The actual minimum/maximum purchase and withdrawal amounts associated with that section were left blank in the text of the online poker bill. Gatto later said that the amount could range anywhere from $300 to $10,000. He also justified the in-person payment requirements as being added to help eliminate the threat of underage gambling and money laundering.

It should be noted that Assemblyman Reggie Jones-Sawyer is still expected to introduce a revamped version of his previous California online poker bill in the near future. That new bill is supposedly being scripted to allow more operators to participate in the industry, including PokerStars and possibly racing tracks.