Online Poker Coming To New York?

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Tuesday, April 1st, 2014 | Written by Lucy Brown

On Friday, State Senator John Bonacic introduced gambling bill S6913 to the New York Senate designed to legalize and regulate online poker. Interestingly, the new bill comes just a few days after Sen. Lindsey Graham and Rep. Jason Chaffetz introduced their federal ‘Restoration of America’s Wire Act’ (RAWA) to both the Senate and the House, seeking to ban almost all forms of internet wagering.

While Congress debates online poker legislation, however, at least half a dozen other US states, including California, are mulling introducing regulation this year, and commenting on New York’s latest move, Executive Director of the Poker Player’s Alliance, John Pappas, said that “the state leaders are looking around, and they do not want to be left behind.”

New York’s online poker bill

Interestingly New York aims to emulate Nevada in allowing just online poker, unlike New Jersey and Delaware which also offer other online gambling games, such as roulette, blackjack, and slots. Consequently, bill S6913 envisages granting 10 online poker licenses for a period of 10 year each with the licence fee then costing operators $10 million. Under the bill, both cash and tournament play would be allowed, with the piece of legislation providing for “Omaha Hold’em and Texas Hold’em poker, as well as any other poker game that the Commission determines is the material equivalent of either of those.”

Online poker operators would subsequently pay a 15% tax rate on gross gaming revenues, defined in bill S6913 as “the total of all sums paid to a licensee from interactive gaming involving authorized participants, less only the total of all sums paid out as winnings to patrons and promotional gaming credits.”

The bill also permits for New York to enter into a liquidity pooling compact agreements with other US states.

Bad actor clause included

In addition, the bill specifically includes a ‘bad actor’ clause which excludes licenses for those online gambling companies which continued to operate in the USA after the UIGEA was passed in 2006. This stipulation is seen as vital for ensuring offshore operators who have continued benefiting from America’s untaxed, grey market, are not permitted to compete and gain an unfair advantage over those “licensees that respected federal and state law.”

Needless to say, the ‘bad actor’ clause is yet another major blow to PokerStars, which grew into the world’s biggest online poker room after PartyPoker withdrew from the US market in 2006. PokerStars may have amassed the market share shed by PartyPoker after its exit, but now PartyPoker has been accepted back into the USA’s regulated igaming market, while PokerStars may have to wait several years before it is even accepted for consideration. In Nevada, for example, ‘bad actor’ have been slapped with a ten year state exclusion.

Bill argues poker is a game of skill

In the past, New York courts have upheld poker to be a game of skill when players compete against each other rather than the house, and another interesting aspect of New York’s online poker bill is that it further highlights the skill element of the game and therefore that it should “not fall under the definition of gambling.”

What next for NY’s online poker bill

After being read twice, bill S6913 has found itself on the agenda of the Senate Committee on Racing, Gaming, and Wagering, which happens to be chaired by the bill’s sponsor Senator Bonacic. The bill will subsequently have to pass in both the Senate and Assembly, after which it needs to to be signed off by New York Governor Andrew Cuomo.

Gov. Andrew Cuomo recently successfully pushed for a sweeping expansion of New York state’s casino gambling industry, giving the go-ahead for four new casinos in New York to complement the existing five Oneida Indian Nation casinos and nine racinos. Furthermore, the agreement reached last May called for a profit sharing arrangement between the state and the Oneidas for the first time since Turning Stone became New York’s first land-based casino in 1993.

“The uncertainty and the acrimony was preventing economic development in Central New York, and we couldn’t allow it to go on any longer.. [the new deal] enshrines the shared vision we all have for the future of the region,” commented Gov. Andrew Cuomo.

Needless to say, Cuomo is a big proponent of gambling revenues and although he is a Democrat and the sponsor of New York’s new online gambling bill S6913, John Bonacic, is a Republican, Gov. Andrew Cuomo is unlikely to raise any major objections if the bill lands on his desk.