PokerStars Stopping Progress on Californian iPoker

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Saturday, July 30th, 2016 | Written by Stephen Smith

The desire to pass online poker legislation in California is real, and for several years advocates have been pushing for a change in the law to allow Californians access to online poker sites. So far, however, progress towards legislation has been stymied by a disagreement over the terms of the proposed law. Those following the saga are placing most of the blame on one side of the issue, but when you examine the matter objectively, it’s clear that both parties are equally to blame for slowing the progress.

The Debate Over Bad Actors

The drama over online poker in California involves a dispute over who should be allowed to receive online poker licenses. On one side of the argument is a coalition led by the state’s Pechanga Band of Luiseño Indians, while the other side is a coalition comprised of another tribal band that has chosen to partner with the site PokerStars.

The Pechanga Coalition is upset over PokerStars’ involvement in the move towards legislation, as they argue that the site operated illegally from 2006 to 2011 when online poker had been banned by a piece of legislation called the UIGEA. Since then, PokerStars has been purchased by Canadian company Amaya, which has been arguing that they were not responsible for the actions taken by PokerStars in the past, or for those individuals no longer affiliated with the company. Amaya’s position is that the PokerStars of today is a different company than the one of the past run by the Scheinberg family.

So far, the Pechanga Coalition has been willing to budge enough to allow for a clause stating that companies that operated in the US illegally could eventually become licensed in California, but only after a 10-year waiting period. PokerStars’ coalition is naturally unwilling to settle for this, as it would give the other operators a 10-year head start.

Blame On Both Sides

In discussions about the current situation in California, there seems to be a tendency to blame the Pechanga Coalition for the problem. Critics are saying that they are not concerned with the welfare of Californian poker players at all, but are instead trying to keep competitors from being able to profit from their partnership with one of the world’s most well-known poker brands. People are calling them greedy obstructionists and worse online.

While it’s true that they are being obstinate and refusing to budge on their position, the idea that they are the only ones who are acting out of self-interest is untrue. PokerStars and the tribal casinos that they are working with are also hoping to capitalize on legalization in California. The idea that PokerStars is a victim here is misguided. The company is not a nonprofit; they are not involved in the legislation as an advocacy group, but as a for-profit company. Had PokerStars not been involved so early on, it’s possible that the tribal casinos would have been on board with legislation from the get go.

When you look objectively, it’s clear that both sides of the dispute are a part of the problem, and both will likely have to make some concessions if California is to ever have successful iPoker legislation.

The PokerStars NJ Factor

One interesting development in New Jersey’s regulated online poker may have the potential to positively change the way in which Californian gaming interest view the prospect of having PokerStars operate in their state. PokerStars only obtained a New Jersey iGaming license after year’s of vetting, and even then other gaming operations were concerned that the brand would come to dominate the market at the expense of the Garden State’s then two iPoker operators, namely Caesars Interactive NJ (888/WSOP), and Borgata (Party Poker/Pala Interactive).

The need to grow the iPoker market helped facilitate PokerStars’ entrance in New Jersey, and instantly the state’s average online cash game traffic shot up by an impressive 20%, with PokerStars heading the market. Since then, however, the pre-PokerStars traffic of around 320 players over a 7-day average has slipped to just 295 players, and furthermore PokerStars is currently playing second fiddle to 888/WSOP. The upshot of this turnaround is that Californian gaming operators may now be less inclined to overestimate the impact that PokerStars could have in the state, or worry about the brand monopolizing the iPoker market to the determent of all the other Californian tribal and gaming interest.