The California Tribal Business Alliance and the Rhetoric War against PokerStars

The advent of regulated intrastate online poker in California, the most populous of the United States, might still be a couple of years off, but the war of words and public opinion keeps churning in high gear. As we detailed in a lengthy feature a week or so ago, the tribal forces that control much of California’s land-based casino gaming have succeeded in placing not, one but, online poker bills before the state’s legislature. 

However, both of these new bills are backed by competing tribal interests, and that continues to lead an escalation of rhetoric, particularly in advance of a California Assembly hearing scheduled for Arpil 23rd, loosely connected to one of the bills, introduced by Rep. Reggie Jones-Sawyer. 

By way of background, Jones-Sawyer holds a seat on the California Assembly’s “GO” Committee (the Committee on Governmental Organization), and the upcoming hearing is an information-only hearing.  If there’s one term that’s likely to get bandied about at that hearing a little more than one would expect, it’s “bad actors,” — and that in turn refers to one entity, PokerStars.

Thus the political theater builds.

PokerStars, as we detailed in that last feature, has entered preliminary negotiations with entities current supporting the other California online-poker bill, the one reintroduced by State Se. Lou Correa.  That bill has the support of the Morongo tribal nation, and Stars has reported to have been in negotiations with the Morongos as well as three prominent Los Angeles-area, non-tribal cardrooms – Commerce, Hawaiian Gardens, and the Bike.

Morongo Tribe Nation Land

Opposing them, as we also reported, are the Jones-Sawyer backers, a coalition of another dozen or so California tribes, most positioned in a loose ring outside the LA suburbs.  The coalition is led by the Pechangas (who run California’s largest tribal casino) and the Agua Calientes, and includes as a subset the three-tribe California Tribal Business Alliance (CTBA). 

Both the Pechanga coalition and the CTBA subset previously released attack statements targeting the possible negotiations by the tribes and LA card rooms with PokerStars, with negotiations between the two sides falling apart over the possibility of PokerStars as a software vendor.  Language in the Jones-Sawyer bill includes a “bad actor” provision specifically targeting PokerStars.

Recent days have seen a further ratcheting up of the politically-based PR attacks, most specifically in the form of a second release from the CTBA.  Apparently, one heated release wasn’t enough, and this time, the CTBA’s chairwoman, Leslie Lohse, issued a rhetorical marvel, full of half-truths, misconceptions and outright falsehoods.  All the mudslinging appears to be part of a concerted effort to give PokerStars as bruised a public image as possible as the competing California online-poker bills are scrutinized and debated.

Leslie Lohse and Jim Nielsen

Lohse’s statement is such an extreme example it merits dissection.  Usually, such full-out attacks are designed to shift attention away from weaknesses in one’s own stance, and as we illustrated earlier, the Pechanga- and CTBA-backed Jones-Sawyer measure is a pretty lousy bill, from its false claims of being a consumer-protection measure to its actual criminalization of player activity on unregulated sites, which is perfectly legal at present.

So what did Lohse have to say about PokerStars and “bad actors” in general that was so important that it warranted a second statement?  Let’s see for ourselves.  Lohse’s and the CTBA’s words are in italics, and a more honest version of events follows:

Nevada doesn’t want them. New Jersey rejected them. So now they’re knocking on California’s door?

Actually, Nevada’s online-poker licenses were issued, per legislative mandate, only in conjunction with existing land-based casino licenses; PokerStars never applied.  And, New Jersey did not reject them, but placed a two-year suspension on the application of Stars’ parent, Rational Group, to clarify existing ownership matters.  This was after self-insertion by the anti-Stars American Gaming Association (AGA), into the state’s regulatory matters.

In an effort to come out of exile, PokerStars is attempting to work a deal with Morongo and some Southern California card clubs that would open the U.S. market to their participation in iGaming.

Definition of exile: “The state of being barred from one’s native country, typically for political or punitive reasons.”  Nope, Stars isn’t barred in California, though the CTBA wants to do just that.  “(S)ome Southern California card clubs…” is also a bit demeaning and dismissive.

As a reminder, this is the group that refused to shutter its site, even after the enactment of the 2006 Unlawful Internet Gambling Enforcement Act (UIGEA), making online gambling illegal. In 2011, the Department of Justice issued orders mandating the site close down, filed a civil action to seize the company’s assets acquired post-UIGEA, and threatened imprisonment alleging, among other things, Conspiracy, Money Laundering, Bank Fraud and violations of the Wire Act. In settlement, they paid a $731 million fine, but admitted no wrongdoing.

No request was ever made for the internationally-based PokerStars to “shutter its site”; that’s a laughable premise.  The UIGEA doesn’t make online gambling illegal – not one little bit.  The DOJ issued no such orders mandating the site’s shutdown; it instead interfered with the portion of the international Internet registry services, notably ICANN, in such a manner as to disrupt service to the domain, and thus leverage PokerStars in the matter.  Imprisonment was never threatened against the company, since you can’t throw a company in prison.  The actual fine was significantly less than the $731 million, since that number includes more than $160 million that Stars gave to purchase the assets of Full Tilt, which the company was under no obligation to do.  “Admitted no wrongdoing”?  Well, that one’s right.

CTBA will strongly oppose any legislation that allows for bad actors, who flagrantly ignored U.S. law, bringing their tainted brands and unscrupulous entities back into the United States. From CTBA’s perspective, only entities that adhere to the highest regulatory standards, such as those used in the regulation of Indian gaming, should be licensed to provide online play. That’s how we handle things in Indian Country – and that perspective has served the California gaming market well. Players understand that our games are safe, secure and fair. They can’t say that about PokerStars – many players are still feeling the burn from past bad actions by PokerStars and their higher-ups.

Nice speech.  “Flagrantly ignored US law” is far different from the truth, which is “operated in a grey area of US law.”  And had Stars as a company chosen to fight further, the 2011 Holder decision clarifying the Wire Act would have worked in its favor.

Indian Country gaming matters aren’t always handled so well, either, in particular consumer-complaint matters.  Consumer sites such as RipOffReport are peppered with horror stories from tribal casinos in California and elsewhere, with consumers finding normal legal and consumer-complaint channels closed to them.  Employees can have it even worse, as this Cali lawyer detailed in a series for the San Francisco Examiner.  Read that story and understand that both the Jones-Sawyer and Correa bills, in their original, tribal-backed forms, call for the tribes’ claimed sovereignty to be extended directly into the private homes of consumers.  It might not even pass federal regulatory muster.

Then there’s that last bit – “… many players are still feeling the burn from past bad actions by PokerStars and their higher-ups.”  Really?  Stars refunded players as soon as it was approved with the DOJ, and that was months before the resolution of the company’s own case.  And only because of Stars’ did Full Tilt’s players, US and rest-of-world both, receive refunds from that failed site.  This Lohse statement is as naked a lie as a lie can get.

In short, the Member Tribes of CTBA will continue to work diligently to ensure any online poker authorization bill will impose strong controls, mandate disclosures, and promote the highest standards of integrity in the gaming industry. Anything less serves to undermine California and the California gaming market.

More speechifying, and lots of talk about standards.  The “mandate disclosures” bit seems to imply that PokerStars has failed to do that in the past, but as PokerStars itself has noted in a response, the company is fully licensed and regulated in numerous jurisdictions around the globe, and its level of corporate disclosure, even as a privately held company, exceeds that generally required of tribal casinos.  The above from Lohse and the CTBA is just a pile of porridge.

It’s going to be hard for anyone to top Lohse’s statement, though with a couple of years of legislative negotiating likely ahead before regulated California online poker becomes reality, there’s always the chance for better. 

Given California’s population (at just under 40 million, not much smaller than Spain), budget problems and generally progressive political attitudes, it’s surprising that the state’s online-poker legislative efforts remain so paltry and laughable.  California remains far behind where it really should be, mired in profiteering and poor politics.  The sadder part of the tale is that the situation isn’t likely to improve any time soon.  

Haley Hintze

Veteran poker writer and editor Haley Hintze offers a uniquely independent and entertaining look at many of the most newsworthy topics in poker.  Noted for her lengthy series that helped expose the cheaters behind the Absolute Poker and UltimateBet scandals, she remains a champion of consumer interests and fair play.

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