The last month of 2015 was full of online poker news in unexpected places and void of progress where previously expected. The month of surprises gives online poker advocates much to anticipate in 2016 in states like California, Pennsylvania, and Massachusetts, while they can rest fairly assured that the Restoration of America’s Wire Act (RAWA) is dead in the water, at least temporarily.
We’ll start this monthly recap with the surprising actions in Kentucky involving PokerStars, Amaya, and the Poker Players Alliance (PPA).
The Commonwealth of Kentucky has been at odds with online gambling for many years, and the legal battles began in 2008 when Governor Steve Beshear attempted to seize more than 140 online gambling domains. That action failed, but two years later, the state attempted to sue PokerStars and PartyPoker on behalf of Kentucky residents who played – services that were claimed to be illegal – after the UIGEA became law in the United States. PartyPoker settled their portion of the lawsuit in 2013 via parent company bwin.party with a multi-million dollar payment to Kentucky.
The Commonwealth then solely targeted PokerStars, seeking damages for online poker activities offered to Kentucky residents between 2006 and 2011, ending when PokerStars departed the US market on Black Friday.
During the first week of December, the PPA announced that it filed a motion to join that lawsuit against PokerStars. However, the organization sought to interfere on behalf of poker players so any money won in the suit by Kentucky would go to consumers instead of politicians and lawyers.
PPA Executive Director John Pappas noted, “The Commonwealth has spent countless resources and time figuring out how to extort money from online poker companies when they could have spent that time creating a safe and regulated market that would have raised equal or greater amounts of money to benefit the nearly 14,000 consumers and taxpayers of the Commonwealth both now and in the future. The affected players should be the ones who collect from this suit, not the government and certainly not the attorneys.”
PokerStars immediately responded with a statement welcoming the PPA’s motion, as they “believe they represent the true interests of Kentucky residents and Kentucky poker players,” according to Amaya Vice President of Corporate Communications. “While we do not believe the suit has merit and will continue to pursue the case in the courts, if there is a monetary judgment, it should go toward the consumers who played on PokerStars and not to line the pockets of opportunistic plaintiff’s attorneys.”
It escalated from there.
Judge in KY rules against PokerStars but the company will appeal. Meanwhile, KY poker players are getting zero! https://t.co/R0CvtOqemM— PokerPlayersAlliance (@ppapoker) December 24, 2015
Circuit Court Judge Thomas Wingate ruled that PokerStars owed $290 million in damages to the residents of Kentucky. Days later, the judge decided to increase the amount of damages to $870 million and add the caveat that PokerStars/Amaya must begin payment or face a 12% yearly interest fee.
Amaya quickly responded with a statement from Marlon Goldstein, Amaya’s Executive Vice President of Corporate Development and General Counsel: “This is a frivolous and egregious misuse of an antiquated state statute to enrich the contingent-fee plaintiff’s attorneys hired by the Commonwealth and not the people of Kentucky. Given that PokerStars only generated gross revenues of approximately US$18 million from Kentucky customers during the five years at issue, a damages award in excess of US$800 million is notably only for its absurdity.”
Goldstein went on to note that Amaya will appeal, which will get underway in January 2016, in order to overturn the judgment.
After an action-packed November for online gambling in Pennsylvania, not much followed in December. Hopes were high after the Pennsylvania House Gaming Oversight Committee passed HB 649 and an amended version was introduced to the House floor on November 24. The need for additional revenue in a thin state budget made it even more likely that online gambling was on its way to a 2015 approval.
However, that didn’t happen… obviously.
What did happen was that the House Appropriations Committee voted to include online gambling regulation in the 2015-2016 budget plan, though the Senate did not share the same enthusiasm. When the session ended, there was no budget passed, and no regulation of online gambling.
The good news is that Rich Muny of the PPA told Poker Update that State Representative John Payne’s HB 649 is still alive, and the topic will be revisited in early 2016. There are high hopes all around that online poker will be legal in Pennsylvania in 2016.
Nothing has happened in California in the past few months, but poker fans can expect movement on legislation in the Sunshine State in 2016. The PPA’s Muny revealed to Poker Update exclusively that California is the “main focus” after Pennsylvania, and it is the “next best bet” to join the American states that legalize and regulate online poker.
With the PPA’s efforts focused in California at the start of the new year, look for one or more previous online poker bills to be revived and reintroduced with more alliances than in the past. The quiet months in 2015 have not been without various special interests – Native American tribes, horse racing associations, and legislators – finding ways to overcome differences in order to pass legislation in 2016.
States to Watch
According to Muny, there are numerous states in which online poker/gambling are possibilities. Beyond Pennsylvania and California, he noted that New York, Massachusetts, and Illinois are also on the PPA’s radar.
In addition, Muny says that states with strong track records in the area of progressive Internet legislation and possibilities include Connecticut and Oregon.
Merry Christmas #poker players. Look forward to spreading more cheer in 2016. Thanks for your support. -jp— PokerPlayersAlliance (@ppapoker) December 25, 2015
As the poker players in New Jersey – and the industry as a whole – anticipate the 2016 entry of PokerStars and Full Tilt into the online gambling market, encouraging numbers came from the Division of Gaming Enforcement in December.
After an encouraging October that saw online poker revenue up 8%, November offered another 2.3% increase to $1,913,403. That number was up 4.3% from November 2014 and put forth two sequential months of gains for New Jersey online poker after an all-time September low.
As for online gambling in total, there was $13.2 million collected, which was the highest revenue to date and a 32% increase year-on-year. Resorts marked its first month of more than $1 million in revenue for online gambling, and the market looked to be on solid ground overall.
The next major boost is likely to occur in the coming months when Amaya officially launches its sites.
PokerStars Will Give New Jersey a Jolt with todays approval – New York Times (1 October 2015) http://t.co/F8jqOSgrsK— PokerStars N.J (@PokerStars_NJ) October 2, 2015
The anticipated hearing for the Restoration of America’s Wire Act took place in the U.S. House Oversight and Government Reform Committee on December 9 and flopped. With a plethora of witnesses that shot down most of the concerns of anti-online gambling committee members with facts, the “A Casino in Every Smartphone – Law Enforcement Implications” hearing was widely proclaimed a failure.
The PPA and others declared the hearing a victory for online poker regulation and legislation, as it seemed quite unlikely that a bill like RAWA could pass that or any other Congressional committee. In addition, Muny told Poker Update that “anti-poker Rep. Jason Chaffetz (R-UT) damaged his cause greatly.”
Muny was careful to note that any threat of anti-online poker legislation like RAWA is never to be taken lightly, and the PPA and others will be watching closely for the influence of Sheldon Adelson over politicians in 2016.
As for a pro-online poker bill like the one introduced by Rep. Joe Barton (R-TX) in past years, Muny believes that as more states regulate online poker and gambling within their borders, there will be more momentum for a bill to move through Congress and regulate on the federal level. At this time, there is no push for Barton to try to move his legislation, but he is still willing to do the work if the issue garners energy in the next year or so.