The Pechanga Coalitions of Indian tribes in California issued a letter this past Wednesday outlining a potential compromise that would result in the removal of opposition to AB 2863.
The coalition has long held to their belief that bad actors should not be permitted to offer online poker in California. This new “compromise” would result in a shift of position. Unfortunately, their position appears so radical that it could result in further delaying online poker in the state.
Or will it? Is there still a way forward for online poker and how far will Amaya and PokerStars bend to reach this goal?
Pechanga “Compromise” More Like Liposuction Than “Pound of Flesh”
In the letter issued by the coalition led by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians, a compromise was outlined that would remove their opposition to AB 2863 and allow PokerStars to offer online poker in California – eventually.
The coalition proposed an amendment that would ban PokerStars from offering online poker for 10 years. Furthermore, the company must pay a fee of $60 million in order to offer online poker.
This is a stark contrast to the amendments added to the bill recently. As currently drafted, PokerStars would face a five-year ban or they could pay a fee of $20 million and immediately join the California iPoker market.
The original amendment was seen as lawmakers looking for a “pound of flesh” from PokerStars for their involvement in the U.S. following the passage of the UIGEA. However, this new proposition by the Pechanga Coalition is more like liposuction.
Will PokerStars Even Bother to Expand to California if Faced with a 10-year Ban?
A five-year ban would not necessarily be the end of the world for PokerStars considering that it takes a few years for a market to fully mature. Under such a ban, PokerStars would still have enough “meat on the bone” in California to make expanding there feasible.
However, what happens after 10 years when the market is likely to be fully matured? In terms of the local California market, PokerStars would likely struggle to gain significant market share. Online poker is constantly evolving and an entire decade could make the market untenable for PokerStars.
The only exception that I could see at this point would be including California in an interstate network. In the next 10 years, it is reasonable to assume that PokerStars will have a relatively robust interstate network that will likely include New York, Pennsylvania and New Jersey.
This robust network could still provide opportunities for expansion and PokerStars would primarily focus on the interstate angle rather than gaining market share against other California companies.
How Far Will Both Sides Bend?
The question now is whether there is still room to negotiate. Most expect that it is the Pechanga Coalition that needs to do the negotiating but one has to wonder if there are terms that PokerStars would consider accepting if it meant finally getting online poker passed in California.
The Pechanga seem to think that both a ban and a steep fine are necessary to allow PokerStars into the fold. Will they even consider a shorter ban? What if PokerStars was willing to forego the use of client lists, accept a three-year ban and pay $100 million to the state? Would that change the mind of the Pechanga?
How far will PokerStars bend and perhaps more importantly, just how much are they willing to pay to offer online poker in California? Is $20 million the right price? Maybe they are willing to actually pay $60 million. What about $100 million? Was that too crazy an idea or would that be a good “long-term investment” into PokerStars U.S.
Most agree that the only chance that the bill will move forward is if the Pechanga is willing to negotiate further. However, if PokerStars has some wiggle room, there may still be a way to get a bill passed this year.