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PokerStars Does Legwork in NY Legislative Bill

Wendeen H. Eolis

Wendeen H. Eolis

By: Wendeen H. Eolis

New York State has come to the party later than most, but this year it has its eye on gambling like never before. The necessary referendum to legalize commercial brick and mortar casino gaming passed more than a year ago; a Commission to oversee the issuance of a limited number of casino licenses is in place. And now we have a “poker only” bill floating through the New York State Senate.

NY Senate Bill S6913—Poker Only!

Last week, S6913 (a bill to provide for licensed intrastate online poker) was introduced by Senator John Bonacic (R) Chairman of the NY Senate Committee on Racing, Gaming and Wagering. The bill has been referred to his committee. New York has toyed with the notion of legalizing traditional commercial casinos for decades.

Cuomo Makes Progress on Gaming Issues

But until Governor Andrew Cuomo came into office, the State’s philosophy on gaming  was more parochial than contemporary. A strict penal code not only makes promotion of gambling illegal; it also makes poker a gambling activity per se—which means that the notion of any distinction as a skill game is all but lost in the state law.  

The current administration has been moving toward support of licensed online poker in parallel with support for licensed casinos. Except for the bad actor clause that made its way into the text of the current legislative bill (introduced last week), the proposed legislation has PokerStars written all over it.

Poker Distinguishes Itself as a Skill Game

The online poker bill has taken a page from the PokerStars playbook, casting poker as a game in which the predominance of skill significantly overshadows the element of chance. The bill references a federal decision by Judge Jack Weinstein who comments on erudite poker studies (many of which were commissioned or supported by the Scheinberg entourage that controls the Poker Stars family of companies). And, studies far beyond those associated with Stars’ efforts for its own apparent legal reasons, make the case for poker as a skill game, convincingly.

PokerStars Plots its Course Stateside

“If supporters of Poker Stars’ entry into the American market had their way, New York would be a key part of their business plan,” say lawyers familiar with Stars’ commitment to expanding their brand stateside.

Over the past several months, there has been plenty of noise about Stars’ push for New Jersey and its courtship of California, but in the background, Stars has kept its eyes trained on New York State. The Empire State has an enticing population of poker playing enthusiasts, and the Company is said to have the will and the wherewithal to take a long term view toward its online presence in America.

With millions of dollars seemingly available to spend on lawyers and lobbyists who have the ears of legislative powerhouses and governors around the country, Stars is known to be “on the prowl” across America.  

Lawyers and lobbyists with strong links to the Cuomo administration have been well aware of Stars’ expansionist state of mind! They could not help but see a potential match between the very experienced and financially successful online poker behemoth, and the Governor's goals to create jobs and new sources for state tax revenue.

One AmLaw 100 lawyer says, “PokerStars, for its part, could not find a better or more ironic partner than the State of New York.” The growth potential for the Company (on the east coast of America) is a sure-fire winner, says one investment banker. He suggests New York would be the ultimate home run.

And what better poetic justice than to be licensed in New York, the state selected by the United States Department of Justice for its bull horned prosecution of online poker.  Isai Scheinberg, the founder of Poker Stars, was among those indicted in the famous Black Friday cases that shut down the biggest online poker sites on this side of the pond.

A successful bid by Stars to set up stakes in the Empire State would not only be a win for Poker Stars and American-based poker players.  It would also be a spectacular win for Cuomo. The anticipated boost in additional state tax revenue from such a successful company is as compelling as the creation of new jobs. 

An Historically Bumpy Road

All of this said, the historical reticence toward gambling in New York State assures a rocky road on the way to bringing online poker forward. For starters, the Senate bill has no companion bill in the Assembly. PokerStars’ efforts to set up shop will by no means be a walk in the park.

Governor Andrew Cuomo’s administration has distinguished itself from others in past decades by moving forward decisively to legalize commercial gaming, but it was no easy task. Neither the Governor's father, former Governor Mario Cuomo (a traditional Democrat) nor his father's successor, George Pataki (a seesawing conservative Republican) ever applied any gusto toward the legalization effort. The religious right was opposed and powerful in the State. New York long observed Blue laws, but does no more. Sunday was celebrated as a Sabbath; churches invited attendance with open arms and department stores shuttered doors, respecting the day of rest.

Mario Cuomo allowed recurrent efforts to legalize gambling to wither on the vine. Governor Pataki flirted briefly with support for gambling (as a means to obtain badly needed revenues to balance the budget). But upstate conservatives showed their displeasure. Pataki revised his course, adopting the ostrich pose, thus insuring a respectable distance from the increasingly controversial issue. Years later Pataki circled back to gambling at a cocktail party regaling friends with stories of one of his sons’ online poker exploits.

More recently, however, Pataki has hooked up with billionaire Sheldon Adelson in a clear bid to ban online gambling. Pataki is co-chair of a coalition intent on restoring the Kennedy era federal Wire Act so as to clearly prohibit online gambling--particularly including online poker.

In an MSNBC interview, he created sizzle in the steak, by expressing fears of terrorists finding gambling sites to be an easy place to move money to serve their evil purposes. It is a good bet that Adelson and Pataki will speak out about state legislative bills that are designed to pursue online poker.

Progress is in the Works!

Adelson talks about spending whatever is necessary to banish online gambling on American shores, as if it is a crime for an adult to play poker in pajamas from a computer in one’s home. But at this juncture, New York State appears to have a more open mind.

New York has legalized full casino facilities in the state, allowing for four licenses to be issued for commercial brick and mortar properties. New York City and its suburban regions are excluded as venues for such operations, for the first seven years.

The current internet poker bill allows for 10 licensed online poker companies to offer their gambling fare to adult citizens throughout the entire state. Under this scenario, the access to online poker would be far broader than land-based options in the state –as there is no embargo on the New York metropolitan area.

Thorns in PokerStars’ Side

PokerStars’ prospects for coming into New York State are iffier than those of active licensed gaming companies by its reputation (among many competitors and law enforcement agencies in America) as the black sheep of the casino industry.

Several gaming law experts around the country concur that Poker Stars is not yet close to gaining approval to operate here. The first iteration of the current online poker bill thumbs its nose at the online (mostly) poker company. The legislation proposed effectively ostracizes any person or company that accepted wagers after the end of the year 2006, the year the Unlawful Internet Gaming Enforcement Act (UIGEA) passed. Apparently, this provision was directed squarely at the online behemoth.

Poker Stars Perseveres; the Company Could Win Big in NY

Still, pundits around New York’s Capitol continue to buzz about the colossal benefits that await the state as it considers legalization of online poker. In the world of online gaming, where bizarre twists and turns are routine, Poker Stars may have reason to expect to prevail--as a competitor at the top of the Empire State…eventually.   

Editor’s Note: Wendeen Eolis is CEO of EOLIS, a legal consultancy with a specialty in the gaming space. She has served as an advisor to Mayor Rudy Giuliani and as 1st Asst. to Governor George Pataki with responsibility for gaming issues in her portfolio. She was the first woman to cash in the main event at the World Series of Poker. See her wikipedia listing, and eolis.com press clip index for more information. This article is her exclusive property. She can be reached at:eolis@eolis.comTwitter Facebook and LinkedIn or at the website: www.eolis.com.

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Submitted by wheolis on March 31, 2014 - 6:07pm
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