Inside Gaming: It's PokerStars vs tribes in California online gaming fight

LAS VEGAS -- If California’s Internet poker debate was an actual card game, PokerStars just doubled up.

But the European online gaming giant is still short-stacked against two of the state’s largest tribal casino operators in its effort to gain a piece of California’s potentially lucrative — albeit nascent — Internet poker market.

Three tribes embraced legislation this month that would allow PokerStars into California.

Last week, Caesars Entertainment Corporation, the gaming industry’s largest proponent for legalized online gaming, said it no longer objects to PokerStars entering the U.S. market. Caesars operates Harrah’s Resort Southern California in San Diego County for the Rincon Band of Luiseño Mission Indians.

Pro-Internet gaming activists hailed the Caesars decision as game-changing. Online Poker Report’s Chris Grove termed it “a seismic shift.” Caesars and PokerStars are now on the same team.

Don’t start booking your seats at the virtual gaming tables just yet, though. Two Southern California tribes, the Pechanga Band of Luiseno Indians and the Agua Caliente Band of Cahuilla Indians, still hold all the aces.

“It’s complicated,” one gaming source said of California’s Internet gaming legalization, which includes two competing online poker bills.

One bill only allows tribal casinos and casino-like card rooms to operate Internet poker sites. The bill also has a “bad actors clause” that would keep out PokerStars and other companies that accepted wagers from Americans after the 2006 passage of the Unlawful Internet Gambling Enforcement Act.

The other bill doesn’t include the PokerStars ban and extends eligibility to the state’s race track industry.

“I’m less optimistic that it will get done this year,” Assemblyman Mike Gatto, D-Glendale told Pechanga.net’s Dave Palermo.

The assemblyman introduced the PokerStars-averse bill in December, when he predicted a 50-50 chance of passage.

Rincon, San Diego’s Pala Band of Mission Indians and Northern California’s United Auburn Indian Community have thrown their support behind the second bill. With Caesars and three tribes in the fold, PokerStars gained support.

However, California political insiders said online poker is dead unless Pechanga and Aqua Caliente are on board.

“Without Pechanga, there will be no bill,” a state official told Palermo.

In an e-mail to the Review-Journal, Caesars Senior Vice President Jan Jones Blackhurst said the $4.9 billion acquisition of PokerStars by Canada-based Amaya Gaming Group, Inc. last year ended the company’s concerns over reputation.

The previous ownership of PokerStars forfeited $731 million in a settlement to end a legal battle with federal prosecutors over accepting American wagers after 2006.

“We no longer are seeking a bad actor clause in any state,” Jones Blackhurst said. “With the purchase by Amaya, we believe PokerStars is cleansed of the taint and regulatory approval should be left to the regulators.”

In California, PokerStars has an agreement to operate online gaming with the Morongo Band of Mission Indians and the San Manuel Band of Mission Indians, as well as three Los Angeles-area card rooms.

PokerStars spokesman Eric Hollreiser said in an email the company welcomes Caesars’ change of heart.

“In California, we’re part of a growing coalition working together to promote the industry, protect individual freedom and counter the misleading, negative campaign of self-interested, anti-competitive groups,” Hollreiser said.

GamblingCompliance North American Research Director Chris Krafcik, who first reported the policy change, said Caesars’ shift could fuel Internet gaming debate in new markets such as New York and Pennsylvania.

Hollreiser said PokerStars will “work closely with Caesars” to seek online gaming regulation at the state and federal levels.

The biggest question mark is New Jersey, where PokerStars has a partnership with Resorts Atlantic City to operate the casino’s online gaming. PokerStars will also build a $10 million poker room at the Boardwalk property. The company has been unable to obtain a gaming license in New Jersey, despite clearing several hurdles.

Last week, BusinessInsider.com reported Gov. Chris Christie is holding up the licensing as a favor to Las Vegas Sands Corp. Chairman Sheldon Adelson, the industry’s most fervent opponent of legalizing online gaming.

The New York Times reported this month that Adelson loaned Christie one of his private jets. The governor is expected to seek the Republican nomination for president in 2016 and has been courting support from the billionaire, who contributes heavily to GOP candidates and causes.

Hollreiser declined comment on a Christie-Adelson connection.

“We’re continuing to work with the New Jersey Division of Gaming Enforcement toward gaining approval to offer online gaming under the PokerStars and Full Tilt brands,” he said.