… if internet poker is legalized in the United States, they apply for a license, and they are denied?

Assuming Barney Frank’s bill, Jim McDermott’s bill, and Senator Menendez’s bill all get passed, reconciled and signed into law by President Obama, the PPA’s dream will have come true: Internet poker will be “legal” here in the United States. (Hallelujah!) Then the question becomes: What next? How does this new law get implemented? What are the likely consequences? Who wins and who loses?

There are three threads here in the Legislation forum that deal with these questions in one form or another. It’s always interesting when non-lawyers begin offering legal opinions and “predictions” as to what is likely to happen once a new law goes into effect. It’s probably accurate to say that nobody really knows what is likely to happen if these bills pass – including the people who are pushing the legislation. (A case in point: There is no general agreement as to how many states are likely to opt-out. The estimates/guesstimates are all over the place – from “no more than five” all the way up to as many as twenty.) The PPA says there is “a big push” to get these bills passed in the current legislative session. Congressional staffers, quoted in the press, are privately saying final passage “is a long shot” and Barney Frank’s HR 2267 has only 70 co-sponsors in the House. (It takes a majority plus one – or 218 votes – to get a bill through the House of Representatives. Do the math.) Despite all the arguments and back-and-forth here on 2+2, I agree with the Congressional staffers – the odds of final passage (in the current legislative session) are not good. But let’s suppose, just for the sake of argument, that a miracle happens, all the stars align, all the obstacles are overcome, the bills pass and internet poker becomes “legal” here in the United States. Will it be a panacea – or just the start of a long protracted war?

JPFisher55 starts off the thread My Prediction if HR 2267 Becomes Law by asserting: “1. Poker Stars and Full Tilt will get licenses because they have many legal arguments that they have not violated any valid federal or state law.”

That’s an interesting prediction especially in light of the fact that at least one amendment was offered up during HR 2267’s markup which specifically excludes “illegal overseas sites that are currently offering internet poker to players here in the United States” from being licensed. (Gosh, I wonder who that amendment could possibly be aimed at? Did the amendment make any kind of distinction between sites offering sports betting and sites offering poker only?) Gary Loveman, Harrah’s CEO, was clear concerning what he thinks of overseas sites like Full Tilt and Poker Stars – he called them “essentially illegal operators” which, presumably, should not be granted a license. So, despite JP’s confident prediction, there is at least one Congressman - and one big-time gaming CEO - who think Full Tilt and Poker Stars shouldn’t be licensed. If this legislation becomes law and Full Tilt and Poker Stars are denied a license, then they’re effectively screwed – they can no longer operate “legally” in the U.S. market.

[Mod note: The verbiage above was stricken as unsubstantiated]

Being a non-lawyer and not understanding all the intricacies and cross currents in this clash of titans, I’ve been mystified as to why Full Tilt Poker and Poker Stars would choose to support a bill which seems designed to screw them? It just didn’t make sense why they would encourage their players to join (and support) the PPA. That was the case until somebody in one of the threads, (it may have been TruePoker CEO), explained the apparent contradiction: Tilt and Stars have to appear supportive of the new law (and its passage) in order to have any hope at all of getting a license. (If Tilt and Stars opposed the law and it passed anyway, then they’re guaranteed not to get a license.) So now it makes sense: Full Tilt and Poker Stars make a “business decision,” roll the dice, and hope against all hope that they get a license. But what happens if Stars and Full Tilt come up snake eyes? What do Full Tilt and Poker Stars do if they apply for a license and are denied?

I suppose, from Poker Stars and Full Tilt’s perspective, this is the worst possible outcome. With the stroke of a pen and a negative decision by the Secretary of the Treasury, they are effectively excluded from the United States market. Do they take this sitting down - or do they fight? Do they band together with all the other overseas sites that are denied a license and file a suit to have the new law overturned? (I suppose there are a number of possible legal grounds they could cite in bringing such a case, but it will be a long drawn out affair as they’ll be up against the likes of Harrah’s and MGM/Mirage.) Here’s another good question for any lawyers who might be reading this. Since Poker Stars and Full Tilt are operating from outside the United States, incorporated under the laws of a foreign country and not under U.S. jurisdiction, can they bring suit in the United States to try and overturn a U.S. law? Would any such suit be dismissed automatically by a U.S. judge ruling that Full Tilt and Poker Stars do not have “standing” for bringing a challenge against a U.S. law? If Poker Stars and Full Tilt do find a way to challenge the law, what are the chances of such a challenge ultimately being successful? If the law does get overturned after a protracted legal battle, then it’s back to square one for the legal status of internet poker here in the United States.

Maybe the amendment banning current overseas operators will get stripped out of the final bill and Stars and Tilt will be granted licenses simply to avoid these potential land mines. I don’t think that’s the case though since that outcome conflicts with what the big land-based operators here in the United States want. They want Tilt and Stars out of the U.S. market so they can have it all to themselves. Like who wants competition from the world’s largest poker room?

Former DJ

It's a pretty easy decision for FTP and PS, IMO. They know the status quo won't last for twenty more years. They can either milk a couple of more years out of that or they can get licensed and greatly increase their value and longevity. In fact, as our fight prolongs the status quo, this is pretty much a freeroll for them.

It was a given that someone would propose an amendment at the mark-up banning sites that knowingly violated U.S. laws. It was also a given that no one would vote against such an amendment. What's important here is that the amendment does allow FTP and PS to make their case. The sites will also continue to lobby their position behind the scenes.

The bottom line is that the sites are thrilled with this bipartisan win in Congress. We're on the right track and have the momentum.

Rather than just hoping regulation passes, wouldn't it be better for the sites to try to obtain some sort of court ruling that poker is legal? If they already have the legal opinions that it is (and it seems those are well founded) then this would pretty much wipe out UIGEA in one stroke. This would force the hand of the Congress to either try to issue an outright ban (which surely wouldn't pass in the current environment), accept the legality ruling and let it go unregulated, or pass regulation on favorable terms.

Is it just a risk/reward thing? Too much risk to try to get such a ruling when just about anything can happen when you go into court? Even in the crazy US legal environment, I've never seen something like we have with online poker, where some sort of random decree from a previous administration's DOJ that has no basis in statute, with case law leaning against it, causes so much trouble.

The DoJ won't accept anything less than a Supreme Court ruling. Also, there's nothing automatic about this. Virtually every state AG will say this is unlawful in their state, while the DoJ will claim this is unlawful at the federal level. They'll also seek to sway opinions with the 317-93 UIGEA House vote.

I think we have a reasonable shot at winning this in court, but I can't see this as a primary strategy. If it were, the sites would have done it long ago (especially a site like Party Poker that chose instead to leave the market and to pay a big fine). U.S. based sites certainly would have sought such a ruling.

These legal opinions are our side of the story. It's important that the sites have formulated this response, but this isn't the same as a court ruling in our favor.

That all works if we win. If we lose and can't appeal, it's game over. If we lose at one level and appeal, we'll find ourselves weakened while waiting for the appeal.

If we find ourselves unable to move anything in Congress, I absolutely agree that we will wish to seek a declaratory judgement on the legality of offering online poker in the U.S. PPA is ready to pull the trigger on that.

If it were easy, U.S. based sites would be offering poker right now.

Who are you quoting? No amendment was passed with that wording. Here is a post which explains the amendment that did pass, and why it doesn't exclude PS and FTP:

http://forumserver.twoplustwo.com/sh...52&postcount=8

And here is the amendment itself, so you can read it:

Amendment by Mr. Bachus and Mrs. Bachmann, no. 15.

Worst case scenario, PS and FTP don't get licensed. So what? There will be plenty of new sites to choose from instead, with large, international player bases - probably easily exceeding the current size of PS and FTP. We might even see the return of PartyPoker (they settled everything legally already with the DOJ), who used to be the largest and favored site of US players.

I would like to see PS and FTP get licensed, as they have developed great software. And I believe they will get licensed under the current bill. But it isn't a dealbreaker if they don't.

I hope that PStars and FTP get licenses, but I just don't understand why everyone is so worried that they won't. They are the two biggest poker sites right now, and that is because they continued to take American customers.

Losing PStars and FTP would be too bad, but there will always be a top two (or three, or four when this legislation gets passed). MegaAwesomePoker.usa will come along, set up shop and take over as the new leader. Since online poker will be "legal" the traffic will make PStars look like a joke. Or maybe it will be like it has been discussed in another thread, playing for real money on Facebook poker. Think how sweet it will be to play against those donkeys who think that because they have eleventy billion play chips that they know what they're doing.

I have no doubt that PStars and FTP have a plan and several contingency plans. Worry about losing them is not a valid reason to stop supporting this legislation.

Maybe this is a naive view but I believe that if ps and ftp are shut out the very next day two new companies called "maxtilt" and "pokercosmos" will open.

Are you saying that if the bill does not go through you believe Stars/FTP will continue to operate in an unregulated US Market?

The biggest problem with that amendment would be if Stars/Tilt stopped supporting legislation as they are an important funding source.

Since they didn't, its not a huge deal at this point.

They aren't going to get licensed (even though I wish they would), but that's not a huge deal in a post legislation world so long as a competitive market is created.

PS and FTP can sue the Treasury Department if it denies them a license on the grounds that they violated US law since UIGEA was passed. They can file a petition in federal court seeking a Mandamus directing the Treasury Department to grant them a license. This would be two separate lawsuits; one for each company. IMO, a member of the MO Bar, they would win their lawsuit.

However, it will take each of them quite some time to litigate and win. So if the Treasury denies them a license, PS and FTP will be hurt for sure. I suppose that either of them may decide to merge, or sell out, to a US company instead of suing. However, PS and FTP are willing to take the risk.

IMO, the Treasury will grant both of them licenses because it will rule that neither intentionally violated US law. Of course, the final bill may have different conditions which could preclude PS and FTP from obtaining a license, but the present one fails to do so. Just because some Congresscritter believes that the current requirement precludes PS and FTP from obtaining a license does not make it so. Congresscritters often don't read the bill on which they vote and are lousy lawyers if they are lawyers.

I, too, do not see the word "poker" in the text of the amendment. Are you referring to a quote somebody said during the hearing, which would reflect an intent to include poker? If so, I'm curious as to both who the speaker was, and to whether or not there was any way that that speaker's intent would carry through the literal content of the amendment (which does not reflect this intent) so as to apply as a rule for the Treasury when choosing its licensees.

Just so you know repulse, the intent of a particular Congressperson, or the whole Congress for that matter, is only relevant in a court of law if the law under review is ambiguous on its face. These amendments are not ambiguous on their face.

As PX has already pointed out, the amendments to HR 2267 did not say anything remotely close to what former DJ put in quotation marks (does that surprise anyone?). The amendments say nothing regarding poker and prohibits licenses only to those who KNOWINGLY accepted unlawful wagers, or accepted clearly unlawful wagers after UIGEA passed.

PokerStars is not lying when it says that it has multiple opinion letters from some of the US's most respected law firms saying that their operation has never accepted an unlawful wager and is not doing so now. I have seen them personally.

And please do not forget that HR 2267 was concerned with casino gaming too. IMHO, the real intent of the amendments was to prevent licenses to sites that allow sports betting (primarily) and casino games (secondarily). I do not think there is near as much concern about poker only sites like FTP and Stars.

Skallagrim

The thing is, this is not yet a final bill and I think if you took a poll among the 41 members who voted with us as to whether Stars and Tilt should be licensed the vote would run something like 30-11 against, and that might be generous.

Sheer incompetence may win the day, but my bet is that by the time a final bill passes the legislative intent to not license sites that served the US previously will be written into the bill. It was clear as day from the hearing that lawmakers do not want to license existing sites.

But, LG, do you think it was clear to those same lawmakers that there is a distinction, and at law the distinction is significant, between poker only sites and sites that will also accept your Super Bowl bet?

If you do I think you are giving the majority of the Congresscritters far too much credit.

Skallagrim

This was explicitly covered and prohibited in the bill. The bill is actively preempting any reasonable alternatives for the sites. There was a recent article in the Las Vegas Sun where one of the representatives involved in this bill stated something along the lines of: "You don't give Al Capone a liquor license after prohibition."

No, but I think Harrah's lobbyists will figure it out before a final bill comes to pass.

That's what I suspected, and that seems good for us. Thanks for the clarification, Skall.

PX:

You exhibit very selective memory in citing the Bachus/Bachmann amendment while totally ignoring Amendment # 2, (i.e. the "Bad Actors" amendment), introduced by Representative Brad Sherman of California. (Amendment # 2 passed by a voice vote.) I watched the hearing. Congressman Sherman specifically cited (only slightly paraphrasing) "... illegal overseas sites currently operating in violation of U.S. law," and his strong belief that (again slightly paraphrasing) "... these sites should not be granted a license under this bill," as he introduced his amendment. For anyone who has any doubt about the wording (or intent) of Representative Sherrman's amendment, here is the actual text:

SHERMAN_101_Bad_Actors.docx
July 27, 2010 (7:33 PM) 1 of 1
AMENDMENT TO H.R. 2267
OFFERED BY MR. SHERMAN OF CALIFORNIA
Page 11, line 16, strike “or”.
Page 11, line 20, strike the period and insert “; or”.
Page 11, after line 20, insert the following new subparagraph:
“(E) fails to certify in writing, under penalty of 1 perjury, that the applicant or other
2 such person, and all affiliated business entities, has through its entire history:
3 “(i) not committed an intentional felony violation of Federal or State
4 gambling laws; and
5 “(ii) has used due diligence to prevent any U.S. person from placing a bet
6 on an internet site in violation of Federal or State gambling laws.
7 “All entities under common control shall be considered affiliated business entities for the
8 purpose of this subparagraph.”

Representative Sherman's amendment is a dagger aimed at the heart of Full Tilt, Poker Stars, and all the other overseas sites that are currently accepting deposits and offering action to U.S. players in violation of the UIGEA. (The UIGEA is what Representative Sherman is referring to when he asserts that these sites are violating "U.S. law".)

While offering his amendment, Mr. Sherman didn't mince words in expressing his contempt for overseas operators - he used words like "criminal" and "corrupt" to describe these sites. Representative Sherman's amendment passed and is now a part of HR 2267 - "as amended."

Former DJ

Representative Sherman does not know gambling law. He doesn't realize that PS and FTP are not intentionally violating US laws and have legal opinions that constitute due diligence.

I guess that the bill could be amended to exclude all firms that accepted the online poker business of US citizens after the UIGEA, but I'm not sure that such a provision would be lawful.

1. This amendment also does not contain the line about poker that you quoted. My question stands - where is that quote from?

2. PS, FTP, et al, do not accept deposits in violation of the UIGEA. They would have to be conducting unlawful Internet gambling in the first place to violate the law under the UIGEA.

PS and FTP will have no problem signing the required certified document.

Sure, why not? They are now.

You have a history of taking small bits of fact here and there and extrapolating from them grand visions of your conspiracy theories. This is no exception.

Again, FTP and PS feel that they have what they wanted...a reasonable opportunity to make their case. It's also quite clear that Congress will not pass this bill as written. IMO, the Senate won't pass a bill licensing casino gaming at all, and who knows what the poker-only bill will say when it's done and ready to go.

It is hard for me to believe someone capable of finding and posting the exact language of the amendment made a mistake in posting in quotation marks different language which in actual fact is not in the amendment at all.

So, former DJ, do you spew out made up quotations because you do not care about the truth, or do you deliberately lie? There seems no other reasonable explanation.

Skallagrim

PokerStars Reacts to Successful Markup of H.R. 2267:

http://www.gambling911.com/poker/pok...67-072910.html

FesteringDJ take note: