Make the Bad Actor Clause About Actual Bad Actors

August 25, 2014
Make the Bad Actor Clause About Actual Bad Actors

The so-called bad actor debate has been a hot topic in California. It may be the main reason the state did not pass online poker this year.

Proponents hope to keep PokerStars out of the market based on the opinion that the company acted illegally by staying in the U.S. market after the UIGEA was enacted. On the other hand, PokerStars supporters assert that the bad actor clause is simply a method of limiting competition in what would be the largest intrastate market.

The California Legislature will have to resolve this issue, one that may eventually make it to a courtroom.

The real bad actors are the ones that stole from the poker community.  Lawmakers and regulators should ensure that the rogue software and employees behind the multi-million dollar thefts do not get licensed.

Get the Date Right

For whatever reason, bad actor proponents keep using December 31, 2006 as the last date a person, company or intellectual property involved in an online poker site in the U.S. can remain in good standing. The UIGEA was enacted immediately upon being signed into law on October 13, 2006.

There is a grace period of more than two and a half months in the bills that have been proposed in California and other states. Virtually every poker site that left the U.S. market did so almost immediately, making this grace period unnecessary.

Real Bad Actors Operated During this Window

The cutoff date of December 31, 2006 for a bad actor clause makes no sense. Some have suggested it is a way to get former UltimateBet management that left the company during that grace period in the door. Let that sink in for a minute.

UltimateBet was the home of an insider cheating scandal where players were scammed out of over $20 million. There was a subsequent cover up where several names that have attempted to enter the U.S. regulated poker market were caught on tape discussing the scandal or mentioned in recordings related to the cheating.

Absolute Poker executives are another group of people that need to be excluded. Absolute Poker had an insider cheating scandal unrelated to the one at UltimateBet where many players were never repaid. Absolute Poker was later involved in the Black Friday indictments.  The company defaulted on its obligations to players, stiffing them for an estimated $45 million.

The insider cheating at UltimateBet and Absolute Poker started before the UIGEA was enacted.

Full Tilt Poker executives that helped squander nine-figures of player funds should also be kept out of regulated markets. Unlike Absolute Poker and UltimateBet, none of the people responsible for the Full Tilt implosion have attempted to resurface in the U.S. regulated industry.

This is not to say everyone that worked for these companies should be automatically excluded.  There are many individuals that were in the dark about the company’s behavior and the job description of most employees would have had them far removed from the scandals that plagued the companies. Several former employees of these companies already work in the regulated markets and are doing great jobs.

Bad Actor Debate Should Involve Player Protection, Not Politics

The people that should not be allowed in the industry are those that were involved in the cheating, cover up, intentional spreading of misinformation, and operation of an insolvent company.  For whatever reason, this never comes up when discussing bad actors, yet a company that paid U.S. players back 10 days after Black Friday, settled with the Justice Department with explicit permission to reenter the U.S. market, and bailed out Full Tilt Poker players, is.

The PokerStars debate is a political one that may prevent regulated online poker from becoming a reality in California and beyond. It is up to players to remind lawmakers and potential operators that the real bad actors are those that actively stole from players or were complacent with those that did.

Those individuals and related intellectual property resurfacing in regulated markets should be the real concern.  If players do not speak up, it could become a reality.


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