Bad Actor Clause Debate Rages On as Law Experts Weigh In

PokerStarsThere is a very good reason lawyers make the big bucks: Law, and gaming law in particular, is not for the faint of heart. There are arguments to be made on both sides, appeals, unresolved issues to be worked out, and purposely ambiguous language to be interpreted.

Case in point, the current attempts by certain gaming interests in California to have a “Bad Actor/Tainted Assets” clause written into online poker legislation, and the blowback they are receiving from the gaming interests who would like those clauses stricken from the bills.

Cue the experts.

Legal experts weighing in

A few weeks back, Harvard Law Professor Laurence Tribe (who is working as a consultant for PokerStars mind you) penned an opinion where he unequivocally stated that the Bad Actor clauses proposed in California were unconstitutional and would not survive serious challenges in a court of law.

But gaming lawyer I. Nelson Rose (considered one of the country’s foremost expert on this narrower scope of the law) sees it differently, as he explains in his most recent column at GamblingAndTheLaw.com.

“The problem is that Prof. Tribe knows the U.S. Constitution,” Rose writes, “But he doesn’t have enough experience with legal gambling to know that gaming statutes and regulations often appear to be unconstitutional.”

Rose goes on to explain how gambling falls under “vices” and is therefore subject to the “state’s police power” which is to protect the “health, safety, welfare and morality of its citizens,” as Rose explained it.

Rose continued on, saying, “state’s police power often trumps constitutional rights” which allows the state governments to ignore federal law and even the constitution in some instances.

As strange as it sounds, gambling falls into this category, even according to the Supreme Court who Rose points out stated in one landmark case: “… Gambling implicates no constitutionally protected right; rather, it falls into a category of ‘vice’ activity that could be, and frequently has been, banned altogether.”

Rose then makes the point that as a vice any laws permitting state-run gambling are meant to be restrictive in nature, allowing lawmakers to limit licenses (for the good of the public) far beyond just criminal activity.

Rose’s article is a very interesting read and a good overview of just how complex this situation is. I highly recommend anyone following the California online poker fight read through his piece: Gambling and the Law®: Are “Bad Actor” Laws Constitutional?

What this means in California

While the debate rages on, I would suspect that PokerStars and its allies tend to agree with Rose’s assessment, despite what their own, highly regarded expert stated. Notice there is little mention of Nevada’s Bad Actor clause being contested as unconstitutional.

If they felt otherwise than why fight so hard to remove the Bad Actor language in the first place? If you feel it’s unconstitutional and wouldn’t hold up to the slightest legal fight there would seem no reason to fight against it, unless you expected the court case to be costly in terms of both time and money.

This isn’t to say that the PokerStars/Tribe viewpoint is wrong, it’s just not completely right, as Rose himself elucidates in his article, “Prof. Tribe’s second supposed constitutional infirmity, the Equal Protection Clause,[16] is not much stronger.”

The real problem is, I’m having a hard time envisioning this issue being worked in the next few weeks, as both camps have dug their heels in and are content to let another legislative expire without an online poker in California.

 

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