What is a Bad Actor Clause in Online Poker?

You'll see the term 'bad actor clause' mentioned pretty frequently when reading many articles regarding the legalization of Online Poker in the United States, but what does it mean? Basically it is a clause that is placed into bills that legalize, or propose to legalize online gaming in any given state. The term 'bad actor' refers to any online gaming company that continued to do business after UIGEA (Unlawful Internet Gambling Enforcement Act) was passed in 2006. The decision to place a bad actor clause in any bill is up to each individual state and of the three states that have so far legalized online gambling in various forms all have different bad actor clauses.

It’s worth pointing out that offshore online poker rooms that accept US players, those such as BetOnline Poker are not in any way attempting to enter the states in the US that are, or are attempting to, regulate online poker, in fact many US poker rooms will now no longer accept players from states, such as New Jersey where online poker is regulated, however players from all other states are welcome.

A quick look at the three states shows huge differences in these clauses...New Jersey did include a bad actor clause however before it came into law the clause was scrapped meaning that there is no bad actor clause in the New Jersey bill. This means that online gaming companies who continued to do business after UIGEA are allowed to apply for a license in the Garden State. Nevada on the other hand has a 10 year lock out period meaning that companies doing business within the States post UIGEA will have to wait 10 years before applying for a license. This means that in Nevada the giants of online poker such as PokerStars and Full Tilt are blocked from entering that particular market for a decade. Delaware is similar to New Jersey in that there is no bad actor clause and Illinois, in their proposed bill have a totally different take on it. Initially the bad actor clause was the same as Nevada's however after consideration the wording of the bill was changed so that now the bill states that if the company continued to serve the US market post UIGEA it can apply for a license, however, should that company have been convicted on any charge relating to UIGEA then they are blocked. Again this means that Stars and Tilt will have to wait to apply in Illinois.

So what does it all mean? The real upshot of the bad actor clause is that PokerStars and Full Tilt will be the companies that are affected, and as these are now owned by the same company, it therefore comes down to just the one company that is affected. Of course, many companies have continued to do business in the US, however not everyone wants to apply for licenses. PokerStars will be happy enough with the situation so long as the deal to purchase the Atlantic City Hotel goes through, that will give them their foothold in the US market.