It was almost 10 years ago that I wrote an article title "Online poker may never be approved in California unless all benefit." It suggesting that online poker in California was likely dead in the water until all parties including the state, the Tribes, the poker rooms and the horse racing industry were guaranteed a piece of the action. And that nothing would really be resolved as long as the PokerStars name existed.

What to do about PokerStars?

A decade later nothing has really changed and the main obstacle is still the same as it was then. The Morongo Band of Indians, the San Manuel Tribe of Mission Indians, and the Bicycle Casino poker room and the Commerce Casino poker room all have a partnership agreement with PokerStars that any deal must allow the PokerStars brand to operate unimpeded. But the remaining California Tribes, led by Pechanga Band of  Luiseño Indians, have said they would not even consider online poker unless PokerStars was excluded from ever obtaining a California license - because they were bad actors, (i.e. they continued to operate in the United States after the UIGEA was passed in 2006). While this was the stated reason for opposition everyone understands that the PokerStars name is so large that competing online poker rooms would be left in the dust. The issue was exacerbated in 2012 after Black Friday when the FBI shut down several poker sties including PokerStars, only to give the company a clean bill of health after they agreed to pay a large fine and buy out the assets of Full Tilt Poker, which allowed customers stiffed by that site to be reimbursed, saving possible election fallout from disgruntled online players. Despite this, the opposing tribes said that the agreement changes nothing and as far as they were concerned PokerStars is still a bad actor.

Several bills were put forward after Black Friday in the state but none really gained traction. Bills included giving a share of the profits from online poker to all affected parties; providing some sort of "time out" for PokerStars that would have excluded them from launching in the state for a few years (so that other Tribes could get a head start); and a bill asking for a  fine to be paid by PokerStars to the other Tribes and horse racing industry to make up for some of the likely profits PokerStars would see in the state. The last bill called The Internet Consumer Protection Act was introduced in 2017 by Assemblyman Reginal Jones-Sawyer and required licensees to pay $12.5 million for a 7-year license that would be deposited into a poker fund to be paid to the horse racing industry as a subsidy and could be applied towards future taxes owed. The tax rate was progressive from 8.847% for revenue under $150 million per year up to 15% for any company generating revenue over $350 million. But the fate of PokerStars wasn’t discussed and that stopped the bill from getting any real traction. After 2017 it was clear that online poker legalization was a dead issue so the state started focusing on online sports betting as a possible money generator instead after the Supreme Court struck down PASPA.

It's not the same Pokerstars

It needs to be noted that PokerStars has undergone many ownership changes over the years. The company was founded by Isai and Mark Scheinberg in 2001, and they maintained ownership until 2014 when PokerStars was sold to the Amaya Gaming Group for $4.9 billion. Amaya changed its name to the Stars Group, but after the company’s CEO was charged by regulators for securities fraud and was forced to resign and after it was clear that online poker was never going to go forward in California or really make the big splash they hoped for in the U.S., Amaya sold PokerStars to Irish-based Flutter Entertainment in 2020 for $6 billion. Flutter was best known for the Paddy Power-Betfair brand in Europe and Australia and the FanDuel brand in the United States.

Flutter has continued to run PokerStars as a brand in North America where online poker has been licensed, namely New Jersey, Michigan, Pennsylvania and the Canadian province of Ontario. FanDuel doesn’t operate in Delaware or West Virginia, the other two states with licensed and regulated online poker. There are expectations that in 2026 they will also launch online poker in Connecticut and Rhode Island, which already has a framework to legalize poker sometime this year. But the biggest states that Flutter is undoubtedly eying a big poker launch for are states where they currently offer sports betting and those states are considering the legalization of online casinos but have yet to pass legislation, namely Illinois, Virginia, Massachusetts and most significantly New York. The latter state seems to have accepted the realization that they have saturated sports betting as there is no new interest to launch sports betting in the state at the ridiculously high tax rate of 51%, but there may be many new companies interested in online casino gambling (which would include poker) at a far lower rate, most likely around 30%.

Pokerstars merger with FanDuel

To affect this move, Flutter announced that PokerStars would merge under the FanDuel brand and all stand alone PokerStars sites would cease to operate later in 2026. The new name will be FanDuel Poker. The question is whether that name change will have any effect on the bad actor clause which could see California Tribes reconsidering their stance on PokerStars? I reached out to a legal analyst in the state which I met at SBC conferences for his opinion and he was clear it wouldn’t make a difference:

"Any bad actor clause would include covered assets. Since PokerStars operated the United States following the passage of the UIGEA, any assets from the brand continues indefinitely and ownership or branding doesn’t change the history. That’s why the sale from Scheinberg to Rational Group and now to Flutter makes no difference as it would all still be viewed by the courts, poker rooms and Tribes as the same company. The technology, player databases and everything that makes PokerStars valuable remains in place. So unless FanDuel was willing to scrap PokerStars completely and build a new product from scratch, the bad actor clause will apply.

That said, there may be a different reason for all gambling interests to reconsider not only online poker but also sports betting and that’s the fact that the products are becoming stagnant and they are leaving significant money on the table. Tribal revenues skyrocketed until covid, but the expected turnaround once covid was no longer a pandemic has not occurred. There was a one-year bump after casinos that closed were reopened but the last report from the state shows that Tribal casino gambling in the state has really not grown at all. Similarly, horse racing has fallen off a cliff. Interest in the product is so poor that Golden Gate Fields closed operations, the state fairs have stopped offering horse racing and all betting is now confined to Santa Anita Park and Del Mar, both which have seen a decline in attendance in the last few years.

The Tribes have exclusive rights to Class III gambling and are always worried about cannibalization but even they have acknowledged that at some point they are going to have to work with the state and the horse racing industry to enact legalization of sports betting since it is a large missed revenue opportunity and is already happening anyways with prediction markets which the governor can’t stop. Newsome was able to shut down Sweepstakes Casinos but not prediction markets which are federally legalized under the CFTC. Companies like Kalshi are always looking for workarounds to existing laws and the Tribes don’t want to lose out on that potential revenue. If they come to an agreement on sports betting I have little doubt they will once again look at online poker and figure out if that can be rolled into a sports betting bill while keeping slots, table games and craps the exclusive rights for the Tribes."

I reached out to the California Nations Indian Gaming Association and a contact at Pechanga for their opinion on whether the name change would make any difference and for any comments about the possibility of backing new gambling initiatives and was unable to get anyone to go on the racord by the time of this writing.

Legal Wranglings

It should be noted that California’s constitution requires any changes to gambling laws to be affirmed by a referendum. In 2022, two state measures were put forward to legalize sports betting. Proposition 26 called Legalize Sports Betting on American Indian Lands Initiative, which would have allowed sports betting at Tribal casinos and at horse racing tracks was voted against by 67% to 33% margin, while Proposition 27 called Legalize Sports Betting and Revenue for Homelessness Prevention Fund Initiative which would have allowed commercial and online sports betting was voted against by an 82% to 18% margin. The defeat of Proposition 27 was mostly attributed to the Tribes vehemently campaigning against the bill, while Proposition 26 was likely just got caught up in the push against Prop 27. In better words, most Californians didn’t understand the difference between propositions 26 and 27 so they just voted against both. It’s also notable that the number choosing not to vote on either proposition was very high.

So, later this year Pokerstars.com in North America will no longer exist and instead will be FanDuel Poker. The name change will undoubtedly cause a bit of upset among poker historians who associate the PokerStars brand with the massive growth in poker in the U.S. 2000s spurred on by Cinderella stories like Chris Moneymaker and Greg Raymer winning the WSOP main event after qualifying through a cheap satellite tournament on PokerStars, and many will associate the name with popular TV shows like The Big Game, High Stakes Poker and the EPT tournaments.

FanDuel has assured players that the poker product won’t change and all the same games that poker players presently enjoy such as zoom poker will still be available on FanDuel Poker. But if anyone was hoping the name change would lead to a groundswell of states seeking legislation to license and regulate online poker since the PokerStars name will be gone, particularly in California, they will be sorry. The rule relating to covered assets still applies so as far as states and Tribes are concerned, the name change means nothing and hence the product will still not be available in California anytime soon. If analysts are right there will be more discussion on sports betting in California soon but poker will almost certainly not be a part of those initial talks. That’s unfortunate, as poker is still very popular in The Golden State, but the issue of whether to offer online poker has existed now for 20 years with no real movement, so what’s another decade or two or three or four or…?

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