US-Based Poker Players Alliance Nears Possible End of Run

The US-based Poker Players Alliance (PPA), the country’s largest advocacy and lobbying organization on behalf of poker-related interests, faces a severe financial shortfall and may close its virtual doors at the end of March.

It’s a dire time for the group, which was founded in California in 2005 and has operated in Washington, DC for the last decade. The PPA has claimed well over a million members for the past several years. However, these are non-paying memberships, generated largely through sign-up campaigns on former US-facing sites Full Tilt Poker and PokerStars.

The PPA has operated more as an astroturf lobbying group representing corporate interests than the grassroots advocacy group it long claimed to be. With its corporate financing now dried up and its long-time executive director, John Pappas, already having departed for greener pastures, its future is bleak.

The PPA’s freefall first became public in February, when Pappas announced his resignation. A former Congressional aide and a career lobbyist, he had headed the PPA since its move to Washington, DC.

His departure has left home-grown poker lobbyist, Rich Muny, in charge. A former civil engineer and dedicated poker player, he began as the PPA’s state representative for Kentucky. In 2011, he moved to the PPA’s home base in Washington and became vice-president of player relations, a role he tackled with near-fanatical dedication.

Poker boom

All that, however, occurred in the face of the PPA’s own decidedly mixed results and dwindling resources. Its spending heyday ran from 2007 to 2011. The US’s onerous Unlawful Internet Gambling Enforcement Act (UIGEA) came into effect in early 2007 and forced many major online poker operators to stop serving American players, especially those sites offered by companies listed on the London Stock Exchange.

Full Tilt Poker and PokerStars weren’t among those sites, and they became the largest US-facing operators… for a while. They also became the primary benefactors of the PPA, together supplying more than 99% of its financing for some years as they instructed the group to lobby for online poker to be legalized again at federal level.

Instead, as often happens in gray-market situations, the legal situation went in the opposite direction. In April 2011, the US Department of Justice (DoJ) unveiled its “Black Friday” crackdown, targeting three major US-facing companies—PokerStars, Full Tilt Poker and Absolute Poker. All three companies, a handful of executives, and third-party payment processing intermediaries were charged with various crimes, all connected to schemes to transfer money electronically between American players and the sites.

Full Tilt Poker and Absolute Poker collapsed almost immediately, and were exposed as having acted in other fraudulent ways, in what became a major black eye for the entire online poker industry. As the two major corporate supporters of the PPA, that loss slashed its funding.

PokerStars, too, felt the DoJ’s sting, although it was operated with proper internal controls and moved on. Ultimately paid a major $731m settlement to the DoJ.

It also left the PPA in a precarious position. The settlement admitted no corporate wrongdoing, but PokerStars’ support for the PPA only had value if it could find a path to re-enter the online market in the US. To further complicate the situation, the US government finally realized that online-gambling regulation had to be handled, as with other matters, on a state-by-state basis.

PPA’s ‘death knell’

PokerStars succeeded in New Jersey, but never stood a chance in Nevada and Delaware, the other two legal online poker states. The big game, though, the make-or-break deal, was California. PokerStars, now under its new corporate owner, Canada’s Amaya, Inc. (later changed to the Stars Group), spent many millions trying to open the California market while also preventing the PokerStars brand from being branded a “bad actor” in connection with the Black Friday crackdown. Such a labeling could have meant as much as a decade on the sidelines for Stars, if not an outright permanent ban.

In any event, it didn’t happen. Despite California’s massive population, liberal and pro-gambling leanings and its own dire need for an infusion of new revenue, the online poker push failed. Year after year, legalization bills were proposed, but were all stonewalled at the committee level by a hardline coalition of the state’s tribal nations, which all operate mega-sized tribal casinos in various locations across California. They didn’t want the competition.

Earlier this year, legislators in California who had formerly pushed online poker bills announced that they weren’t even going to try, the tribal gridlock on the issue remaining unbroken. That gridlock forced the collapse of a rival, pro-legalization coalition PokerStars had formed a couple of years back with other California casinos and cardrooms.

It may represent the death knell for the PPA.

Donations call

Neither PPA nor PokerStars’ parent the Stars Group has issued a statement saying that it has terminated or scaled back its funding of the PPA. However, Stars has stopped its lobbying efforts in California, and has turned its attention and investments elsewhere, such as its purchase of sportsbooks William Hill Australia and CrownBet.

It leaves the PPA and its US-facing efforts on the outside, looking for scraps. Despite its grassroots advocacy claims, the PPA has never received significant donations from players, many of whom have at times felt disenfranchised by some of its earlier efforts.

Muny took over the PPA’s reins on 1 March, just after he issued a desperate call for $25,000 in donations, stating that it might fold otherwise. He has also floated a survey around the concept of expanding the PPA’s lobbying interest to include other forms of gambling, most specifically sports betting. That topic is getting plenty of attention as the Supreme Court prepares to issue an opinion that may finally open up most of the US to legal sports wagering.

For the PPA, though, it may be way too little, way too late. It did have one small victory, helping in the Pennsylvania legalization effort. That was a nice win, but in the long run, perhaps simply not enough to keep the PPA afloat.

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