Californian Law on Online Poker Put to Test

After launching their online poker site Cafrino, Californian entrepreneurs Sean Stavropoulos and Jonathan Aiwazian saw their venture scrutinized by the Californian Attorney General. It appears that the duo has put the state’s online gambling law on a test even though the site does not require players to bet money or pay a subscription fee.

According to a spokeswoman for Attorney General Kamala Harris, the state statute on online poker generally asserts that "playing for something of value is illegal." But, this position is not shared by Aiwazian who says: "The reason we are legal is we are not a gambling site."

He also stated that players don’t have to make any payments to the site and that advertising revenue generates money that is paid to players. In addition, Cafrino’s New York-based lawyer, Adam Solomon, assessed that the site is "a lawfully structured sweepstakes."

Regarding the success of Cafrino which was launched on September 10 with the help of around $300,000 in financing from Kayweb Angels LLC and marketing services from LiveRail, Aiwazian underlined: "It's done a lot better than we anticipated. We're on pace to reach over a half-million hands dealt in the first month of operation."

And the operation may stand a chance at keeping up with the success, it appears. This is mostly thanks to the fact that the California statute is sloppily worded, assesses online gambling legal expert Prof. I. Nelson Rose, adding that state law allows poker games to be played for money in limited circumstances at state-licensed card clubs, tribal casinos, charities and private homes.

He also assessed that such wording led Attorney General Bill Lockyer to issue a flawed opinion that "gambling" includes instances when a person spends nothing to play poker for a prize.

"The attorney general is simply wrong when saying that something you can enter for free is gambling. If anyone and everyone can enter for free, then it is not gambling," Rose said, asserting that legal precedent provides that "gambling" involves three key elements: a prize, chance and consideration.

In conclusion, Rose stated: "I don't think the state Legislature intended to overturn 2,000 years of legal history when it said poker, if played for money or other prizes, is gambling without having to pay anything to enter and without any chance of losing money."

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