February 28, 2013

Did the PPA "Lobby" for SunFirst Bank?

Haley Hintze is well-known in the poker community for her diligent, even obsessive, investigation into the Absolute Poker and Ulitmate Bet superuser scandals. Since Black Friday, Hintze has turned her sights on the Full Tilt Poker collapse, generating quite a number of informative articles and often digging up fascinating nuggets of backstory to fill in some of the blanks in the public Black Friday narrative.

Hintze today published a four-part story, "PPA Linked to Full Tilt / PokerStars SunFirst Bank Lobbying Effort" which uses emails generated in the SunFirst Bank investigation to fill in some gaps in the events that led up to Black Friday. Her full piece is worth a read by anyone interested in the state of poker lobbying efforts in the months leading up to both the Reid-Kyl bill and Black Friday.

There is a lot of information packed in the Hintze piece which is worth some reflection and comment once I return from vacation. However, I did want to address one point raised by Hintze:

Whether the lobbying effort grew out of SunFirst’s own desire for legal confirmation or whether it was the sensing of an opportunity by lawyers for Stars and Tilt remains unexplained, as does the mechanism of how John Pappas and the PPA became involved in lobbying on SunFirst’s behalf, to benefit Stars and Tilt. The lobbying effort appears to have begun in conjunction with Full Tilt joining the SunFirst operation, but the failure to procure a beneficial legal opinion from the Utah AG’s office did not cause Full Tilt to back out of the arrangement.

As part of my job, I work with a variety of industry groups on legislative and administrative rule proposals. What I do is not "lobbying" per se. [FN1]. My role is more in background support, typically drafting proposed bills or rules, then handing them off to lobbyists who get them submitted. I then provide comments on proposed amendments, and on occasion testify before committees or meet with legislators who have questions about the bill. In drafting bills or rules, I nearly always am coordinating with multiple interest groups; sometimes it's a gathering of the usual suspects for your industry, sometimes you find your group aligned with a mortal enemy group on an issue, and sometimes it's a kumbaya "for the good of everyone" compromise proposal hashed out in advance of submission.

Turning back to the SunFirst / PPA situation, I think it is important to be careful in describing what the PPA's role was in "lobbying" the Utah Attorney General for an opinion that online poker was not illegal, so processing payments was likewise not illegal. First, there is nothing improper about requesting an AG opinion on an issue, even one related to your own business. In fact, AG opinions (or similar processes, like advisory opinions or declaratory orders before certain agencies) are an important tool for businesses looking to clear up legal grey areas in advance of taking the risk of violating an unclear statute or rule.

Next, there is nothing inherently improper about the PPA assisting SunFirst (or any other poker industry business) in obtaining an AG opinion that online poker is legal, or that processing online poker payments is legal. It appears from the emails cited by Hintze that the PPA was advancing its usual arguments that poker is a game of skill, and that online poker was not illegal under state or federal laws as they existed post-UIGEA. Now the mere fact that the PPA's argument--which it had robustly developed by that point--supports SunFirst's business interests in processing online poker payments does not mean that the PPA was "lobbying for" SunFirst. Rather, the PPA was lobbying for online poker, and that argument was of benefit to SunFirst.

Finally, and perhaps most importantly, the mere fact the PPA coordinated its lobbying efforts with SunFirst does not mean there were any shady dealings between the two, or that the PPA was aware of the alleged bribes by SunFirst executive Jeremy Johnson (and Hintze explicitly disavows drawing the latter conclusion). The emails cited by Hintze certainly demonstrate coordination between SunFirst, the PPA, and their respective attorneys. But in lobbying efforts of this kind, such coordination is common--routine, in fact. It makes sense to divide the lobbying work based on the interests and expertise of the coordinating groups. Here, letting the PPA take the lead on the issue of the legality of online poker would make sense, given their expertise in developing those legal arguments. Further, submitting draft bills, rules, or, in this case, opinion letters, is also routine; no legislator or official wants to start from a blank slate, and those most interested in the issue will generally draft a proposal that suits their needs as a starting point for discussion. So the PPA's submission of materials to the AG in support of online poker in general, and in support of SunFirst's request for an opinion on the legality of payment processing specifically, is actually quite consistent with the activities of most issue advocacy groups.

The interesting issue raised by the emails reported by Hintze is whether the PPA had any deeper connection to SunFirst, Jeremy Johnson, or Chad Elie. The connections between PokerStars, Full Tilt, and the PPA have long raised questions in the minds of some poker players about whether the PPA is truly an independent advocacy group, or instead is a stalking horse for the online poker sites who provide most of the PPA's money. Hintze's article explores this issue in light of the new SunFirst emails, and the connections and timeline of events Hintze draws are quite intriguing (and something I will certainly re-read once I get back from vacation). Hopefully Hintze or others in the poker community can use these emails to shake loose more documents that can help fill in the remaining gaps in this backstory.


[FN1]. "Lobbying" carries a technical, legal definition of paid advocacy that is much narrower than the more generic use of that term. I will use "lobbying" in that broader sense of advocacy for a position by a group with an interest in a particular issue or industry.

- Posted using BlogPress from my iPad


  1. Edits are tough to post from the road, so I'll post this as a comment-addendum.

    Even if what the PPA did was legally proper lobbying for SunFirst, the larger question remains whether the PPA should have been lobbying for a bank merely because it processed online poker payments. This is where the PPA connections to Full Tilt and PokerStars come into question, which is really the larger issue Hintze is tangling with (and the more important issue).


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