Let’s Try This Again: Another California Online Poker Bill Introduced

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Online poker is once again back on the table in California, as California State Representative Adam Gray introduced Assembly Bill 2863 (AB 2863) on Friday. The bill’s goal is to legalize and regulate intrastate online poker in the Golden State.

This has been tried many, many times before in California over the last several years, but has rarely gone anywhere thanks mostly to a group of Native American tribes who want as much control as possible over online gambling in the state. There are so many stakeholders in this issue – tribes, card rooms, race tracks, and more – that so far, everybody has lost in the tug-of-war.

Last year, Rep. Gray introduced a similar bill, AB 431, which was considered a strong “compromise” bill. Rep. Gray is the chairman of the state Assembly’s Governmental Organization (GO) Committee and was able to get his legislation through a committee vote, but that is as far as it got, partly because of opposition from the select group of tribes and partly because daily fantasy sports (DFS) was pushed to the forefront.

The biggest difference between AB 2863 and last year’s AB 431 is an added compromise when it comes to the involvement of pari-mutuel facilities. The hardline tribes have not wanted racetracks to be included – the tribes want as big of a piece of the pie as possible – and in this bill, they are finally left out. Sort of. In AB 431, racetracks are not permitted to become licensed online poker operators, but in exchange for being excluded, they, as a whole, will be due to receive as much as $60 million per year from online poker revenues generated by the industry. This $60 million would come from the licensing fees paid by operators and the tax revenues they will be required to pay to the state.

The hope here is that the stubborn group of tribes will be appeased while at the same time, the racetracks will be content to receive money for doing nothing.

Operator licenses will be good for seven years, though the fees involved were not set in the bill. In previous bills, the initial licensing fee was $15 million, with 15 percent of gross gaming revenue taxed. Service providers – those that don’t actually operate the sites, but provide things like software and marketing services – must also be licensed, though it appears that they will not be charged a fee like the operators. They will, however, have to foot the bill for the investigation into their suitability.

Like in AB 431, there is no “bad actor” clause, which typically prohibits operators who accepted U.S. players post-UIGEA from applying for licenses. The hardline tribes have always wanted this because it would shut out established companies like PokerStars, but it does not seem that they will ever get it. In fact, a number of other tribes have formed a coalition with PokerStars and its parent, Amaya Gaming.

One aspect of the legislation that players will not like is that it makes it a felony to play poker on an unlicensed poker site. Other pieces of legislation that have been written around the country generally make it illegal to operate an unlicensed poker room, but it is unusual to make it an actual felony for someone to play on such a site. That doesn’t mean it would be strictly enforced – it is hard to imagine the police knocking on someone’s door for playing a $5 Sit-and-Go on, say, Bodog – but it is certainly possible.

The entire bill can be found on the California legislature’s website.

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