Progress Report for California Legal Online Poker Legislation
In the wake of a potentially game-changing committee vote on April 23rd, the prospects for legalized and regulated online poker in California have never been better.
Nonetheless, industry experts and political wonks alike are couching their optimism in caution, fully cognizant that a nearly decade-long effort is still far from coming to fruition.
Known as Assembly Bill 2863, California’s pending legislation pertaining to regulation of online poker enterprises is the most promising version yet, especially after gaining passage by Assembly Governmental Organization Committee via unanimous 19-0 vote.
Co-sponsored by Assemblyman Adam Gray and Assemblyman Reggie Jones-Sawyer, AB-2863 was introduced in February of this year, with the goal being to improve upon previously stalled legislative language.
This new bill is actually an amendment to a 2015 legislative proposal known as AB-431, which was yet another in a long line of iPoker initiatives considered by California lawmakers over the years.
Assemblyman Gray, who also serves as the chair of the Assembly Governmental Organization Committee, issued the following statement in the wake of the unanimous vote:
The question of how to regulate iPoker has been in front of the Legislature for nearly a decade We have not rushed this process. We have taken the time necessary to thoroughly understand and respond to the concerns put forth by stakeholders. Through this process, we have created a coalition that is willing to acknowledge the problem and support a comprehensive solution.
Two primary issues had worked to delay meaningful momentum for prior attempts to pass new online poker laws:
- Opposition from the State’s Tribally-Owned Casino Industry
- Hesitance to Allow “Bad Actors” to Reenter the California Marketplace
Seven of the state’s Native American tribes – led by the Pechanga Band of Luiseño Indians of Temecula – have expressed fear that allowing racetracks to apply for online poker licenses will erode the exclusivity of their right to operate gambling enterprises within California.
The tribes, along with a coalition of lawmakers and citizen activists, have also drawn a proverbial line in the sand, refusing to readmit “bad actors”, most notably PokerStars, which willingly served American customers despite the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.
The unanimous passage of AB-2863 by a committee vote signals that Assemblymen Gray and Jones-Sawyer have succeeded in addressing both of these pivotal hurdles to legalized and regulated online poker.
To remedy the obstruction of California’s tribally-controlled casino gambling network, AB-2863 pledges up to $60 million in annual revenue to the state’s horse racing industry.
In exchange for these regular payments, racetracks would be excluded from the licensing process, and this ineligible to operate an online poker platform.
This provision should serve to protect the tribes’ right to operate casinos and gambling enterprises without competition from outside parties. Accordingly, the horse racing industry lined up in support of AB-2863, effectively signaling a collective embrace of this new approach.
With PokerStars, and affiliated professional players like Daniel Negreanu, helping to spearhead California’s legislative push towards online poker, the bad actor clause has remained the central sticking point for the eventual passage of iPoker laws.
Not surprisingly, progress on this debate is less noticeable within AB-2863’s language, and no bad actor clause has been included.
Nonetheless, the Morongo, San Manuel, and United Auburn tribes, as well as the California Nations Indian Gaming Association – previous advocates of the anti-PokerStars bad actor clause – all expressed their support for the bill through testimony delivered at the committee hearing.
One reason for the widespread approval for AB-2863 is the bill’s thoroughly constructed statutory language, which expands on the “shell” previously provided by AB-431.
Within the bill are three clearly conceived restrictions on:
- House-Banked Casino Games
- Third-Party Banking Games
- Pure Games of Chance which Presented to Players via a Poker Format
Furthermore, AB-2863 places a clear priority on the concept of consumer protection, making it a felony to play on an unregulated online poker site, mandating segregated player fund accounts, relying on modern geolocation technology to screen players for eligibility, and splitting the regulatory duties between both the California Gaming Control Commission and the California Department of Justice.
By limiting the legislation to online poker only, rather than the full assortment of online casino gambling options, California is seeking to become the fourth state to legalize the game following the UIGEA’s passage, with Nevada, New Jersey, and Delaware the first to do so.
The next step for AB-2863 will be consideration, and potential passage, by the Assembly Appropriations Committee, before the state’s Senate begins examining the bill.
However, with many tribes still concerned about the lack of any bad actor clause, political watchdogs have tempered their enthusiasm when it comes AB-2863’s prospects for full-fledged passage.
For now, California’s poker players will have to stick to card rooms, tribe owned casinos and the few US friendly sites to pursue their poker aspirations.