The efforts to legalize online poker in California have been dropped for 2014.
The California legislature had one month remaining to pass some sort of online poker bill before lawmakers close shop until winter. Two laws were in play: AB-2291 and SB-1366. The Senate bill has been shelved and the Assembly bill remains inactive.
State Senator Lou Correa withdrew his bill. Since he is being termed limited out of office this year, someone else will have to take up the cause in the Senate. In withdrawing the bill, which he has championed in some form for six years, Correa commented, “Internet poker is an important public policy. We need to make sure it’s done right.”
Thirteen gaming tribes have said they support an online poker bill, but powerful gaming tribes remain opposed.
Two sticking points remain unresolved and will have to be addressed next year.
1) The “bad actor clause” that is in both versions before lawmakers is a major problem because it would prevent PokerStars from participating due to its previous run in with the U.S. Justice Department over its allowing American citizens to gamble on its online sites after Congress passed a law forbidding that practice. One of the tribes, the Morongo tribe, has partnered with PokerStars, and will not support a bill that doesn’t allow it to participate.
Some critics, such as legal scholar Laurence Tribe, say that the “bad actor clause” would amount to an unconstitutional bill of attainder. Others, such as gaming law expert I. Nelson Rose, say it is not a bill of attainder because it does not mention PokerStars specifically.
The just-concluded sale of the Rational Group to Amaya Gaming Group might provide a way out since Amaya, which owns PokerStars, wouldn’t necessarily have to use that particular brand if it participates in California.
2) The issue of racetrack participation is another stumbling block. Many gaming tribes and card clubs do not want racetracks to be part of the mix. Both bills do not call for their inclusion. However, racetracks do have some powerful friends in the legislature and have made it clear that they will call on them if some provision is not made for their participation.
If these problems had been resolved, a bill would need to be passed by August 22 and sent to Governor Jerry Brown’s desk in order to become law in the 2014 session.
Gaming titan Sheldon Adelson remains an opponent of legalizing online poker in the Golden State, and has so far spent more than $300,000 lobbying against it. His efforts have included recruiting former Assembly Speakers Fabian Nunez and Willie Brown to speak for him.
So far Nevada, Delaware and New Jersey have legalized online poker within their boundaries.
No one disputes that California will be the largest online poker market in the nation if it is legalized, but there are disagreements as to how large that market will actually be.
Averaging together the estimates of various experts such as PokerScout/Academicon and Eilers, Blue Sky, GamblingData and Capitol Matrix project that California’s online poker market will produce about $327 million in revenues in the first year and $486 million in about five years. That is without taking into account indirect effects on the economy such as employment and tax collection.
The Golden State will be able to learn from the experiences of other states that have entered the market earlier. This could make its online poker industry more productive than New Jersey or Nevada’s.
