California stands on the verge of approving online poker and daily fantasy sports, an unusual development given that DFS has seemed to be hibernating for the last few months in the Golden State.
The Assembly in January approved of Rep. Adam Gray’s fantasy sports bill Assembly Bill 1437 with one no vote at the same time that his online poker bill was moved to the floor of the chamber.
Fellow lawmakers bought Gray’s argument that, “This is an activity that goes on every day. It’s important we get our arms around this.” So far the Senate hasn’t moved on the bill.
Gray, the chairman of the Assembly Governmental Organization Committee, is having a harder time trying to bring together the disparate elements needed to pass an online poker bill, including gaming tribes, card clubs, and horse racing interests. In pressing his Assembly Bill 286 he uses basically the same arguments that he used for DFS: that of providing consumer protection for an activity that is going on unregulated.
The difference between the two is that iPoker has been around as an issue for about ten years, whereas DFS sprang into the public view less than a year ago.
In DFS players assemble virtual sports teams with players based on real life athletes and win or lose depending on how their players do in real games. In many ways it resembles gambling, although its proponents argue that it isn’t that. They prefer to compare it to the stock market, where success depends on your skill in picking a winner. The two largest DFS sites are DraftKings and FanDuel.
Some opponents to Gray’s bill contend that the state constitution would need to be amended for it to be legal. The single Assembly opponent, Mark Levine, asked Attorney General Kamala Harris to venture an opinion, but she appears to be too busy running for U.S. Senate to get involved.
Gray’s DFS bill would authorize the California Department of Justice to license operators once it determines that they are legitimate. The Department would also be responsible for vetting providers of online poker, although the licenses themselves would be issued by the California Gambling Control Commission, with a one-time price tag of $12.5 million.
If the Senate goes along with Gray’s bill, California would join New York, whose legislature approved a DFS bill that awaits the signature of Governor Andrew Cuomo.
Because it was an “urgency” bill, the DFS bill would take effect immediately. It would also ban DFS contests based on amateur sporting events, such as college sports.
But the Senate has been lagging. The bill wasn’t assigned to a committee until May. Finally, last week a hearing was scheduled for the Senate’s Governmental Organization Committee.
One reason may be concerns that have been raised by the San Manuel and Morongo tribes, which both operate casinos in the state and have lobbied against any iGaming bill.
The iPoker bill continues to be a contentious issue with the main sticking point remaining the opposition by one powerful coalition to the participation by PokerStars, and that coalition’s insistence on some sort of “bad actor” provision that would make their participation hard or impossible. PokerStars are called “bad actors” because they were accused several years ago of allowing U.S. residents to play in their offshore poker sites, violating federal law. The practical reason some tribes fear PokerStars is that they have accrued extensive lists of California players and have agreements with several tribes and card rooms for partnerships.
Admitting that the issue is “highly charged,” Gray told the committee last month that having such a provision “could create more problems than they solve.” His language would allow PokerStars to apply for a license if it stopped operating in the U.S. 2011 when U.S. Justice Department ruled that online poker was prohibited under the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA). They could be required to pay $20 million or delay entry into the market for five years if they operated between 2006 and 2011.
Gray must achieve something like near unanimous support for his bill because, being a financial bill, it would need two-thirds of the Assembly for approval.
