California legislators last put the brakes on an online poker bill that had fanned hopes. Some tribes that had hoped to see a bill passed are unhappy that apparently daily fantasy sports has leaped ahead of iPoker in importance.
The bill that was expected to be heard in the first week of the year was pulled last week from the Governmental Organization Committee. The bill, AB 167, authored by Assemblyman Reginald Jones-Sawyer, was seen as favorable to racetracks and PokerStars, the largest web-based poker site.
PokerStars is a bête noire of some gaming tribes, which would prefer that a “bad actor” clause be inserted in the bill to prevent it from competing in the Golden State.
“Bad actor,” equates with PokerStars, which several years ago settled with the U.S. Justice Department because it allowed American players to play on its offshore websites. PokerStars settled in 2012 for $730 million. Two years later Amaya Gaming Group purchased the company for $4.9 million. PokerStars has 70 percent of the global iPoker market.
Nevertheless, six tribes have called AB 167 “fatally flawed.” They claim that AB 167 would threaten their tribal state gaming compacts. They argue that the bill “should not move forward solely for the sake of supporting a business model that might possibly benefit a few tribes in the short term, to the certain and permanent detriment of all other tribes, not to mention, the citizens of California.”
California is considered the largest untapped online poker market in the U.S. Some estimates say it would be worth nearly $400 million annually. Its tribal gaming industry is certainly the largest in the country, accounting for $7.3 billion annually.
Despite that, lawmakers last week pushed online poker back and moved forward daily fantasy sports (DFS) onto the front burner. This appears to be a reaction to the fact that some states are seeking to ban the practice as illegal gambling while others are embracing it as a game of skill.
The attorneys general of New York and Illinois have no waited for their legislators to act before moving to shut down the games. Nevada gaming regulators have ordered websites operating in the state to shut down until they obtain gaming licenses.
DFS allows players to essentially wager on the performance of actual athletes, but in the format of a fantasy sports team. Currently more than 56 million people participate in North America.
AB 1437 would authorize companies in the Golden State to offer the games once they obtain a license. The Government Organization Committee, which is sitting on AB 167, approved of the bill by 17-1.
California’s Attorney General, Kamala Harris, has not taken a position.
Assemblyman Marc Levine told fellow lawmakers last week that DFS is gambling and noted that the bill is being considered by a committee that concerns itself with gambling. That means that in order to address it the lawmakers must put it to the voters in the form of a referendum, he says.
Levine declared, “This is gambling. There’s no doubt about it. Let’s not fool ourselves. An entry fee is a wager; cash prizes are gambling winnings; daily fantasy sports companies are bookies.”
Assemblyman Scott Wilk, who voted for AB 1437 countered, “Whether it ultimately is legal or illegal, I think that’s for others to decide. I think it’s for us to do what we can do to protect our constituents.”
The California Nations Indian Gaming Association (CNIGA) prior to the vote issued a statement criticizing the vote happening ahead of a poker bill.
“The regulation of fantasy sports is well intended. However, the state needs to prove it can deal with one online game–I-Poker–before it takes on others,” declared Steve Stallings, chairman of CNIGA.
He added, “Practice makes perfect applies here. The exercise of debating and approving I-Poker will prove useful in addressing additional details that arise in the new proposals of introducing sports wagering and licensing and regulating DFS.”
Stallings told the Orange County Register, “This hasn’t had the kind of scrutiny from industry experts, law enforcement, or the justice department that Internet poker has had. The state of the legislation is the result of all of that input and information gathering. That hasn’t happened here. There are just too many unanswered questions.”
Before it can come to a vote on the Assembly floor the DFS bill will need to be vetted by the Appropriations committee. But if Stallings’ reaction is any guide, some powerful gaming tribes may be getting ready to put a wrench in the works.
Gray answers tribal critics by noting that DFS sites are currently operating in the Golden State without any regulation while the same is not true of iPoker sites, although California consumers do play on sites that operate illegally.
