The deadline to introduce bills into the California legislature is always busy, and this includes two bills that would authorize iPoker in the state.
One bill, introduced by state Senator Lou Correa is a repeat of a bill introduced last year. Correa’s bill is clear. It would allow any non-house-banked poker game. Any other kind of online gaming in the state would be a criminal misdemeanor, subject to seizure of assets. Tribes would be licensed if they had run a poker room for at least three years or have a compact with the state for casino gaming. Card rooms would be eligible and would be licensed by the California Gambling Commission. Tribal entries would be licensed by the appropriate tribal gaming commission.
The “bad actor” clause—any online entity that had accepted U.S. bets after the 2006 Unlawful Internet Gaming Enforcement Act—is tough and meaningful. Any such operation would be banned forever.
The bill does not prohibit interstate compacts and is silent on the notion of opting in or out of any federal bill authorizing online poker or full iGaming.
The tax rate is 10 percent of gross gaming revenues. The bill is considered an “urgency” bill, which goes into effect immediately, and requires a two-thirds majority of both houses to pass.
The second bill is sponsored by Assemblyman Reggie Jones-Sawyer, and is supported by a consortium of tribes, including Pechanga, Agua Caliente, San Manuel, Lytton Rancheria, Sycuan Band, Viejas, Barona Band of Mission Indians and others. Some of the stipulations of this bill are:
• Licenses for tribes and card rooms;
• 10-year, non-transferable licenses;
• No online cafés;
• $5 million licensing fee;
• Undetermined regulatory costs;
• A fund to identify and prosecute illegal online casinos;
• A ban on any state participation in federal online gaming laws;
• No determination of “bad actors”—the regulatory bodies can apply any penalties;
• Prohibits interstate compacts;
• A similar “urgency” status like Correa’s bill.
These bills will be considered by the California legislature this session, which opens on February 22.
The Golden State has more than 38 million residents, by far the largest market for internet gaming. It also has the largest Indian gaming industry in the nation. Seven powerful gaming tribes in the state, along with several others, including Southern California’s Pechanga tribe, are pushing the proposal. Some form of online gaming has been proposed in the legislature each of the past four years.
One version of the proposal would forbid “bad actors,” which have operated online gaming in the U.S. in violation of federal law from participating. Another proposal would limit each license holder from operating more than one gaming site. Licensees would pay $5 million and 5 percent of gross revenue. Any number of licensees would be allowed, although they would be limited to gaming tribes or card rooms that have operated for at least five years.
Currently Nevada, New Jersey and Delaware offer online gaming. In Nevada, for instance, only online poker and its derivatives are legal, although the state is considering expanding that.
An uncertain impact will be posed by the recent conviction on eight felony counts of Senator Rod Wright—the most powerful and prominent legislative booster of online gaming in California. None of the charges were connected to his support of online gaming. However, it is considered a blow to the effort to legalize it, but not necessarily a fatal one. It could mean that such a bill will favor tribal gaming interests at the expense of card rooms and other interests.
