A bill that would legalize iPoker in California has gotten further in the legislature than any such bill has ever gotten before. If it passes California would become the fourth, and by far the largest, state to legalize the pastime.
Last week the Assembly Governmental Organization Committee unanimously approved of a bill by the chairman, Adam Gray, sending AB2863 to the Assembly floor. This is the ninth year that a bill like this has been introduced in the Assembly.
Gray said that he believed progress has been made on the two so far insurmountable problems, whether the horse racing industry will have a place at the table, and whether there will be a “bad actor” provision aimed at preventing PokerStars from participating.
This time Gray and his allies have chosen to emphasize the importance to protect California consumers from off-share poker websites that could cheat them out of their money.
“The bill in print right now accomplishes what is most important and sometimes gets lost in this discussion, and that’s protecting consumers,” said the chairman this week.
This same theme was taken up by Poker Players Alliance Executive Director John Papas who went onto the internet to demonstrate how many such sites currently operate unregulated by California law.
The fact that the Assembly has taken action to legalize daily fantasy sports in order to provide consumer protection was also seen as supporting similar action on online poker.
The horse racing industry has also joined to support the bill, dropping its previous demand that it be allowed to operate websites in return for an annual subsidy of $60 million that is called for in the bill. Members now see this as a way to support the industry, which is declining in the Golden State. Some supporters of the bill see the $60 million figure as unrealistically high, however.
Nevertheless that provision remained in the bill, especially after the racetrack industry produced a strong list of supporters to testify before the committee, including union representatives from the Teamsters, the SEIU, and the Jockeys’ Guild.
Two gaming tribes appear to remain opposed to the bill, the Pechanga and Agua Caliente tribes, with Agua Caliente insisting on the inclusion of the “bad actor” clause to prevent Amaya’s PokerStars from operating within the state. PokerStars is so targeted because of its alleged violation of the Unlawful Internet Gambling Enforcement Act in 2006.
Strong supporters of the bill include the Morongo, San Manuel and United Auburn tribes, and the California Nations Indian Gaming Association (CNIGA,) as well as various members of the racetrack industry. California is a strong union state, so union advocacy gives a new potent urgency to the bill that it lacked before.
Gray conceded last week that support for the bill is far from unanimous outside of his committee. “While we have not yet come to a consensus on this issue, through recent meetings with tribal leaders, we have made serious progress,” he said in a statement. He continues to meet frequently with stakeholders, to try to work out a compromise on the “bad actor” clause.
Gray told Poker News, “We’re having meetings every two weeks with a variety of tribal governments with all different perspectives to try to arrive on what that language will look like and to build the consensus necessary to move this forward. I’ve made a verbal commitment and an in-writing commitment right here in the bill that we will in fact put in suitability language, which is the last remaining issue.”
The most recent conference was last week, a meeting with Gray and tribal leaders. Some progress was made, although sticking points remain. Some leaders, such as Steve Stallings of CNIGA, point out that due to the expenses of launching the sites that they will probably not be profitable for several years, so the state won’t collect any taxes during that time.
Others have criticized the assumptions in the bill as not being “real world.’
Assemblyman Mike Gatto, a longtime supporter of such a bill, said last week that he put the bill’s passage this year at being less than 10 percent, due to an inability of egos and power politics to meet somewhere in the middle.
The passage of the bill represents the most progress that has been made since, unlike last year’s bill, which was a “shell” with no actual regulatory language, this bill is detailed. It does, however, include “placeholder” language meaning that some sections, such as those dealing with “bad actors,” still remain to be filled in. will be included in the bill before it is passed off to the Senate, Gray said. These “suitability standards.”
That this continues to be a sticking point can be seen from the relative positions of Robert Martin, a leader of the Morongo coalition and Mark Macarro of Pechanga.
Martin made clear last week that the bill should not pick “winners and losers” in the market, and that including such a provision would welcome a lawsuit.
Macarro of Pechanga insisted that “bad actors” such as PokerStars who operated in spite of federal law, gained an unfair advantage over other competitors who obeyed the law, such as building a brand and customer base.
Although the next stop for the bill is the Assembly floor itself, Sacramento political observers don’t believe it will go any farther without the support of the Pechanga and Agua Caliente tribes. That is because it is being advanced as an urgency measure, which requires passage by two-thirds of both houses.
Last week CNIGA Chairman Steve Stallings issued a statement about the bill:
“On behalf of the 34 member tribes of CNIGA, I commend the Governmental Organization Committee for moving Assembly Bill 2863. We thank Committee Chairman Adam Gray and Assembly leadership for their commitment to move this issue forward.”
Stalling added, “For nearly a decade, Internet poker has been a hotly debated issue, Today’s vote marks a turning point on the issue. For the first time, we have moved closer to a consensus with Tribal governments, card rooms, horse racing industry and labor groups supporting a safe and secure environment for Californians to use today’s technology to play poker.”
Stallings concluded, “Following established association guidelines, we know and understand the complexity of this issue and understand that more work is needed. However, with the momentum established today, an Internet poker bill can and will pass this year.”
Besides calling for a $60 million payment to racetrack interests, the bill would require operators paying a 15 percent tax rate. Only tribal casinos and card rooms would be allowed to participate, and licensees would be allowed to operate up to two sites. Operators would be required to put up $15 million upfront for a fund to deduct tax payments.
If the bill were passed as an urgency bill, the state would have less than a year to write regulations to implement it.
The Golden State’s racetrack interests are clearly hoping for the bill to pass this year. Recently Nick Coukos, president of the Thoroughbred Owners of California, gave a presentation on the bill to his membership.
Coukos and several others including executives with Del Mar, Los Alamitos, the fair circuit, the California Thoroughbred Breeders Association, and California Thoroughbred Trainers association recently signed a letter to Gray that reiterated that the industry is demanding the $60 million annually to be able to continue to offer live racing.
The money would allow racetracks to offer larger purses and attract better horses and jockeys, making it more competitive with states where racetracks are allowed to deploy slot machines.
“It will be the first time we get some other form of revenue which we need eventually,” Coukos told his members. “We’re running at a complete disadvantage to other states in the nation.”
Right now the racetrack industry has exclusive rights to offer gambling online.
