California online poker legislation, lately floating around as AB 2863, is virtually dead. Despite all efforts, concessions, and discussions in 2016, it seems that there will be no online poker legalized or regulated in the Sunshine State … again.
For the ninth year, the interested parties were unable to make the necessary agreements to get it done.
While Nevada, New Jersey, and Delaware continue to rake in revenue from their online gambling industries, and while daily fantasy sports (DFS) bills are flying through state legislatures faster than Fedor Holz can win another million dollars, California factions refused to find the appropriate compromise. Though some deals were made to get the horse racing industry and others on board with the latest bill, a group of tribes faced off against Amaya/PokerStars and the Poker Players Alliance to stop AB 2863 in its tracks.
The deadline was the end of August. This is being submitted for publication on the evening of August 30. For all intents and purposes, the bill is dead.
On behalf of poker players around the United States, GRRRRR.
Why Hope Lived
The year started with the same hope as every other year. And several online poker bills were introduced into the legislature in the first few months of 2016. But it was Assemblyman Adam Gray who worked hard on his AB 431 legislation to reach compromise with many of the parties involved. Progress transformed the bill into AB 2863, and that one passed the Governmental Organization Committee in April by an 18-0 vote. So far, so good, yet nothing particularly groundbreaking took place.
The actual groundbreaking part was that a deal had been worked out to stop the horse racing industry’s staunch opposition to and lobbying against online poker. By promising them a $60 million revenue-sharing deal, that huge hurdle had been overcome.
This was encouraging…
Amendments to AB 2863 continued to surface throughout the summer, as the tax rate was adjusted and the bad actor clause – by now referred to as suitability – tweaked. But it was the latter that continued to pose the problem.
It is a shame that obstructionist forces continue to block the passage of a pro-consumer online poker bill in California. (1/4)— Eric Hollreiser (@erichollreiser) June 30, 2016
We finally have real progress this year, with the majority of gaming tribes supporting the legislation, along with AFL-CIO, SEIU, (2/4)— Eric Hollreiser (@erichollreiser) June 30, 2016
…Teamsters, horse racing tracks, card rooms and gaming operators. Unfortunately, a recent amendment to AB 2863 is unconstitutional (3/4)— Eric Hollreiser (@erichollreiser) June 30, 2016
and our opponents seem intent to expand upon that flawed and unconstitutional language. (4/4)— Eric Hollreiser (@erichollreiser) June 30, 2016
An amendment revealed in June set up the proposed law to exclude operators and companies that accepted money from US customers after December 2011, which meant that PokerStars was going to be able to participate in the industry in California. The backlash was quick and strong from a group of six tribes led by Pechanga and Agua Caliente.
By the middle of June, Gray changed the bill’s suitability wording to require that any operator that took US players’ money after the UIGEA passed in 2006 would have to pay a $20 million fee to participate or wait five years to apply for licensing. That version of AB 2863 passed the Appropriations Committee and went to the Assembly floor for further discussion and a potential vote.
This was more encouraging…
The opposing tribal group was determined to fight the bill, as they knew that PokerStars would likely pay the $20 million to access the market immediately. So despite the progress that had been made thus far, the group vowed to change it to exclude PokerStars.
With Gray seemingly working all of his options behind the scenes and the bill being closer than ever to passage, and with the deadline more than a month away at that point, hope lived.
How Hope Went Into a Coma
The rhetoric between the tribal factions opposing PokerStars and the Poker Players Alliance supporting PokerStars became quite divisive. Both called the other an obstructionist to California online poker. And poker players began to vent their frustrations on social media.
The opposing tribes proposed an amendment to exclude bad actors for 10 years AND require them to pay a $60 million fine at that time to enter the industry. Gray took that into consideration and amended his bill to require bad actors (PokerStars) to stay out of the market for the first five years of operations, with no fine available to alter that time period.
Interestingly, this final amendment happened in the middle of August, just a few weeks after Pechanga hired the BBC Public Affairs lobbying firm to represent their utility and energy interests in the legislature. BBC was founded by former State Rep. Gary Condit, whose son-in-law just happens to be Assemblyman Adam Gray. The LA Times exposed the murky ties between Pechanga and BBC that both groups claim had absolutely no bearing on Gray’s last-minute amendment to exclude PokerStars from the market.
With that, PokerStars threatened litigation. And the PPA officially urged lawmakers to reject the bill as it stood. “These proposed amendments would restrict competition and leave players dissatisfied,” read the press release. “We are deeply disappointed that Chairman Adam Gray has chosen to play politics at the behest of special interests,” said the opposing special interest.
How Hope Died
The deadline for the current California legislative session is August 31. In order to pass AB 2863, it would have to pass in the Assembly and Senate, in spite of all of the opposition and threats, and get to Governor Jerry Brown for a signature. It is highly unlikely to happen in the last 24 hours of the session.
Poker players are angry.
.@RichMuny Let's take a poll!— Isaac Haxton (@ikepoker) August 19, 2016
Which would you prefer?
They are disillusioned with the PPA, which is supposed to represent the best interests of poker players but is accused of only representing PokerStars. They are frustrated that no matter how much progress was made and how many years these discussions in California have been happening, no deal could be reached. Neither side was willing to compromise enough to get it done.
To clarify, PPA has not come out against the CA online poker bill. We are simply asking the legislature to remove the "bad actor" amendment.— PokerPlayersAlliance (@ppapoker) August 24, 2016
The CA online #poker bill's new "bad actor" amendment harms its prospects for passage by turning powerful tribes & card rooms against it.— PokerPlayersAlliance (@ppapoker) August 24, 2016
Rest in peace, AB 2863. You were a good kid with a lot of potential, but your parents locked you in a hot car and couldn’t stop arguing long enough to crack the window.