On Monday, Assemblyman Mike Gatto (D-Los Angeles) introduced AB 9, new legislation that would legalize online poker in California. Gatto’s legislation was a bit of a curveball, not because of what it contained, but because of who introduced it.
Gatto, a thrice elected member of the Assembly, seems to have beaten Assemblyman Reginald Jones-Sawyer to the legislative punch. Back in August, Jones-Sawyer went on record as saying one of the first things he would do when the legislature reconvened was introduce a new online poker bill – Jones-Sawyer was the sponsor of online poker legislation (AB 2291) during the 2014 session.
The basics of AB 9
The Gatto bill is for all intents and purposes a revised version of proposed legislation crafted by the coalition of 13 tribes (since reduced to 12) that coalesced around their mutual opposition to PokerStars and its California partners – the Morongo Band of Mission Indians, Bicycle Casino, Commerce Casino, and Hawaiian Gardens Casino. And it should be noted that the tribal draft was merely a refined version of Jones-Sawyer’s AB 2291.
As noted above, in late November one of the 13 tribes, the San Manuel Band of Mission Indians, broke ranks and joined the PokerStars coalition, creating a slight shift in the balance of power between the two factions. Although this power shift didn’t stop Gatto from including strict Bad Actor/Tainted Assets provisions in AB 9.
Interestingly, as Chris Grove noted in his OPR Quick Take E-Mail Newsletter on Tuesday, Gatto received campaign donations from tribes in both factions, including PokerStars’ allies Morongo and San Manuel, yet the Bad Actor/Tainted Asset language remains, and in fact goes even further than what the tribes were calling for this past summer to also prohibit new owners of these so-called tainted assets.
Response from Pala Interactive
Jim Ryan, the CEO of Pala Interactive, which is one of the tribes in the anti-PokerStars coalition, told PokerUpdate that on first reading, the Gatto bill has “a few gaps” that will need to be worked out, but called it a good discussion-starter.
Here is Ryan’s statement in full –
Pala like others in the community have just received this Bill and are in the process of doing a detailed review. From a preliminary review we believe that there a few gaps that will require reconciliation amongst the various stakeholder. We also believe that the bill will be a catalyst to these discussions. Pala continues to be committed to securing online poker legislation and will work with the various stakeholders to achieve this goal in 2015.”
Response from Mike Gatto
Speaking to PokerNews.com’s Matthew Kredell, Assemblyman Gatto stated his belief that the proposal can “unite all the various groups” involved. Gatto went on to say:
We have a lot of the same language from last year, but what I think makes our bill special is a regime for weeding out money laundering, guaranteeing foot traffic to casinos and expanding the number of parties who will be able to participate in the marketplace.”
Gatto also stated he expects this to be a year-long debate, which may signal a willingness to compromise on several fronts.
Response from PokerStars and their coalition
PokerStars has not responded to the introduction of AB 9 at this time.
Takeaway #1: Who is Mike Gatto?
Why Mike Gatto?
Assemblyman Reginald Jones-Sawyer had already stated his intention to introduce a bill this month; a bill that would likely resemble AB 9 in most respects considering Gatto’s bill seems to be just the next progression in the AB 2291/Pechanga tribal proposal/AB 9 timeline.
Gatto told Kredell, “This is a Mike Gatto bill… I’ve always been a fair legislator, and we’ll work with a lot of different participants.” Gatto also stated he sees the opportunity for a lot of people to make a lot of money.
In addition to a potential competing bill in the Assembly by Jones-Sawyer, it will also be interesting to see who picks up retired State Senator Lou Correa’s mantel as the online poker champion of the California State Senate.
Takeaway #2: 5-3=2
One licensing requirement that was loosened was the reduction in card room operation experience from five to three years, for an otherwise qualified card room or tribe.
One potential entity this change may appease is the beleaguered Casino M8trix, which opened in August of 2012.
The $800 million Graton Casino would seem to be a better contender, but they opened in November of 2013, which would still place them outside the three-year window.
The impetus for this subtle change is not clear at this time.
Takeaway #3: In-person Internet transactions
Perhaps the strangest part of the bill was the section requiring players to register their online poker accounts and make their initial deposits in-person at the online poker site’s home casino/card-room or what the bill terms “Satellite Service Centers.”
According to the text of AB 9, SSC’s need to be authorized card rooms or tribal casinos. This is an interesting way to appease smaller tribes and card rooms (and possibly racetracks if the language is altered) who are feeling left out by the strict licensing requirements and hefty $5 million upfront fee.
Unfortunately it creates what many feel is a seemingly unmanageable logistical problem; essentially defeating the purpose of Internet poker, and at the same time making online poker sites regional.
Gatto explained the reasoning behind this measure to PokerNews as an effort to “appease” people who have raised concerns over what are essentially non-existent iGaming problems: Underage play and money laundering. He also added that it would presumably increase foot traffic at casinos and card rooms.
This seems like one of the first provisions that will have to go, but perhaps SSC’s could morph into skins of the primary license holder in an amended bill, as Gatto’s reasoning for the provision is sound – it just won’t be practical to require in-person transactions.