Online poker advocates have been trying to legalize and regulate online poker in California since 2008. While each year seems to bring more promise than the last, never has so much progress been made as in 2016.
Even so, the bill has yet to get to the floor of the legislature for an actual vote. The latest happenings are promising, as more compromises have been reached than in any past year, but one large obstacle remains – that of the bad actor clause in the bill. And a group of influential tribes are doing everything possible to stop the latest bill in its tracks.
Quick 2016 Recap through May
This year started off with a number of online poker bills again on the table, but only one California lawmaker reached out to all interested parties to make progress. Assemblyman Adam Gray took his AB 431, tweaked and reworked it, and eventually transformed it into AB 2863.
The new bill went to the Governmental Organization Committee in April and passed by a vote of 18-0. The Assembly Appropriations Committee was scheduled for a May hearing, which was rescheduled to June. Despite having worked out a $60 million revenue-sharing agreement with the horse racing industry to overcome that obstacle, there was more work to be done on the bad actor clause and tax rate.
"This bill is not yet ready" the California online poker mantra for the past 10 years— Steve Ruddock (@SteveRuddock) June 15, 2016
On June 8, amendments to Gray’s bill were released, revealing a graduated tax rate on gross gambling revenue from 8.47% to 15% and a licensing fee of $12.5 million. The bad actor clause was adjusted to exclude companies that accepted money from US customers after December 2011. Since PokerStars and Full Tilt left the US earlier that year, the clause allows the companies to participate in the California online poker market.
While the PokerStars coalition of tribes, unions, tracks, and land-based cardrooms was on board with the newest version of the bill, a group of six tribes – the most outspoken being Pechanga and Agua Caliente – were not happy. Within days, a statement from those objecting tribes sent a letter to Gray, stating in part, “Although we have made some progress under your leadership, we regret that your amendments … related to suitability standards and taxation force us to oppose the bill.
The group of six tribes stood against the PokerStars coalition that recently grew to 21 entities, while more lawmakers got into the mix, like Appropriations Chairperson Lorena Gonzalez.
A June 15 hearing on the new bill was postponed, but the Appropriations Committee did pass AB 2863 one week later on June 22. The most recent version of the bill changed the bad actor clause to date back to the UIGEA passage in 2006 but gave offending companies the opportunity to pay a $20 million fee to bypass the clause or wait five years to apply for licensing.
@ppapoker Said the PokerStars shill.— Victor Rocha (@VictorRocha1) June 15, 2016
The bill then went on to the Assembly floor, where it now awaits discussion in the House before a possible vote. The opposing tribes were so incensed by the movement that they assured a “robust discussion” in the Assembly and also released the results of a push poll that showed most Californians oppose online poker legislation.
There are several things that may happen. First, Gray and other supporters of AB 2863 can try to push it through the Assembly and then Senate despite the objections of the Pechanga group of tribes. Second, the Pechanga group could stop the bill in its tracks and prevent any further movement on the bill before the deadline at the end of August.
The Pechanga-led group seems to be standing firm on the objection to the bad actor language in the bill and refuse to make any compromise that will allow PokerStars into the California market. This could be an obstacle that bill supporters cannot successfully hurdle.
Agua Caliente's Grubbe seemed to be resigned to the fact that the Cali online poker bill is going to the Assembly floor, will fight it there— Dustin Gouker (@DustinGouker) June 22, 2016
Reportedly, Gray and others are still in talks with the opposition. With two months left to find a compromise or take a risk, news should be forthcoming in the next few weeks. There must be time to pass the bill through the Assembly, then move it to the Senate floor for discussion and a vote, and finally send it to Governor Jerry Brown for final approval.
Keep your eyes and ears open for updates.