Latest California Online Poker Bill, AB-2863, Introduced

The California State Legislature will again address the controversial topic of online poker at some point in 2016, following the introduction of AB-2863 (Assembly Bill 2863) by California State Representative Adam Gray on Friday.

Gray’s AB-2863 is an amended version of the AB-431 “compromise” legislation championed last year by Gray, who used his position as the chairman of the state Assembly’s “GO” (Governmental Organization) Committee to boost his earlier bill through an initial committee vote.  However, opposition from a minority, but powerful, hardline tribal coalition and overriding interest for a DFS (daily fantasy sports) regulatory bill robbed Gray’s early effort of any legislative momentum it possessed.

State of CaliforniaThis year’s version, AB-2863, is similar but not identical.  One of the major changes is an amendment through which the state’s pari-mutuel facilities would be excluded as active operators while still being in line to receive as much as $60 million annually from the state’s collective online-poker revenues.  The tradeoff is that by eliminating the racetrack as active operators, Gray might be able to appease that hardline tribal faction, which continue to insist on exclusivity over most of California’s potential online-gambling offering.

The other big stumbling block to earlier bills, the “bad actor” language included which was designed to target international poker giant PokerStars, also remains absent from Gray’s latest submission.  Instead, AB-2863 includes a generalized suitability requirement contingent on the approval of the state’s gaming regulators.  Such suitability requirements are standard in all licensing jurisdictions, and the only objections to date have come from a minority of the state’s tribal nations, who previously had insisted on being subject to approval only from tribal regulators.

Application and license fees have yet to be defined within AB-2863, which would create a framework to license and regulate both primary online operators and secondary service providers.  The previous version of Gray’s bill included a $15 million licensing fee, and an ongoing tax rate of 15% of GGR (gross gaming revenue).

One thing that does remain from previous measures, that players will likely find untenable, is that the bill would make the playing of poker on unlicensed, out-of-state or offshore sites a felony.  The playing of online poker in any form has never been illegal under any California law, and consumers may protest that aspect of the measure in that it may provide the state’s tribe’s with a legal monopoly over online poker, while also limited online consumer protections because of the tribes’ ongoing sovereignty claims.  Expect consumer-rights organizations to protest that aspect if the bill gather steam.

Several of the state’s stakeholders have already issues statements of support for Gray’s AB-2863 bill.  For instance, Rincon Band of Luiseno Indians Chairman Bo Mazzetti issued the following statement on Friday:

“The Rincon Band of Luiseño Indians has worked and continue to work with the Legislature, Tribal leaders, cardrooms and other key stakeholders in passing meaningful Internet poker legislation. The introduction of Assembly Bill 2863 provides a vehicle for the passage of Internet poker.

“Through Assemblyman Gray’s hard work last year and continuing open and honest dialogue this year, the momentum behind Internet poker legislation builds.

“Paramount to any gaming legislation is the protection of children and the vulnerable; California job creation; revenue generation for state services, and consumer protection. AB 2863 expands upon all of these ideals.

“We support Assemblyman Gray’s efforts and look forward to getting this done in 2016.”

The Rincon nation already has an operating agreement with Las Vegas-based Caesars Entertainment. which conducts a World Series of Poker Circuit series event once per year at the Rincon casino, located not far from San Diego.  An online Rincon site affiliated with Caesars (Harrah’s) and the WSOP would almost certainly be one of the strongest brands in a newly regulated California online poker market.

No dates have yet been set for any hearings or votes on Gray’s latest bill, which is something like the 12th legislative proposal in California regarding online poker over the past nine years.  Once viewed as the next likeliest state to approve the game, the state’s ongoing legislative gridlock has allowed other jurisdictions, such as Pennsylvania, to move closer to regulation.  Nonetheless, there’s still a chance that California could find a way to legalized online poker in 2016 or 2017.

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