Comparing California Online Poker Bills AB 2291 and SB 1366

John Mehaffey February 24, 2014 897 Reads

Two online poker bills were introduced in California on Friday.  The text of both bills was published by Online Poker Report. 

There are many similarities between the two bills.  Both only allow online poker.  Each only allows operators to be commercial card clubs and tribal casinos, leaving racetracks out of the picture.  Cash game rake is charged per hand as opposed to a percentage of the pot.  This mirrors policy in the state’s live poker rooms.  There are also enforcement policies to deter offshore firms from operating unlicensed sites. 

The bills are different in several ways.

How AB 2291 and SB 1366 Differ

SB 1366 is 93 pages.  It goes into far greater detail than the 69-page AB 2291 bill.  This gives it several points where it includes additional regulation or more specific requirements.  There is identical language in both bills that may have come from failed versions in past legislative sessions.  This makes it likely that the differences are intentional.

Interstate vs Intrastate

AB 2291 forces California to opt out of any potential federal online poker network unless forced by Congress.  It also forbids the state from entering into any interstate liquidity sharing agreements.  SB 1366 allows California to form partnerships with other states and enter a federal pool of players, provided California law is followed. 

Experience

Both bills require operators to have experience in the gaming industry.  AB 2291 requires a casino to have at least five years of experience in operations.  SB 1366 only mandates three years of experience.

Unregulated Site Enforcement

SB 1366 carries the language:

“Any money, other representative of value, or real or personal property used in, or derived from, the play of a gambling game provided on the Internet that is not authorized by the state pursuant to this chapter is subject to seizure…”

That section does not clarify whether players would fall under that term.  AB 2291 carries enforcement language that specifically targets unlicensed offshore sites that continue to operate in California. 

Skins

SB 1366 has a section that covers how skins would operate as strictly marketers.  While AB 2291 addresses partnerships, it does not go into the detail about networks and skins that its senate counterpart does.

Bad Actor

Both bills carry a “Bad Actor” clause.  This covers companies and individuals that operated unlicensed online gaming companies and keeps them out of the market.  SB 1366 allows any company that did not operate in the U.S. after December 31, 2006, to enter the regulated California market.  AB 2291 leaves the date blank, allowing it to be debated in the legislature.

Tribal Gaming

SB 1366 has an expanded section that contains language pertaining to tribal gaming operators.  This portion of the bill addresses how tribes will obtain licensing and automatically qualifies any existing brick and mortar gaming pact to operate over the Internet without an application fee or additional scrutiny.  AB 2291 contains some language that covers this, but not in the same detail. 

Cash Transactions

AB 2291 allows players to initiate cash transactions at casino cages associated with regulated poker sites.  SB 1366 specifically forbids cash and money order transactions.

Taxes

SB 1366 requires poker sites to withhold 5 percent of any tournament win of more than $600 if it was also 300 times the buy-in.  The bill also requires an annual reporting of all player deposits, wins and losses to the state.  AB 2291 compels poker sites to report player wins for tax purposes, but does not give specific requirements.

Support

SB 1366 requires sites to offer 24-hour phone support to players.  AB 2291 requires 24-hour support, but does not specifically mandate phone support.

California Rake Model Problematic

Interstate agreements will be difficult due to the unusual nature of how California poker is raked.  State law forbids the house from taking a percentage of the pot.  Instead, card clubs and tribal casinos either charge an amount per hand or a time charge.  Charging by the half-hour is not an ideal policy for online poker so the charge per hand policy will be used. 

All three states that are live in the U.S. rake a percentage of the pot.  This is industry standard and is likely to create a conflict with California’s online poker rooms if interstate liquidity is ever considered. 

California Online Poker Bill Details

The details of AB 2291 and SB 1366 may be found at Californiaonlinepoker.com.  The full text of AB 2291 and SB 1366 may be found at OnlinePokerReport.com.

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