California Online Poker Hearing: Live Reporting, April 27

Steve Ruddock April 27, 2016

California Online Poker Hearing: Live Reporting, April 27

US Poker will post continuous updates of today’s hearing in front of the California Assembly GO (Governmental Organization) Committee, scheduled for 1:30 PM.

The hearing will be live streamed here.

The only item on the agenda is Adam Gray’s and Reggie Jones-Sawyer’s online poker bill, AB 2863.

Gray is the Chairman of the GO Committee.

What to expect

US Poker anticipates the hearing will last between two and three hours, and will result in the committee voting on and passing AB 2863.

However, we also anticipate several points of disagreement being raised by the state’s many, and varied stakeholders. The level of disagreement will provide us a solid bellwether when it comes to the bill’s potential path forward this session.

The hearing

1:30 PM (PST)

Chairman Adam Gray, the chief sponsor of AB 2863 calls the meeting to order.

Gray takes the podium and details how we’ve gotten to this point, and why AB 2863 is necessary.

Gray says AB 2863 is the product of hours of meeting with potential stakeholders.

Gray believes the annual subsidy to horseracing has solved this issue, but the debate over suitability (namely PokerStars) hasn’t been worked out, but progress is being made.

1:40 PM

Reggie Jones-Sawyer, a cosponsor of AB 2863 picks up where Gray left off, saying the coalition supporting the legislation has grown (“oh how it has grown”).

Jones-Sawyer echoes Gray’s comments about the current unregulated online poker environment in California.

1:45 PM

PPA Executive Director John Pappas takes stand, and is going to detail the ease with which Californians can access unregulated online poker sites. Pappas will demonstrate just how it easy it is in a few moments.

Pappas cites scandalous Lock Poker as a prime example of how unprotected Californians are.

Pappas begins real time demonstration.

Real time demo is a new wrinkle at these hearings. Hard to deny Californians aren’t being directed to illegal offshore sites when it’s right there in your face. Pappas also bounces back to the potential risks, once again citing Lock Poker closing down allegedly owing many millions to players.

Pappas notes this is the ninth year California has had these discussions and its time to put some of the differences aside. Notes regulators have done a good job in other locales, and stakeholders need to put the interest of consumers ahead of competition.

Assemblyman Daly asks Pappas about potential tax rates, and how they’ve been implemented in other locales. Pappas states that cost of high tax rates would likely be pushed onto customers and would keep unlicensed sites down.

This line of questioning was completely absent last year, and is a good sign that lawmakers are brushing up on the issue.

2 PM

Kumeyaay Nation spokesman says the tribe is neutral on the bill.

The tribal governments in support of the bill are now approaching.

Morongo Chairman Robert Martin (aligned with PokerStars) is now speaking in support of AB 2863. Says it protects consumers and creates jobs and revenue for California.

Martin says the state shouldn’t be legislating suitability. That should be left up to the regulators.

Rincon Council member and CNIGA Chair Steve Stallings is concerned over high tax rates and licensing fees.

Stallings, as well as Pala and UAIC representatives support the bill.

Chairwoman Lynn Valbuena of San Manuel also supports the online poker bill.

All of the representatives from the Horseracing industry voiced their support for the bill.

there have been few surprises thus far, although the stakeholders and lawmakers are being more specific than in the past.

Agua Caliente Chairman Jeff Grubbe is throwing some cold water on AB 2863, or better said, being pragmatic, noting that the $60m racing subsidy is quite large and wasn’t really hashed out between potential operators. Grubbe is also highlighting the many blank spots in bill, most notably the vague suitability language.

Grubbe essentially opposes the bill, but is remaining neutral at this time.

Pechanga Chairman Marc Macarro (closely aligned with Agua Caliente) is making a similar case. Alas, there appears to be no forthcoming compromise on the PokerStars issue.

Macarro juxtaposes PokerStars 2006-2011 to current “illegal” offshore operators, and leaves the question unasked, but it’s “why is PokerStars ok but not these other sites?”

Macarro also notes Nevada has a bad actor clause that keeps PokerStars out.

Yocha Dehe and Kumeyaay take no position, but fall in line with Pechanga and Agua Caliente on bad actor language.

2:15 PM

Horseracing representatives take the stand and the hearing grinds to a halt – they like to talk about unrelated things.

Horseracing representatives formally support AB 2863.

Horseracing support is far from surprising. AB 2863 earmarks up to $60 million annually for the industry, a number that all of the operators combined are unlikely to generate in profits. This could be a point of conflict for some potential stakeholders, as even though the money is coming from the state’s cut of the iPoker pie, horseracing is essentially guaranteed to be the biggest beneficiary of the industry.

Barry Broad from Teamsters (aligned with horseracing industry) echoes racing’s opinions on AB 2863.

The subsidy hasn’t just garnered the support of Horseracing for AB 2863, they are basically now lobbying in favor of the bill to pass immediately. This is a really good development, as it puts extra pressure on lawmakers with horsetracks in their districts to pass the bill.

The more I think about it, the more I think the horseracing subsidy is an incredibly shrewd and genius move by Adam Gray. Suddenly politicians who previously had no interest in online poker now have unions and horseracing workers calling and asking them to support AB 2863.

Union support has potential to put online poker on the radar of politicians.

We basically saw a parade of California voters just tell their representatives that every union supports this bill, and thinks it’s necessary to save their pensions and jobs. Very powerful testimony.

2:45 PM

Card room representative for Bicycle, Commerce and Hawaiian Gardens (aligned with PokerStars) speaking in support of AB 2863. Says “we can get it done this year.”

David Fried is speaking for a separate bloc of 20 card rooms, but wants to make sure the bill doesn’t prohibit small and medium sized card rooms. Letter of support can be seen here

There is a lot of support for AB 2863, but it appears that the Pechanga coalition is going to remain steadfast in their opposition. It’s widely believed that as long as Pechanga opposes the bill it will not be brought up for a vote on the Assembly floor.

By and large card rooms are in support of the bill, but they will likely raise some minor (far from insurmountable) concerns if it does progress through the legislature.

Several local governments have testified in support of the bill.

3 PM

Dissenters are now testifying, including the Coalition to Stop Internet Gambling.

CSIG representative referenced lottery scandals, something I recently wrote about.

3:15 PM

Assemblyman Jim Cooper is raising concerns about revenue. He has also raised concerns over the state’s capacity to oversee and regulate online poker. Cooper is a very serious and pragmatic member of the committee.

Gray states that he’s been meeting every two weeks with stakeholders.

Gray reiterates the current suitability language is a placeholder, and they continue to work on what he feels is the lone remaining issue.

Suitability language would be added before the bill went to the floor of the Assembly for a vote according to Gray.

As David Fried noted:

Assemblyman Gipson asks CBGC agents (from the audience) if the process is thorough enough. Regulators seem convinced the standards are high.

With CBGC already up front, Assemblyman Cooper circles back to his concerns from last year, namely the department’s backlog of current cases and their ability to oversee online poker.

Regulators say they’ll have resources and know-how to handle it. Say they will work with consultants and other jurisdictions to gain experience in regulating online poker.

Assemblyman Levine brings up Problem Gambling issues, another ancillary point that is typically not brought up in California. The broaching of all these secondary issues during today’s hearing is a good sign in my opinion.

3:45 PM

GO Committee passes AB 2863 by a vote of 18-0