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California online poker bill AB 2863
California Assemblyman Adam Gray introduced AB 2863 during the 2016 legislative session. The bill took a different approach from previous years’ efforts to legalize online poker in the state. In those attempts, the various stakeholders were unable to reach a consensus and the bill failed to come to a vote before the end of the session.
In 2016, Assemblyman Gray hoped to solve the issue with the debate about whether horse racetracks should get involved in the state’s online poker industry.
The California horse racing industry would have received up to $60 million per year from online poker taxes if AB 2863 had passed the state legislature. Additionally, 5 percent of the annual taxes would have gone to California’s Fair and Exposition Fund, which supports administering agencies, state, county and district fairs.
The other 95 percent would be split three ways. Purses for the horsemen would receive 95.4 percent. Finally, the remaining 4.6 percent would be evenly divided between pensions for horsemen and employees of racetracks.
AB 2863 did not address licensing fees or a tax rate. These portions of the bill were intentionally blank, while the previous version required a $15 million deposit and a 15 percent tax rate.
Another issue in AB 2863 was a bad actor clause, which is why some California tribes want to keep PokerStars out of the state. Consequently, this led PokerStars and its coalition to rally against AB 2863.
The 2016 legislative session ended in California on Aug. 31, 2016. AB 2863 did not get a vote and was thus declared dead for the year. Whether the issue will again see the light of day in 2018 is anyone’s guess.
Past California online poker bills
California Assemblyman Reginald Jones-Sawyer introduced AB 167 in 2015. The bill would have permitted all card clubs, tribes and racetracks to offer online poker in California.
Additionally, it would have created player penalties for giving action to unlicensed, offshore sites. This bill had the support of the PokerStars coalition, but not the Pechanga coalition.
Assemblyman Mike Gatto introduced AB 9 during the 2015 California legislative session. This bill included a “bad actor” clause and did not permit licensing of racetracks. This bill had the support of the Pechanga’s coalition, but not PokerStars’ coalition.
Finally, State Sen. Isadore Hall and Assemblyman Gray introduced SB 278 and AB 431, respectively. These were placeholder bills with no primary language about online poker.
PokerStars’ coalition consists of the Morongo Band of Mission Indians, San Manuel Band of Mission Indians, Commerce Casino, Hawaiian Gardens and the Bicycle Casino.
This group opposes the so-called “bad actor” clause, which would exclude any company that accepted bets after Dec. 31, 2006, in the US without proper licensing.
The reason for PokerStars’ coalition’s opposition to the clause is apparent. As a result of the provision, PokerStars would be excluded from operating in California, removing the group’s partner.
The PokerStars coalition also supports the inclusion of the state’s racetracks. The consensus is that any bill that does not include the horse racing industry will get a veto by Gov. Jerry Brown.
There are seven tribes that oppose bad actors and the participation of racetracks in California. Those tribes are:
- Agua Caliente Band of Cahuilla Indians
- Barona Band of Mission Indians
- Lytton Band of Pomo Indians
- Pechanga Band of Luiseño Indians
- Viejas Band of Kumeyaay Indians
- Yocha Dehe Wintun Nation
- Sycuan Band of the Kumeyaay Nation
Other tribal positions
Most other California tribes have remained mostly silent on the issue of racetracks or bad actors. Pala Interactive, the online gaming subsidiary of the Pala Band of Mission Indians, appears to expect the inclusion of racetracks.
Rincon Band of Luiseño Indians partnered with Caesars for its land-based casino. Hence, it seems logical that it would use WSOP.com for its interactive gaming. Rincon and Caesars both stated that they support the inclusion of PokerStars in the California online gaming market.
California online poker FAQ
Why is California behind other states in legalizing online poker?
While California was one of the first states to offer legal card clubs, its ability to move that a variety of factors hampers the industry’s move to the internet.
There are three gaming segments in California: card clubs, racetracks and tribes. All three have different opinions as to how to approach online poker, even within the groups. Because of this, there are issues with agreeing on how to move forward.
Additionally, there are conservative groups that oppose any form of gambling expansion.
Are there any legal online poker sites in California?
There are no legal poker sites in California. Hence, Bovada, Winning Poker Network, Merge Gaming and all other offshore sites operate unlicensed.
What are the chances that California legalizes online poker?
California online poker appears to be unlikely to pass in the near future.
What are the main issues keeping online poker from legal online poker?
The main issues pertaining to the inclusion of racetracks and PokerStars.
Will California offer legal online casino games?
All bills introduced up to this point have only proposed legalizing poker. They did not include casino games or sports betting.
Will California pool with other legal poker states?
Most California online poker bills have proposed the possibility of sharing players with other states, so it is possible that California could choose to pool players with New Jersey or Nevada should the state move forward on legalizing internet poker.
How soon would California launch online poker if they pass legislation in 2018?
It would take between 12 and 18 months for California online poker to launch if approved by lawmakers.
Will PokerStars operate in California?
That depends on the bill that eventually passes. While some include language that would specifically exclude PokerStars, some industry experts believe that a bill excluding PokerStars can never pass in California.
How much tax revenue will California generate?
It is estimated that California online poker rooms would generate about $350 million a year in rake. This would translate to $35 million a year in tax revenue at a rate of 10 percent.
Additional licensing fees for sites and employees would also create taxes for the state.
Will California poker sites be available outside of California?
Legal California poker sites would only be available in states where a liquidity sharing agreement is created. Otherwise, players will be required to be in California at the time of action.