California Mulls Latest Online Poker Bill, with Plenty of Ifs, Ands, or Buts

Posted on: February 21, 2017, 12:30h. 

Last updated on: February 21, 2017, 12:36h.

Casino.org Staff Writer Read More
Expertise: Commercial Gaming.

The California online poker legislative push is back from the dead, and so is State Assemblyman Reggie Jones-Saywer (D-59th District) and his bill. Jones-Sawyer’s attempts to unite warring factions in the state’s gaming industry died in 2014 and 2015, along with his poker bills of those same years, but give the man credit: he doesn’t give up easily.

Assemblyman Reginald Jones-Sawyer AB 1677 California online poker
California State Assemblyman Reggie-Jones Sawyer returns with a new online poker bill, but will he succeed where others, including himself, have failed? Don’t hold your breath. (Image: lasentinel.net)

Undeterred, Jones-Sawyer has presented a new bill, AB 1677, aka the Internet Poker Consumer Protection Act, which offers little that’s new, although it does provide a platform to at least reignite the debate.

At the heart of that debate will be the question of suitability. Because online poker will see operators taxed, a bill to regulate it would need two-thirds majority vote to pass in the legislature. This is impossible unless all future stakeholders, mainly tribal casinos with political capital and lobbyists, are in agreement.

More of the Same

But blocking that outcome are two diametrically opposed groups of tribal operators, who are determined not to agree on the suitability question.

In one corner, the group that has loosely become known as the Morongo Coalition wants PokerStars to be included in a future market, because it has a commercial deal with the internet giant. In opposition, the group known as the Pechanga Coalition doesn’t, for the opposite reason. Instead, it wants as much of the online poker pie as it can get for itself, and views PokerStars as a threat.

Despite this being the real, inescapable issue, AB 1677 passes the buck on this one, leaving the question of suitability up to gaming regulators.

“An eligible entity seeking to offer authorized Internet poker games shall apply to the department for a determination of suitability,” it states. “If the department determines the applicant is suitable to receive a license, the applicant shall then apply to the commission for an operator license.

The applicant shall pay an application processing fee sufficient to cover the reasonable costs associated with the determination of suitability and the issuance of the license.”

Without an overt “bad actor” clause inserted into the legislation, it will be unacceptable to the Pechanga coalition and Jones-Swayer can expect to receive a letter denouncing it within a week or two.

Racing Industry Payday

It’s not as though there has been no progress since Jones-Sawyer last tried his luck at legalizing online poker. Last year, Assemblyman Adam Gray pulled off something of a coup by removing another major impediment to regulation: the state’s racetracks.

The racing industry agreed to its own non-participation in a future online poker market in return for the first $60 million in taxes and licensing fees collected from the game each year. That clause is back, but with a slight tweak in that the industry would collect 95 percent of the first $60 million, which would at least allow the state a small reward for its troubles.

A California online poker market would probably generate that much, but only in its first year, especially with the licensing fees set at $12.5 million, as per the new bill. In a new twist, a racetrack would be allowed to act as “a service provider,” but only if its operating partner agrees to split revenues 50/50 with the track. This would seem to be an unlikely partnership.

The debate begins again with the introduction of this bill, but no one is really holding their breath this go-round.