Another California Online Poker Bill Introduced, Prognosis Grim

Updated: February 23rd, 2017 by Dev Ops

Stop us if you’ve seen this one before: A bill seeking to authorize and regulate intrastate online poker has just been introduced in the US’s largest state, California.

Well, it’s true enough.  A few days ago, California State Assemblyman Reginald Jones-Sawyer introduced Assembly Bill 1677 (AB 1677), called “Internet Poker Consumer Protection Act of 2016” [sic].  One supposes one of the first changes to the bill by Jones-Sawyer will to be to update the measure to its current year, 2017, and yes, this bill is a virtual carbon copy of last year’s bill introduced by Jones-Sawyer.

california-stampAnd as in years past, the bill is almost certainly doomed to a stalemate — and eventual defeat — due to opposition from the small coalition of hardline California tribal nations who demand exclusivity to any future online poker in the state.  That coalition has demanded no licensing opportunities for the state’s race tracks and other pari-mutuel facilities, along with “bad actor” language designed to keep international giant PokerStars from being able to offer its brand in the state.

That coalition, led by California’s Pechanga and Agua Caliente nations and including about a half dozen other powerful casino-operating tribes, has stonewalled every online poker bill not catering to their exact demands for the better part of the last decade.  Since Jones-Sawyer’s bill doesn’t do that catering to the Pechangas, more stonewalling is almost certainly in store for the measure.

What will resolve the ongoing impasse is when several more US states, such as Pennsylvania and New York, legalize the online game.  Only then, when real tax revenue is coming in to these other large-population states, will the hardline tribes reassess the situation and the income that they’re not receiving.

Soapbox moment aside, let’s look at the basic details of what’s in AB 1677:

  • As noted, racetracks and other pari-mutuel outlets to be barred from participation.  However, 95% of the first $60 million the state receives in taxes from licensed operators will be paid to horseracing interests;
  • No “bad actor” date defined in association with the federal implementation of the UIGEA (Unlawful Internet Gambling Enforcement Act).  Instead, the suitability of all applicants will be assessed by state gaming regulators;
  • Operator fees will be set at $12.5 million annually, and initial licenses will be renewed automatically and annually for the first seven years; annual licence fees can be applied against taxes owed;
  • A progressive tax rate for operators will be in force: 8.847% if annual GGR is under $150 million; a tax rate of 10% if the GGR is between $150 and $250 million; a rate of 12.5% if the GGR is between $250 and $350 million; and, if an operator’s annual GGR tops $350 million, the rate jumps to 15%;
  • The bill also calls for the creation of an agency called the Unlawful Gambling Enforcement Fund (UGEF), which will be tasked with cracking down on offshore sights offering online poker to California residents.  Given that most offshore poker sites have voluntarily withdrawn from other US states that have authorized online poker, this is more a white elephant created to soothe feelings rather than have any real, meaningful impact.
  • An age 21 minimum for players;

Jones-Sawyer’s bill has received its mandatory first hearing and been assigned to the Assembly’s “GO” (Governmental Organization) committee.  California’s official legislative tracking site indicates that the bill may receive its initial committee consideration on March 20th.

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