California Online Poker Bills
There have been more than five online poker bills introduced in the California legislature in the past five years, none of which have passed. The most recent bills up for discussion were SB 1366, authored by State Sen. Lou Correa, and AB 2291, championed by Reginald Jones-Sawyer. These too were dropped when their sponsors decided that more time was needed to work out terms agreeable to all parties.
Jones-Sawyer is already in the process of revising his bill and has promised to release a new and improved version of the legislation as soon as the next legislative session opens in December. Both SB 1366 and AB 2291 included bad actor language and would have only legalized online poker while excluding casino table games like blackjack and roulette. PokerStars will lobbying hard during the next five months against any bad actor language which could lock it out of the state.
Most analysts believe that it’s only a matter of time before online poker is legalized in California. But only when the state’s horseracing tracks, Indian tribes, brick-and-mortar cardrooms and other gambling interests can come to compromise will online poker become a reality in the state.
AB 2281 Online Poker Bill Details
AB 2291 is being sponsored by California State Representative Richard Jones Sawyer. The Bill seeks to regulate online poker gaming in California, but it will prohibit all games that are banked by the house – online casino games. This bill has been defined as the IPCPA (Internet Poker Consumer Protection Act of 2014). At its core, this online poker bill seeks to establish 2 funds: the Internet Poker Fund and the Unlawful Internet Gambling Enforcement Fund. The latter fund would collect a percentage of the revenues for combating illegal offshore operators as well as Internet cafes that offer online poker games. The Internet Poker Fund would collect allocations of taxable profits for the provision of social programs.
The state of California would issue a ten-year licence to online poker sites in California that have paid a deposit of $5 million. This deposit would act as security towards future taxation. Since AB 2291 is categorised as an urgency statute, it requires a two thirds majority in order to be passed into law. It must move through both chambers in the California state legislature – the House and the Senate. Should the bill be passed into law, state regulators have 270 days to enact the regulations. There are numerous conditions attached to AB 2291, including the fact that California will be barred from concluding interstate online poker agreements. The bill also acknowledges that there is an element of skill involved in winning games poker, and that skilled players have greater earning potential over the long term. This is the primary reason why legislators seek to regulate online poker and ban online casino games.
All potential applicants are required to have at least 5 years of gaming experience in the state of California. Applications are limited to official tribes and card clubs only. Partnership formation will be limited, and stipulated by the terms of AB 2291. Further, another important requirement is that all banking information, employees and addresses must be California-based. According to the bill, municipalities will be prohibited from regulating the industry, and this includes banning regulated online poker as well as hiking taxes on industry. The date when all online poker sites will go live is January 1, 2015, but it is subject to change. A notable inclusion in this bill is the Bad Actor Clause, but the date has yet to be determined by legislators.
The state of California wishes to act as a responsible gaming advocate and as such the minimum age for regulated online poker gaming will be 21. Online poker rooms are required to verify the identities of players via a government database. All pertinent information will be collected, including Social Security cards, government issued IDs and so forth. All winnings will be taxable and players will be required to file the necessary tax forms. In terms of payments in and out of online poker accounts, it will be necessary for segregated accounts to be held at the online poker rooms. Credit facilities are expressly prohibited. All the online poker rooms that receive licensing will be required to display responsible gambling information at Login. 24/7 support is mandatory and all representatives must be based in California.
SB 1366 Online Poker Bill Details
SB 1366 is another poker bill that is being considered in the California Senate. This online poker bill was released on 21 February 2014. The chief sponsor of the bill is California State Senator Lou Correa. He is the self-same sponsor of the 2013 bill SB 678. Like AB 2291, this bill is classified as an urgency statute. Simply put, this means that it requires a two thirds majority to pass, and once it is passed it will become law immediately. In much the same fashion as the other bill currently under consideration, SB 1366 will be regulating online poker only, within the geographic borders of California. Also important is that online casino games are expressly excluded from this bill. The license that would be granted to potential applicants would be valid for 10 years and tax would be imposed at a rate of 10%.
Bill SB 1366 imposes no limits on the number of licensees permissible in the state of California. However, all operations, including employees, servers, banks and others must be based in the state. A 3-year requirement in terms of casino experience in the state of California is needed to qualify. Unlike the other bill, this one promotes federal online poker networks and interstate online poker networks. In much the same way, municipalities will also be prohibited from taxing the industry and regulating it. Internet cafes are not permitted by this bill. This bill will target offshore poker sites by subjecting them to law enforcement penalties, and players risk confiscation of their funds if they are found gaming at unregulated poker sites.
The bill makes provision for separate regulation when it comes to tribes. Tribes that have already established gaming compacts are not required to apply for additional state licensing for online poker. Partnerships and skins would be permitted for all licensed operators. For the purposes of description, skins are simply affiliate sites that have nothing to do with the operations of the online poker room whatsoever.
The Bad Actor Clause provision of online poker bill SB 1366 states that any online poker room that accepted illegal bets from Americans from January 1st 2007 onwards would not be able to participate in regulated poker gaming. Marketing affiliates are allowed, provided they do not contravene the bad actor clause. Interestingly, the bill permits online poker players outside California to enjoy the games. The terms of the bill necessitate that players are at least 21 years of age to play online poker. All the necessary security checks will need to be completed to validate age and identity. In terms of banking provisions, the online poker bill requires that poker sites hold segregated accounts. Certain deposits are off limits, including money orders and cash.
SB 1366 requires that players are privy to responsible gaming codes of conduct at all times. Various controls are available in the form of maximum playing time, deposit limits and loss limits. In respect of taxes, any winnings exceeding $600 will be subject to 5% state tax.
AB 9 (Internet Poker Consumer Protection Act of 2015) Online Poker Bill Details
California Assemblyman Mike Gatto (D-Glendale) introduced AB 9, otherwise known as the Internet Poker Consumer Protection Act of 2015, on December 1. The bill is quite similar to legislation which was drafted last year and backed by a coalition of 13 tribes, but contains a few revisions.
AB 9 would legalize online poker in the Golden State and allow regulated card rooms and tribal casino operators to apply for licenses. The horseracing industry would be on the outside looking in, as the bill would make the industry ineligible to get into the game.
PokerStars needs not apply
One of the main differences between AB 9 and its predecessor comes in the form of the bill’s bad actor language. This time around, the legislation seems to have been written with the explicit goal of blocking PokerStars from opening up shop in the state.
The earlier version would have prohibited operators who offered online gambling in the state after the UIGEA was passed. This draft goes even further by disqualifying companies which bought assets of operators who skirted the law during that time (i.e. Amaya/PokerStars).
AB 9 also takes a shot at the Iipay Nation of Santa Ysabel, which opened Desert Rose Bingo, a real money gaming site which the district attorney believes is operating outside the law. According to the bill, tribes who currently take bets from players in California who are not physically on tribal lands would not be eligible for regulation.
In an attempt to appease smaller tribal casinos, AB 9 would require all players to register their accounts and make their first deposit in person at the land-based casino or a satellite of its respective online poker site. Subsequent deposits could be made online with a variety of processing methods. Players would also need to go personally to pick up withdrawals over a certain, yet to be determined, amount.
The thinking behind this provision is that foot traffic would increase at smaller casinos, boosting their profits. The Poker Players Alliance (PPA), however, disagrees, and says that forcing players to leave their houses to make deposits would defeat the purpose of opening an online gambling site.
- Only those 21 years of age or above and physically inside the state of California would be allowed to play for real money
- Tribal casinos are now required to have been offering legal gambling for three years instead of five
- Operators pay a one-time fee of $5 million plus annual fees
- All poker variants approved by the state could be offered in online poker rooms, with the exception of Pai Gow, or games in which the outcome could be bet on by a third-party
- Affiliates and their employees must be licensed and would file quarterly reports
- A fund would be established to collect taxes and fees, some of which would be used to pursue illegal offshore sites
- The bill is an emergency statute, meaning that a two thirds majority vote in both the assembly and Senate will be required before being sent to the Governor’s desk
AB 167 (Internet Poker Consumer Protection Act of 2015)
In January 2015, Assemblyman Reginald Jones-Sawyer introduced his much-awaited online poker Bill, AB 167, dubbed the Internet Poker Consumer Protection Act of 2015.
Unlike Assemblyman Mike Gatto’s AB 9, floated in December, AB 167 contains no bad actor clause which would prevent PokerStars from becoming a licensed operator in the state. The bill would also allow the horse racing industry to open their own sites, if they choose to do so.
Tribes which offer unregulated online gambling such as the Iipay Nation of Santa Ysabel, however, would not be eligible for licensing under the Jones-Sawyer legislation.
The bill is the culmination of discussions held between Jones-Sawyer and California’s online gambling stakeholders. The state’s gambling interests have traditionally been at odds with each other as they each try to grab the biggest share of the potentially large Golden State iPoker market.
AB 167, which would see operators pay a one-time $10 million licensing fee, was understandably applauded by PokerStars and its coalition of supporting tribes and land-based cardrooms.
Speaking with the media, Jones Sawyer highlighted the need for regulation in order to protect California’s online gamblers. “Any negative social or financial aspects are borne by the citizens of California, and the revenues generated from online gambling are being realized by offshore operators and do not provide any benefit to the citizens of California,” he said.
SP 278 and AB 431
In February 2015, State Sen. Isidore Hall and Assemblyman Adam Gray introduced the identical poker bills SB 278 and AB 431. The legislation could best be thought of as a placeholder for the language which will come from the final negotiations between the state’s gambling stakeholders. The men are chairman of the Governmental Organization committees in their respective chambers and wield considerable power in the state legislature.
At the moment, the bill only states that it would legalize Internet poker inside California and require the California Gambling Control Commission to create rules and regulations in the event that the bill is passed.