$60 Million Horseracing Subsidy Could Be a Game Changer for California Online Poker

Just when it seemed like there was no hope for online gaming in California this year, a new bill was introduced which has raised the odds significantly.

The legislation, AB 2863, is backed by Assemblymen Reginald Jones-Sawyer and Adam Gray and includes a provision which could bring the state’s gambling stakeholders back to the table. Like other bills, AB 2863 would allow California’s federally recognized Indian tribes to partner with service providers to offer online poker to those inside the state. The interesting part, however, is that they would pay the horseracing industry a massive $60 million subsidy per year to keep it from joining.

Sharing the Wealth

The bill would create an Internet poker fund, into which operators would deposit a yet-to-be-determined amount in order to cover costs like license oversight, consumer protection and state regulation. Created inside that fund would be a “horseracing Internet poker account,” which would collect the subsidy cash to be distributed amongst racing industry players.

The subsidy is meant to resolve one of the main points of contention amongst the state’s diverse gambling interests. Tribal gaming operators have made it clear that they do not want competition from the tracks, and have stuck to their guns on the issue. The tribes say that by law, they alone have the right to offer live poker in the state, and allowing the tracks to participate would violate their right to exclusivity.

The eight figure offer is sure to pique the interest of racetrack owners, who have seen the industry decline in recent years. Some say that horse betting is no longer popular with younger demographics, who have instead chosen to play poker or modern social media games.

The second issue causing conflict in Golden State gambling circles is whether to include “bad actor” language into an iPoker bill, which would effectively block sites like PokerStars from entering into the market. While several powerful tribes had initially demanded that such language be included, some have softened their positions. The Pechanga and Agua Caliente bands have stood firm, hoping to neutralize what would be a formidable competitor.

Getting Realistic

The $60 million figure, however, is unrealistic to what the online poker market could yield, and is likely just a starting point for discussions. Yet even if the final number was only a fraction of that amount, racing operators would do well to accept it. Horseracing would be unlikely to capture even a moderate share of the market, and would be heavily outspent on marketing by the bigger players. Add to the fact that they would need to either develop or pay a pretty penny for descent software, and almost any subsidy starts to look attractive.

The Rincon Band of Luiseño Indians released a statement praising the efforts of Jones-Sawyer and Gray on the issue. “Through Assemblyman Gray’s hard work last year and continuing open and honest dialogue this year, the momentum behind Internet poker legislation builds,” it said. “We look forward to getting this done in 2016.”