California’s Gambling Stakeholders Show No Interest in a Compromise at New Hearing

Assembly sealWhile California’s gambling interests have yet to settle their differences on key issues, the state assembly’s Governmental Organization Committee conducted another hearing last week to assess how prepared the state would be if online gambling were legalized.

What’s the market worth?

During the first panel, state official Anita Lee spoke of the potential market for the industry, and estimated that poker sites could earn up to $400 million a year. Chris Krafcik, an analyst for the website Gambling Compliance, was up next and felt that the iGaming market would hover around $217 million in its first year, and jump to $366 million by the fourth year. The state’s cut, he reasoned, would be around $16 million in the first year, rising to up to $20 million in the fourth.

Next on the docket was a discussion about how public policy could be shaped in a way to maximize the effectiveness of an online poker industry. Michael Pollock of Spectrum Gaming Group suggested that laws should be shaped to supplement land-based casinos, encouraging players not only to play online, but to also visit brick-and-mortar gambling businesses.

Does geolocation work?

Anna Sainsbury, CEO of GeoComply, calmed legislators’ fears about making sure players can only play while inside the state lines. Some anti-online gaming advocates claim that this technology is not reliable, but Sainsbury assured that so far, the practice has been 100% effective at blocking prohibited players in states like New Jersey.

When asked how she could be sure that players weren’t using a virtual private network in order to obfuscate their location, Sainsbury added that not only did the software check for VPNs, but also factored in Wi-Fi, GPS data and analyzed the software running on a player’s device.

California Gambling Control Commission official Richard Schuetz gave testimony on the steps which need to be taken in order to police the online poker industry. He said that anyone who claims that a child could easily access their parents’ gambling account was simply be a victim of bad parenting. He did however, highlight the Gambling Control Commission’s need for extra funds, noting that the agency is understaffed. He also asked that the state create a “testing lab” such as the one in use in Nevada, in order to find potential problems in gambling software.


Mike Pegram, chairman of the Thoroughbred Owners of California, touched on one of the points of contention between that industry and the state’s other gambling stakeholders. He noted that horse racing wagering had dropped nearly 50% in the 15 years since land-based casino was legalized. He felt that if unable to participate, the tracks would lose even more market share to online poker sites.

Bad actor clauses

The second major rift between gambling interests was touched on by Eric Hollreiser, spokesman for Amaya Gaming. Hollreiser spoke on the issue of bad actor clauses and told the panel that such requests were only sought by a few entrenched interests “that have worked hard and spent a lot of money” to avoid any competition.

Although the hearing threw some light on the current online poker landscape in California, few believe that the state’s gambling interests will be able to come to an agreement on an iPoker bill before the end of the session.