California Online Poker Bill Passes Committee Vote
Online poker is not legal in California yet, but it is as close as it has ever been, as Assembly Bill 2863 was passed by the Assembly Committee on Governmental Organization (GO Committee) by a unanimous 19-0 vote on Wednesday. AB 431 achieved the same thing last year before getting shot down by the Committee on Appropriations, but that was just a two-page skeleton or “shell” bill. AB 2863 actually lays out the regulations for a legal online poker industry.
Assemblyman Adam Gray, the co-author and primary champion of the legislation issued a press release on his official government webpage, saying “We know unequivocally that Californians are playing these games online every single day on websites that provide zero consumer protections. After countless revisions and meetings with stakeholders and consumer advocates, there remained two key issues raised by opponents: horse racing and suitability. Today we put forward language that settles the horse racing component, and negotiations over suitability continue.”
Those two issues Gray mentioned have been sticking points by a group hardline tribes who have been trying to restrict California online poker as much as possible so that they can grab the biggest piece of the pie. AB 2863 is a compromise bill in that while it probably isn’t the ideal regulatory solution, it is a damn good one and at least tries to concede a couple points to these tribes. One concession is blocking horse racetracks from being able to acquire online poker licenses. In exchange, though, stakeholders in the horse racing industry will receive at least $60 million per year from the money generated by the poker operators. It seems that all concerned parties are content with this, though horse racing industry members have written Gray to say they will not give any more ground.
As to the “suitability” part, that is a water-down version of a “bad actor” clause that the hardline tribes recently got inserted into the bill. These tribes are deathly afraid of PokerStars and for years have been trying to make sure a bad actor clause is put in to prevent operators like Stars, which offered online poker in the U.S. after the UIGEA passed in 2006, from being eligible for a license. The suitability clause doesn’t strictly forbid such operators from applying for licenses, but puts explicit language into the bill to require that regulators at least consider operators’ past actions in regards to offering games in violation (or possibly in violation) of the law.
Among the witnesses at the hearing was Poker Players Alliance executive director John Pappas. He commented that it made no sense why daily fantasy sports (DFS) could easily see a regulatory bill passed, yet it has been a huge struggle for poker.
“It begs the question: If fantasy sports players in California deserve consumer protection, why aren’t online poker enthusiasts being treated equally?” Pappas asked. “I will add that while the DFS bill does provide regulatory oversight of that industry, A.B. 2863 is far more robust in the way it sets industry standards and safeguards consumers who wish to play poker online. If you voted to support the DFS bill, then support for the online poker bill should be a no-brainer.”
In response to the unanimous vote, Pappas said in a press release:
The PPA applauds the committee for moving quickly and unanimously to pass A.B. 2863. This bill will create a thriving online poker market in California that most importantly protects consumers. There is still much work to do and we are hopeful that any remaining issues can be resolved in a way that ensures a competitive, yet tightly regulated marketplace with operators who care about the consumer experience. Questions of operator suitability are best left to the state regulators who have a long and successful history of setting standards to the maximum benefit of consumers. We urge swift movement of A.B. 2863 as it proceeds through the legislative process.
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