California Gets Second Online Poker Bill
Online Poker Report

Is AB 167 The Bill To Bring Online Poker To California?

California Statehouse
A new California online poker bill has been be introduced by Assemblyman Reggie Jones-Sawyer.

A copy of the bill – AB 167 – is available here.

HIghlights and statements from various stakeholders follow. AB167 joins Mike Gatto’s AB 9 in the 2015 chapter of California’s ongoing attempt to regulate online poker.

Does it have a shot?

The bill appears to remove two of the largest stumbling blocks to consensus by (i) removing bad actor provisions and (ii) allowing race tracks to take part in online poker.

But it’s unclear how wide a base of support the bill enjoys. The aforementioned revisions strike directly against positions held very publicly and very aggressively by Pechanga, to name just one key stakeholder.

And if the statement issued by Pechanga Tribal Chairman Mark Macarro in response to the bill is any indication, those positions haven’t softened, making it difficult to gauge if the bill represents progress toward consensus or simply the stalemate of 2014 redux.

Dave Palermo has a good survey of the political landscape facing the bill at Pechanga.net.

Key points of AB 167

  • License fee: $10mm.
  • Additional fees for application and an annual revenue fee left unspecified.
  • License term: Four year, renewable.
  • Tax rate: 8.5% of GGR.
  • Regulations due within 270 days of passage.
  • Operators can offer “authorized Internet poker games on up to two authorized poker Web sites.”
  • Is an urgency statute (requires two-thirds vote to pass).
  • 21 and over.

Tracks included as eligible entities

From 199990.201(k)(1)(A)(iii), eligible entities include:

A California-owned and operated horse racing association that is based in California and that operates pursuant to Chapter 4 (commencing with Section 19400), whose owner or owners have been authorized, subject to oversight by, and in good standing with, the applicable state regulatory authorities.

The end of bad actors?

The bill appears to lack any UIGEA brightline or similar conditionals designed to explicitly exclude PokerStars.

I’m waiting on comment on the bill from the California coalition that includes the site.

The relevant section seems to be 19990.405, which contains some conditions that would arguably apply to the former ownership of PokerStars, but none that obviously apply to the company under new owners Amaya.

The section excludes applicants for conditions including:

(5) The person has associated with criminal profiteering activity or organized crime, as defined in Section 186.2 of the Penal Code.

( 6) The person has contemptuously defied a legislative investigative body, or other official investigative body of a state or of the United States or a foreign jurisdiction, when that body is engaged in the investigation of crimes relating to poker, official corruption related to poker activities, or criminal profiteering activity or organized crime, as defined in Section l 86.2 of the Penal Code.

(8) (A) The person has been convicted in a court of competent jurisdiction of a felony consisting of either having accepted a bet over the Internet in violation of United States or California law, or having aided or abetted that unlawful activity.

(B) A licensee shall not enter into a contract or agreement with a person or entity described in subparagraph (A).

Chris Krafcik offered a similar assessment via Twitter:

Aggressive definition of gross gaming revenue

From 19990.201(r)(1), gross gaming revenue:

[M]eans the total amount of moneys paid by players to the operator to participate in authorized games before deducting the cost of operating those activities except for fees to marketing affiliates and payment processing fees.

Player penalties appear possible by wording of bill

From 19990.303:

(a) A person shall not do any of the following: […]

(3) As a player located in this state, play any game provided on the Internet that is not authorized by the state pursuant to this chapter.

(b) Subject to an opportunity to cure pursuant to Section 19990.521, a violation of this chapter is a felony, punishable by imprisonment pursuant to subdivision (h) of Section 1170 of the Penal Code.

Interstate player pooling not prohibited

Past online poker bills in California have expressly prohibited the concept of interstate player pooling.

I can find nothing in this bill that specifically addresses, let alone prohibits, such arrangements.

Heavy KYC requirements baked into bill

The bill requires the following information from players before they can play for real money:

  • First name and surname.
  • Principal residence address.
  • Telephone number.
  • Social security number.
  • Identification or certification to prove that person is at least 21 years of age.
  • Valid email address.

Establishes Unlawful Gambling Enforcement Fund

From the legislative digest:

This bill would establish the Unlawful Gambling Enforcement Fund within the General Fund for purposes of ensuring adequate resources for law enforcement charged with enforcing the prohibitions and protections of the provisions described above. The bill would authorize the Attorney General, and other public prosecutors, as specified, to bring a civil action to recover a civil penalty in an unspecified amount against a person who engages in those prohibited activities described above, or other specified unlawful gambling activities. The bill would provide for an unspecified percentage of revenues from civil penalties collected to be deposited into the fund and used for law enforcement activities pursuant to these provisions, upon appropriation by the Legislature.

Statement from PokerStars, tribal and card room coalition

Joint statement of the Morongo Band of Mission Indians, San Manuel Band of Mission Indians, California’s three largest card clubs – the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino – and the Amaya Gaming Group, which owns and operates PokerStars. 

“We applaud Assembly Member Jones-Sawyer for his thoughtful approach to iPoker legislation in California which takes into account many years of input from stakeholders on all sides, including the California Department of Justice. We are still looking at the fine details of AB 167, but we are encouraged that his approach will move the discussion of online poker forward in a positive direction. The bill seeks to establish a vibrant, competitive, fully inclusive marketplace with choices for consumers that enacts strong consumer protections; requires strict oversight and regulation of operators and licensees; and ensures a financial return for the state.

“Our coalition strongly believes that – in order to be successful passing iPoker legislation that brings much-needed protection to consumers in a currently unregulated market – the various interests need to work together.  In place of previous attempts to use the legislative process to provide competitive advantages to a few operators, Assembly Member Jones-Sawyer’s bill brings parties with diverse interests together to move legislation forward.

“It’s time to move on, and move forward. We are pleased to see that Assembly Member Jones-Sawyer recognizes this. We applaud his efforts to shift the discussion in a new and hopefully more fruitful direction.”

Statement from Agua Caliente Chairman Jeff L. Grube

The Agua Caliente Band of Cahuilla Indians does not support AB 167. We support limited internet gaming as long as it is authorized in a manner we believe to be consistent with the intent expressed by the voters. Otherwise we support no internet gaming at all. California voters have approved a constitutional amendment authorizing casino-style gaming on tribal lands with a loud YES and they have rejected an expansion of those games to racetracks by a resounding NO.

Our Tribal Council has spent a tremendous amount of time over the past three years working to build a broad coalition of California tribes and card clubs on a united effort towards the goal of limited internet gaming that protects the interests of all California citizens.

Accordingly, we worked with Mr. Jones-Sawyer on legislation last year that would have authorized limited iPoker to licensed California tribes and cardrooms. We built a large coalition, but ran out of time in the legislative session. We did not, and do not, support expanding gaming to horseracing facilities, nor do we believe that gaming corporations that have previously violated federal law should be able to profit in the State of California from the use of software, brands, and data bases that were used for illegal activities. Thus, we believe that any legislation should provide clear eligibility standards for licensees.

We respect Mr. Jones-Sawyer, but we strongly disagree with this effort. NO iPoker in California is the clearly preferable option in our view to this scheme. AB 167 expands gaming in California against the will of voters, contains no clear standards for eligible licensees, and will clearly divide California Indian tribes. We urge him to not pursue the bill.”

Statement from Pechanga Chairman Mark Macarro

Via Pechanga.net:

“There is much for tribes to dislike about this bill. [AB 167]

“We are disappointed that the bill disregards important principles from a broad coalition of respected tribes and card rooms that help prevent corporations and entities that previously violated federal law from profiting from tainted software, brands, and databases derived from illegal activity.

“Tribes have been steadfast in the principle that online poker be consistent with California’s longstanding public policy of limited gaming, and that means keeping it to just tribes and card rooms.  California voters have always had the final say on gaming expansion and they have already rejected expansion of gaming for horse racing.”

Statement from Assemblyman Jones-Sawyer

Assemblymember Jones-Sawyer Reintroduces Internet Poker Bill

Sacramento, Calif., – After much anticipation from California’s poker community and interested stakeholders, Assemblymember Reginald Byron Jones-Sawyer Sr., from Los Angeles, has reintroduced a measure to legalize Internet Poker within the state of California. The Internet Poker Consumer Protection Act of 2015, also known as Assembly Bill 167, would establish a framework to authorize qualified entities to operate intrastate Internet Poker websites.

“The reintroduction of this legislation comes on the heels of a very thoughtful and collaborative discussion process that included substantial input from both the state’s Department of Justice and Gambling Control Commission. It is absolutely essential that we have a proper regulatory structure in place that provides safe and compliant internet poker access,” remarked Jones-Sawyer.

Under the AB 167, authorized entities, which include tribal gaming facilities, licensed card rooms and in-state horse racing associations, must undergo an extensive ‘determination of suitability’ process by the Department of Justice before they are able to apply for an operator license. Key takeaways of the bill include a required one-time licensing fee of $10 million dollars and mandatory gross gaming revenue payments of 8.5 percent made quarterly to the state. In addition, the bill makes any violations of its provisions a felony.

Internet poker was first discussed over seven years ago in the State Legislature, but there has never been a vote in any committee on any previously introduced bill. Jones-Sawyer is hoping to change that this year.

“We have reached a new starting point. The dialogue over the past year has allowed us to reach even broader consensus and mutual agreement as to who will be able to participate in providing internet poker to our citizens. My goal of setting a standard in California that is the shining example for the entire nation remains unchanged.”

Copy of statement available here.

Is AB 167 The Bill To Bring Online Poker To California?
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- Chris is the publisher of OnlinePokerReport.com. Grove also serves as a consultant to various stakeholders in the regulated market for online gambling in the United States.