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The draft was filed on January 20.
New language under Amendment 4 includes, “declaring the urgency thereof, to take effect immediately.” This means that AB 431 would become an urgency statute in its current form. It would require a two-thirds vote in both the Assembly and Senate.
It would go into effect as soon as it is signed into law by the governor should it pass both chambers of the California Legislature.
The biggest change in AB 431 is that California’s horse racing industry would receive up to $60 million per fiscal year. In exchange for this funding, the racetracks would be excluded from California’s online poker industry.
There is no guarantee that the racing industry would receive this much revenue each year. The tracks would receive 95 percent of the first $60 million collected. The other 5 percent would go to State Treasury to credit the Fair and Exposition Fund.
The annual income appropriated to California’s horse racing industry would fall into three categories. Purses would receive 95.4 percent of the taxes generated by online poker each fiscal year. The retirement fund for California jockeys would receive 2.3 percent. Pensions for general racing employees would also receive 2.3 percent of the funds supplied to the racing industry through online poker.
The California online poker tax rate would be 15 percent of gross revenue under the current version of AB 431. This would mean that the California online poker industry must generate at least $400 million per year to hit the $60 million cap promised to the racing industry under the bill.
Card clubs and California Indian tribes with at least five years of gaming experience would qualify for an Internet poker license. This excludes entities that are currently accepting bets contrary to state or federal laws.
A $15 million deposit would be required for site operators. This would go towards the monthly 15 percent tax. There would be additional fees for the licensing process, as well as problem gambling and regulatory services. Each license could host up to two branded websites. Partnerships among tribes and card clubs would be permitted.
Poker is the only game permitted under AB 431. It is defined as a game between players and not involving any type of player-to-dealer or player-to-banker relationship. Pai Gow Poker is specifically mentioned as a forbidden game as it involves a banker.
Cash games and tournaments would be legal under AB 431. The house would take a per-hand charge for cash games. This is the same way a California poker room generates income. The house may not take a percentage of the pot in California. Cash game fees may be flexible to take into account the limits of the game.
A California online poker site would be permitted to charge an admin fee on poker tournaments.
California online poker players would be required to be at least 21 years of age. Accounts could be created in person at the operator’s live casino. It could also be done by mail, telephone or over the Internet.
Sites would have to verify the player through a national database to match the identity. Any account that does not pass this check would be subject to additional review that includes the completion of a verification process where the player would have to submit a valid photo ID.
Cash and money orders would not be permitted for account transactions unless it was processed at the casino under control of the site’s operator. Credit and debit card transactions must be coded properly and include a reference to it being related to Internet poker.
It would be a felony to operate an unlicensed poker site in California. Players would also be committing a felony by giving action to offshore sites.
The Unlawful Gambling Enforcement Fund would be created under AB 431. The goal would be to investigate illegal gambling. Its funding appropriation is not defined in the bill.
Sites would be required to maintain player support 24 hours a day, seven days a week. Any employee in direct contact with players must be located in California under AB 431.
“All primary servers, facilities, bank accounts, and accounting records” must be in the state. Redundant servers and backup documentation may be stored elsewhere. Service providers are exempt but must grant immediate access to state regulators upon request.
Players must have access to problem gambling services. New accounts would be given information on how to restrict action through the software. Each login to the site would also launch this feature. This includes time, loss and deposit limits. Links and phone numbers to problem gambling services must also be supplied to players.
State gaming regulators must draft regulations within 270 days of the bill’s passage into law. Regulators would have discretion in licensing based on standard practices used in the bricks-and-mortar industry. Any operator in good standing would automatically qualify for an Internet poker license.
There is no bad actor clause in AB 431 but it does exclude any person found guilty of a felony related to illegal online gambling in California or anywhere else in the country.
Sites would be required to give 90 days of notice to cease operations. Poor business conditions would be an acceptable reason to request a site shutdown. If gaming regulators suspect that there may be financial difficulties at the site, the state may request intervention through the courts.
Initial licenses would be valid for seven years. Renewals would also be issued for seven years. California online poker would be automatically repealed on January 1, 2024 unless specifically extended by the state legislature. This could be done by creating a new expiration date or by eliminating it from the law altogether.
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