Subsidy For Horse Racing Is Key Point In Online Poker Effort

California Introduces New Online Poker Bill: AB 2863

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The newest effort to regulate and legalize online poker in California was introduced in the legislature on Friday by Assemblyman Adam Gray.

The new online poker bill, AB 2863, already has the support of the Rincon Band of Luiseno Indians. Chairman Bo Mazzetti issued the following statement shortly after Gray’s bill was introduced on Friday afternoon:

“The Rincon Band of Luiseño Indians has worked and continue to work with the Legislature, Tribal leaders, cardrooms and other key stakeholders in passing meaningful Internet poker legislation. The introduction of Assembly Bill 2863 provides a vehicle for the passage of Internet poker.

“Through Assemblyman Gray’s hard work last year and continuing open and honest dialogue this year, the momentum behind Internet poker legislation builds. 

“Paramount to any gaming legislation is the protection of children and the vulnerable; California job creation; revenue generation for state services, and consumer protection.  AB 2863 expands upon all of these ideals.

“We support Assemblyman Gray’s efforts and look forward to getting this done in 2016.”

Text of the bill is available here.

The new bill comes after years of little progress on the online poker front, but the new bill features a new dynamic meant to create consensus among the state’s gaming interests.

Last year actually saw unprecedented progress — a shell online poker bill made it past a committee vote — but not much else happened other than that.

Draft legislation had been floated last week, sparking a renewed conversation around online poker in California.

The biggest change from past bills: 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 acting as operators in 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.

Chances this time around for online poker?

The inclusion of such a significant financial subsidy for the racing industry is a new approach to regulating online poker.

The horse racing industry has always insisted that it should be involved in the online poker industry, so how willing it is to give on that point remains an open question.

In the past, tracks have rejected the idea of a subsidy in exchange for letting cardrooms and tribes act as the sole operators in a regulated online poker industry.

The $60 million figure is a starting point, but may not be a realistic figure in practice.

How much money tracks will accept as a subsidy is likely the fulcrum on which the success of this online poker effort will hinge.

- Steve covers nearly every angle of online poker in his job as a full-time freelance poker writer. His primary focus for OPR is the developing legal and legislative picture for regulated US online poker and gambling.
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