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A California legislative committee passed a bill that would legalize and regulate online poker for the second straight year.
The bill — AB 2863 — passed the Assembly Governmental Organization Committee unanimously, 19-0, on Wednesday.
“The question of how to regulate iPoker has been in front of the Legislature for nearly a decade,” committee chair and and bill sponsor Adam Gray said in a press release after the vote. “We have not rushed this process. We have taken the time necessary to thoroughly understand and respond to the concerns put forth by stakeholders. Through this process, we have created a coalition that is willing to acknowledge the problem and support a comprehensive solution.”
At the start of the hearing, Gray presented the bill, saying he believes a lot of progress has been made on generating support on the two main sticking points: the horse racing industry’s involvement, and the so-called “bad actor” provision.
The former provision was backed up by nearly unanimous support of the horse-racing industry appearing in favor of the legislation. Progress on the latter was less evident, at least publicly, on Wednesday.
The tack employed by the bill’s proponents was also noticeably different this time around than in the past. Consumer protection emerged as a central theme in supporters’ statements, with the idea that Californians will play online poker on unregulated sites whether the state acts or not.
“The bill in print right now accomplishes what is most important and sometimes gets lost in this discussion, and that’s protecting consumers,” Gray said.
That refrain included Poker Players Alliance executive director John Pappas, who did a live demo on the internet showing how many sites currently take online poker players from California.
Several people who spoke in support of the bill also noted the Assembly’s support of a bill regarding daily fantasy sports, which was moved forward largely because of consumer protection concerns.
The horse racing industry spoke openly in support of the online poker bill and and a $60 million subsidy that it would receive as a part of the legislation, in exchange for giving up the ability to operate in a regulated online poker market.
Beyond just speaking quietly in support of the bill, industry reps were openly pushing for the bill to be passed as a way to help prop up horse racing in the state. Whether the additional, strong support of online poker legislation helps shift the dynamic in the state remains to be seen.
There continues to be a concern that the $60 million subsidy for horse racing is an unrealistic — and unattainable — figure.
Gray, on more than occasion, indicated that he believed the horse-racing industry issue had been settled, and that he was focused on getting tribes on board regarding suitability.
The tribal divisions that have slowed the progress of past online poker bills were on display again on Wednesday.
The loudest opponents of the bill — the Pechanga and Agua Caliente tribes — continued to appear as de facto opponents of the bill.
Pechanga officially took no position on the bill, while Agua Caliente said it stood as “opposed unless amended.”
Both Pechanga and Agua Caliente continued to repeat the refrain that “bad actors” should not be allowed into the market. (This continues to be aimed at PokerStars and its presence in the U.S. market after the passage of the Unlawful Internet Gambling Enforcement Act in 2006.)
“While we have not yet come to a consensus on this issue, through recent meetings with tribal leaders, we have made serious progress,” Gray said in his opening statement.
The Morongo, San Manuel and United Auburn tribes, as well as the California Nations Indian Gaming Association, all appeared in support of the bill.
During questions after testimony was given, Gray said that suitability was the last major issue to be resolved in his bill. He indicated that he was meeting “every two weeks” with stakeholders regarding the presence of a bad-actor provision.
While an iPoker bill cleared the same hurdle last last year, this represents the most progress for online gaming in the state to date.
Last year’s bill was a “shell” that included no actual regulatory language, while the 2016 version is a robust piece of online gambling legislation.
The bill requires approval by the Appropriations Committee in the Assembly before it would head to the full Assembly.
It’s unclear how soon we might see action on the bill, although Gray promised that it would include suitability language by the time it comes up for a vote before the full Assembly. Given the sticky nature of that problem, it might not occur in the immediate future.
The bill’s prospects, without the support of all the tribes in the state on bad-actor language, would appear to be poor. If Gray can do what has been impossible so far and get the opposing tribes on board, then the equation changes significantly.
The bill must be passed by a two-thirds majority to reach the Senate.
Correction: An earlier version of this story indicated that the bill would not need approval by the Appropriations Committee.
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