PokerStars Coalition Calls CA Online Poker Bill Amendments "A Step In The Right Direction"
Online Poker Report

PokerStars’ California Coalition Welcomes Progress On Adam Gray’s Bill To Legalize Online Poker

PokerStars Coalition supports online poker California amendments
This article may be outdated. Get the latest news on California here.
The coalition of California gaming interests which includes Amaya, the Morongo Band of Mission Indians, San Manuel Band of Mission Indians, and California’s three largest card clubs has issued a statement applauding Assemblymember Adam Gray’s amendments to bill AB 2863.

The three card clubs in the coalition are the Commerce Casino, Hawaiian Gardens Casino and Bicycle Casino, and of course, Amaya owns PokerStars at which many of the previous bills have aimed “bad actor” language.

The statement implies that the amendments comprise solutions to the final objections to legalized online poker which have so far held up passage of legislation over the past few years.

Coalition statement in full

“We applaud Assemblymember Adam Gray for moving the ball forward on iPoker and addressing the final two key issues in his bill AB 2863. This is a step in the right direction and we look forward to working with him and bill co-author Assemblymember Frank Bigelow in the coming weeks to get AB 2863 across the finish line.

“Our coalition has long-supported a competitive online poker marketplace in California that offers choices and strong consumer protections; rigid suitability standards; strict oversight of operators and licensees; and provides a financial return to the state.

“Our coalition commends Assemblyman Gray and his leadership both last year and this year to authorize and regulate online poker. For too long this issue has left consumers vulnerable and we are hopeful that 2016 brings closure, and a safe, regulated and competitive marketplace.”

The amendments retain bad actor language that won’t apply to PokerStars

Critically, the amendments, which were published a few days ago, set a “bad actor” condition that applies to poker operators who “accepted a bet or wager on any form of Internet gambling, or engaged in a transaction relating to those bets or wagers, from a person located in the United States,” after December 31, 2011.

The date is almost eight months after the DOJ Black Friday shutdown which led to most operators, including PokerStars, closing their U.S. online poker businesses.

A second clause regarding suitability criteria comes without a date, and seems to be designed to catch online executives who were involved in offering online poker before the key cut-off date.

Taken together, the clauses appear to accept that Amaya would be a suitable applicant for a license, so long as key executives have no record of offering unlicensed online poker in the U.S.

Since the sale of PokerStars to Amaya, and the subsequent staff cleansing required by the New Jersey Division of Gaming Enforcement before it granted a conditional waiver to allow PokerStars to operate in the NJ online poker market, the key executives at Amaya will probably pass the suitability criteria.

  • The current text of the bill is available here.
  • The amendments are here.

More money for the state government

The amendments also include what OPR’s reading of the bill suggests is a substantial extra amount of cash for the state government.

The removal of text which would have allowed operators to offset gaming taxes against the substantial upfront fee means that the state will receive not only $12.5 million from each licensee as a one-off payment, but also between 8.847 percent and 15 percent of gross gaming revenue.

OPR’s base case revenue projections for the California market assuming a poker-only bill is for $310 million in annual revenue, which would imply a tax rate of 12.5 percent under the new amendments. If revenues exceed the base case and reach $350 million, then the tax rate will rise to the maximum of 15 percent.

A step forward isn’t the whole game

The fact that the statement refers to the changes as “a step in the right direction,” doesn’t imply complete confidence that all the issues are now settled.

The California bill is offering large payments to the California horse racing industry, but several tribes not in the PokerStars coalition continue to have objections.

The coalition of six tribes led by the Pechanga Band of Luiseño Mission Indians of Temecula and Agua Caliente Band of Cahuilla Indians of Palm Springs still want “bad actor” language that will exclude PokerStars.

The bill, including the new amendments, is expected to get a full committee hearing of the Appropriations Committee on June 15.

That hearing should expose any continuing divisions that will prevent the bill making it to law this year.

Image credit: Atomazul / Shutterstock.com

Sign Up For The Grove Report – US Online Gambling Industry Insights Delivered To Your Inbox:
Joss Wood
- A former editor of Poker Industry Pro, Joss Wood is a graduate in English from the University of Birmingham. Joss also holds a master’s degree in Organisational Development from the University of Manchester. His career path has taken him from the British Army, through business and finance to seven years as a successful professional poker player.