California Online Poker Bill Amendments

11th Hour California Online Poker Amendments Put PokerStars In Penalty Box, Prospects For Passage Unclear

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Amendments to an online poker bill that would put Amaya/PokerStars on the shelf for at least five years were released late Wednesday by California Assemblyman Adam Gray in an 11th-hour effort to get AB 2863 through the state Legislature before an Aug. 31 adjournment.

Divergence on “bad actor” issue at heart of debate

The amendments are believed to be supported by at least 10 politically-powerful American Indian tribes Sacramento insiders believe are necessary to get California online poker legislation through the Assembly and Senate.

But the mandated five-year “penalty box” in AB 2863 for companies who accepted or facilitated wagers from American customers after Dec. 31, 2006 is opposed by PokerStars and its business partners, the Morongo and San Manuel Mission Indians and the Commerce Club, Bicycle Club and Hawaiian Gardens card rooms.

The amendments also change the tax rate for poker websites . Originally, Gray’s bill proposed a sliding scale ranging from 8.64 to 15 percent based on annual industry-wide gross gaming revenue totals. The bill will now call for a flat tax rate of 10 percent.

Short wait to find out if bill can advance

Tribal sources last night said getting the necessary two-thirds vote of the Assembly over the objections of the tribal/PokerStars/card room coalition would be “a steep climb.”

But sources said support from ten other tribes – a coalition of seven tribes led by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians and three other tribes active in lobbying the issue – could get AB 2863 out of the Assembly by the end of the week.

“This potential compromise presents the most viable path to legalization,” said a tribal source who requested anonymity.

The amended bill “should secure two-thirds [vote] in the Assembly,” Trent Hager, chief of staff for Gray, told the Los Angeles Times.

Hager predicted the bill “will be fairly well received in the Senate.”

Degrees of compromise

The Pechanga/Agua coalition had taken a hard line against licensing PokerStars, which reached a $731mm settlement with the federal government following accusations it violated state and federal laws. PokerStars admitted no wrongdoing in conjunction with the settlement.

But member tribes recently began easing their position against the foreign company, demanding only that it be “shelved” for at least five years, a similar penalty imposed on the company by Nevada gambling regulators.

Tribal officials Wednesday urged Morongo and San Manuel to align themselves with other tribes and stakeholders in getting online poker legislation through the Assembly and Senate.

“If San Manuel and Morongo are genuinely concerned with protecting consumers, they would support this tenuous compromise,” said a tribal official who requested anonymity.

- Dave Palermo is an award-winning metropolitan newspaper reporter. He has written about American Indian governments for more than 20 years, working as an advocate for several tribes and tribal associations. He also has co-authored books on gambling and gambling law.
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