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New California Online Poker Bill Introduced

Legislation Would Give Up To $60M To Horse Racing Industry


California will have another chance to legalize real-money online poker this year with a new bill introduced Friday by two Golden State lawmakers.

Assemblyman Adam Gray and Assemblyman Reggie Jones-Sawyer put forth the state’s latest attempt at regulating the card games, AB 2863. The online poker-only legislation comes about six weeks after a separate online poker bill from Jones-Sawyer was pulled from a hearing agenda.

AB 2863 calls for race tracks in California to receive up to $60 million in revenue sharing per year from online poker operators, in exchange for the horse racing industry not being in the space. Under the proposal, only tribal casinos and card rooms could be online poker operators. Service providers, like a PokerStars, would also be allowed in thanks to partnerships with operators.

“The bill would require the first $60,000,000 collected each fiscal year pursuant to the license deposit and quarterly fees provisions to be deposited into the California Horse Racing Internet Poker Account, which the bill would establish in the General Fund,” the legislation reads. “The bill would continuously appropriate 95 percent of the funds in the account to the California Horse Racing Board for distribution, as specified, and would transfer five percent of those funds to the Fair and Exposition Fund, a continuously appropriated fund.”

It has been estimated that the state’s online poker market could eventually be worth more than $380 million a year. Between 2009 and 2010, California players accounted for 16 percent of U.S. revenue and four percent of worldwide revenue in online poker.

California’s brick-and-mortar card rooms bring in annual revenue of $850 million. California’s tribal gaming industry is worth around $7 billion a year, the most in the nation.

While there are 60 tribal casinos in the state, there are nearly 100 brick-and-mortar facilities statewide that offer poker. The state could likely only support 6-10 unique online poker operators, a tribal gaming insider recently told Card Player. That doesn’t include skins.

AB 2863 doesn’t currently have a tax rate for online poker operators and their respective partners. Additionally, a “license deposit” hasn’t been determined yet.

Though California could compact with another jurisdiction for online poker, the bill would first limit the games to those 21 and over and physically within the state’s borders.

In exchange for regulated online poker, players on unlicensed offshore sites could be subject to a felony charge under the bill. The legislation said it “would provide that any violation of the Internet Poker Consumer Protection Act of 2016 is punishable as a felony.”

In April of last year, a different bill from Gray advanced out of a legislative committee. It was the first and only time California lawmakers have voted on an online poker bill. However, the state’s 2015 online poker efforts were deemed over by September.

It has been six years of debates in California without an online poker bill passing.

There have been calls for adding online poker to legislation pertaining to daily fantasy sports. A DFS bill passed the Golden State Assembly last month and currently sits in the Senate for consideration. The state’s largest newspaper recently said it supports an omnibus bill. However, for now, DFS and online poker remain separate issues.