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Exclusive: Assemblyman Mike Gatto Discusses New Online Poker Legislation in California

Exclusive: Assemblyman Mike Gatto Discusses New Online Poker Legislation in California 0001

California Assemblyman Mike Gatto told PokerNews that he thinks his new online poker bill introduced Tuesday will solve the external challenges and many of the industry issues that prevented the state from passing online poker legislation in the past.

“I think we have a proposal that can unite all the various groups that were not previously united,” Gatto said in a phone interview. “We have a lot of the same language from last year, but what I think makes our bill special is a regime for weeding out money laundering, guaranteeing foot traffic to casinos and expanding the number of parties who will be able to participate in the marketplace.”

Gatto, who chairs the Assembly Committee on Appropriations, indicated that he had planned to introduce the bill later entered by Assemblyman Reggie Jones-Sawyer last session but deferred and let Jones-Sawyer take the lead. In the opening days of the new session, he decided to take the reigns this year and sponsor that same legislation with a few key changes.

The main difference is Gatto's bill requires the initial deposit as well as withdrawals over an undetermined amount (he said it could be anywhere between $300 and $10,000) to be made in person, and establishes satellite service centers to handle these transactions.

By having the initial deposits and withdrawals over a specific amount done in person, Gatto hopes to appease the concerns of those who oppose online gaming due to the potential for underage play and money laundering. It also provides a reason for people to go to the casinos in person.

Gatto admits that there are likely to be a few groups that dominate the marketplace, which is why he thinks that satellite service centers are important to give the state's smaller casinos a piece of the pie. If the best site is focused around casinos or card rooms in Southern California, it will want to partner with small casinos in all corners of the vast state in order to have satellite service centers where people can make a deposit and withdrawals. This will also bring foot traffic to the smaller casinos.

“A lot of people in the gold rush got rich selling shovels, and we think we have a proposal that has shovels in it now,” Gatto said.

While this could be a nuisance for players, Gatto noted that most people in the state are within an hour of some establishment that takes bets.

The new legislation still contains a bad actor clause meant to prevent the participation of PokerStars and excludes horse racing, the disagreement upon which Jones-Sawyer called two of the main issues that prevented his legislation from moving last session.

The bad actor clause was even altered to address Amaya Gaming's purchase of PokerStars, indicating that a company that has acquired or purchased the covered assets of a “bad actor” is not suitable to obtain a license. Another addition might provide an opening for Amaya by allowing a waiver for an applicant that demonstrates clear and convincing evidence that the use of the covered assets will not adversely affect the integrity of intrastate Internet poker or otherwise pose a threat to the public interest.

Gatto expressed that he didn't introduce the bill at the request of any one faction that is breaking from the Jones-Sawyer bill, a sentiment seemingly echoed by sources within the California gaming industry who said the assemblyman had done this on his own without approaching them. According to Gatto, he is open to exploring amendments on the bad actor and horse racing issues.

“This is a Mike Gatto bill,” Gatto said. “It's not Coke or Pepsi. I've always been a fair legislator, and we'll work with a lot of different participants. This is an opportunity for everybody to make lots of money.”

Jones-Sawyer proclaimed in August that he plans to introduce revamped online poker legislation already amended to be amenable to all parties early in the new session, and that is still expected within the industry.

Gatto doesn't anticipate quick movement on the bill. He says a true consensus is still lacking, and projects a year-long conversation with the hope of reaching an agreement by August.

“We put a lot of thought into addressing the external concerns with online poker in general,” Gatto said. “I still maintain that if we don't address those concerns, there will not be a bill. When we address the external concerns and get everyone on board, then you'll get the momentum, and the different industry groups will feel this is more real and come to the table to participate in a discussion on how we can make this something everyone signs off on.”

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