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California Online Poker Bill Passed By Appropriations Committee, Now To Assembly Floor

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  • California online poker bill passed the Appropriations Committee; will now head to Assembly floor.

After nine years of discussion, an online poker bill has finally made it to the full Assembly floor in California, and that was the easy part.

Wednesday's passage through the Appropriations Committee showed that there remains a large divide among industry stakeholders on suitability standards, and that a bill is not likely to make it through the Assembly until a compromise can be reached to appease all parties.

The bill appeared to pass with only one vote against, but each of the committee members who spoke on the issue qualified his or her yes vote, often saying that they would not be ready to approve the legislation in the full Assembly.

"I certainly will strive to further revise the bill to be stronger," Assemblyman Adam Gray said. "As it stands today, it's undoubtedly the strongest bill in the country."

The session began with voices heard from a long line of industry supporters and a short one of opposition. Support includes six Indian tribes, 15 card rooms and almost the entirety of the horse racing industry. Opposition came from a seven-tribe coalition led by Pechanga and Agua Caliente.

On an issue that is being held up by a minority, it's most interesting to hear from the opposition.

"It has been claimed that Yocha Dehe is opposed to any form of legislation to authorize online poker and that no bill will satisfy our tribe," said Leland Kinter, chairman of the tribe. "This is false. What is true is that our position is driven not by profit motive or a particular business model or even a desire to align with a certain business partner. Rather, Yocha Dehe's position is driven by principles that respect the heightened gaming rights with which the people of California have entrusted tribal governments, and that comport with sound public policy that is protective, thoughtful and deliberate."

Agua Caliente chairman Jeff Grubbe added: "We don't think that a $20 million get-out-of-jail-free card is appropriate for anyone who still may be captured by these carefully written provisions."

As PokerNews reported Tuesday night, amendments added to the bill by the committee included a one-time $20 million fee for sites that operated in the U.S. after Dec. 31, 2006, but before Dec. 31, 2011.

Responding to committee members who questioned if the bad-actor penalties were strong enough, Gray clarified that there is a distinction between companies who operated in the U.S. against federal law and in a gray period.

"In the bill as amended here in committee, any operator blatantly operating illegally is unsuitable," Gray said. "That is post-2011, when we had absolute certainty. There was a gray period between 2006 and 2011, and if you operated during that period that's where the potential for a five-year penalty box or $20 million comes into play."

The post-2011 date refers to the Justice Department's legal ruling in December of 2011 that the Wire Act applied only to sports betting, and that states had the right to authorize other forms of iGaming.

Assemblywoman Lorena Gonzalez' said the bad-actor language needs to be figured out and strengthened, and asked that the bill address that the horse racing industry will only get the iPoker subsidy so long as horse racing continues in California.

"I hope we can resolve some of this before it comes to a vote on the floor, because I think it will prevent a vote from being successful on the floor," Gonzalez said.

The use of tainted assets became a common refrain from committee members. The bill already contains a three-year blackout period on use of customer lists obtained while operating in California during the gray period. Gray stated that the bill also empowers the regulatory commission when issuing the license to remove any other lists or assets it sees as providing an unfair advantage, though he noted that he's not sure what is the value of these already five-year old lists that have been sold multiple times.

"I suppose you might be able to get a better list from Facebook, who probably knows everyone in the world who likes poker," Gray said.

Assemblyman Bill Quirk made the assertion that the biggest tainted asset is not the customer list, but the PokerStars name itself.

Gray compared PokerStars being sold to Amaya Gaming to a bank that had a chairman or major shareholder fined for engaging in an illicit activity and then was sold to another owner, stating that he didn't know of any other area where the new shareholders and owners would be held responsible.

"If we held every bill to the standard we've held this bill, we wouldn't have any bills," Gray said.

Assemblyman Eduardo Garcia perhaps gave a window into the Pechanga coalition's demands with his statement. He requested that the five-year penalty for companies that operated in the U.S. between 2006 and 2011 be a requirement in addition to the $20 million fine, a figure he wants increased.

Garcia also brought up non-gaming Indian tribes in California, and how he thought they should be getting a subsidy like the racetrack industry.

Gray stated that he set a schedule with stakeholders at the beginning of the year laying out that the horse racing issue would be addressed in the Governmental Organization Committee that he chairs, the fiscal issues in the Appropriations Committee, and suitability standards on the Assembly floor.

"We area ahead of schedule, having put suitability in the bill now before it goes on the floor," Gray said. "We'll continue to refine that and take all the suggestions to make an even better bill than today, but I want to make sure it's understood that every single concern raised is addressed in the bill in some fashion. You can debate the merits of if it's strong enough, but all concerns raised are in the bill."

Grubbe concluded his comments by teasing what is to come: "We look forward to a robust discussion of this proposal on the Assembly floor should it pass today."

*Image courtesy of dave gostisha/

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