Californian Online Poker Legalisation Gearing Up Again

Two bills – both urgent – introduced to the Legislature late Friday

The much anticipated re-ignition of the California online poker legalisation debate took place late Friday with the introduction of two bills to the California State Legislature.

Both were submitted as urgent bills, which mean that a two thirds majority vote in both the Assembly and the Senate will see them fast-tracked into law, with a 270 day deadline for the completion of supporting regulations.

The bills, SB 1366 and AB 2291 were introduced to the Senate and the Assembly respectively just on the right side of the Legislature's deadline for submissions Friday.

Both seek the intrastate legalisation, licensing and taxation of online poker in California, and both show evidence of the involvement of different tribal interests.

SB 1366 appears to be an update of state Sen. Lou Correa's old SB678 (see previous InfoPowa reports), according to a review on the poker information site Online Poker Report. Now titled the Internet Poker Consumer Protection Act of 2014, the bill is believed to be supported, as it was last year, by the San Manuel Band of Mission Indians.

The measure retains wide "bad actor" provisions excluding operators who offered online gambling action post-UIGEA, but does allow for interstate compacts with like-minded states seeking to share player pools.

Importantly, it is also not hostile to the possibility of Congress passing a federal legalisation law, as politically remote as that achievement may at present appear to be.

Under this bill there would be no cap on the number of operator licenses issued, which would be valid for 10 years and require an upfront and one-off $10 million fee against which a monthly tax bill of 10 percent of GGR would be credited until the initial fee was run down, when operators will start paying the 10 percent into state coffers.

AB2291, which was presented by Assemblyman Reggie Jones-Sawyer to the Assembly's finance and appropriation committees and reportedly enjoys the support of a number of tribes, is in some respects a little more flexible in the area of bad actor provisions, restricting such licensing prohibitions to operators who were naughty only in California, and leaving the interpretation of the timeframe open to discussion.

Among the powerful tribal interests pushing this bill is the Pechanga Band, which has reportedly insisted on a clause expressly prohibiting the licensing of Indian gaming interests who accept action from persons not physically on Indian lands, even though they may be located within the state borders of California at the time.

This bill has some heavyweight support from existing land card room companies and is less flexible when it comes to compacts with other states, eschewing these (with its large population California can afford to do this) and insisting that the state also opt out of any federal legalisation of online poker that may be proposed.

If in future California lawmakers allow federal legalisation to take root in the state, licence holders are given the right to withdraw from licensing and claim refunds from the state.

The upfront fee proposed by AB2291 is more reasonable at $5 million, with a non-transferable licence duration of 10 years. Emulating the Correa bill, but with less onerous taxation, AB 2291 imposes a 5 percent monthly tax on GGR, which is credited to the upfront deposit until the initial fee has run down, when operators will start paying the 5 percent into state coffers. There may also be yet-to-be-decided regulatory fees.

The number of licenses to be issued remains unspecified for now, giving room for the further wheeling and dealing that experience has taught legislators will be needed to get this sort of controversial legislation through the political gauntlet.

AB 2291 is also interesting because it additionally addresses – and bans – internet cafe "sweepstakes-style" online gambling, proposing that heavy fines be imposed on this type of illegal operator.

These fines would be used to boost the operations of a yet-to-be-formed Unlawful Gambling Enforcement Fund, charged with stamping out all illegal and unlicensed online gambling activity in the state.

There's also an additional nod to concerns on underage gambling in a clause which makes it an offence for an online player to knowingly permit any person under age 21 years to use his or her online poker account, with fines of up to $10,000 possible for repeat offenders.

Online Casino News Courtesy of Infopowa

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