California Internet Poker Bill Amended To Address Taxes, SuitabilityFlexible Rate, Restriction On Existing Customer Databases Proposed By Author |
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A bill on the table to legalize and regulate online poker in California was amended this week to address some of the remaining issues facing the legislation.
It wasn’t the first time this year that Assembly Bill 2863 has been altered, but these amendments can be seen as an attempt to end a stalemate in Sacramento that has lasted for nearly a decade.
According to San Francisco-based gaming attorney David Fried, who posted the proposed amendments online, the changes address taxes and suitability. The taxes are especially important because California horse tracks agreed to forgo eligibility for online poker licenses in exchange for a $60 million state subsidy. As for suitability, some California tribes still want restrictions on PokerStars because of its past business activity in the United States.
Taxes
At the April 27 hearing on Assemblymember Adam Gray’s online poker bill, there wasn’t a tax rate set to help explain how $60 million could flow to the horseracing industry each year. According to the proposed amendments, there would be a one-time licensing fee of $12.5 million, in addition to a flexible tax rate that depends on the size of the California online poker market.
The tax rate could be 8.847 percent, 10 percent, 12.5 percent or 15 percent. The smallest rate would be if the market is $150 million or less. The 15 percent would be for an intra-state online poker market that surpasses $350 million.
There was some testimony at the hearing that called into question the projection of California’s online poker market, estimated to be worth nearly $400 million at maturation, but Gray said that we “haven’t seen a [web poker] market the size of California in the United States.” He said that one million people in California play poker on offshore sites.
California has a population greater than that of Canada, so if any intra-state online poker market in America can live up to its hype, it’s likely the Golden State.
Suitability
The years-long debate surrounding “bad actor” language could be resolved by the provision that proposes a restriction on service providers like a PokerStars using customer lists that were generated “prior to the effective date of the [online poker] regulations” until 2019.
That could give California tribes the level playing field out of the gate that they want.
The bill’s language wouldn’t prevent a company that facilitated games for Americans between 2006 and 2011 from doing business in the Golden State’s online poker industry, but it presumably addresses the issue that some tribes have with service providers benefiting from offering online poker to Californians before it was approved by the legislature.
A coalition formed by the Morongo Band of Mission Indians, San Manuel Band of Mission Indians, California’s three largest card clubs—Commerce Casino, Hawaiian Gardens Casino and Bicycle Casino—and PokerStars’ parent company praised the changes Thursday.
“We applaud Assemblymember Adam Gray for moving the ball forward on iPoker and addressing the final two key issues in his bill AB 2863,” a press released said. “This is a step in the right direction […] Our coalition has long-supported a competitive online poker marketplace in California that offers choices and strong consumer protections; rigid suitability standards; strict oversight of operators and licensees; and provides a financial return to the state.”
What’s Next
There was a hearing on the bill planned for May 18 in the Assembly Appropriations Committee, but it was canceled by Gray, presumably because the amendments weren’t hashed out yet. Now that they are, there could be another hearing in the coming weeks. If it makes its way through the Appropriations Committee it could come up for a full Assembly vote. The measure passed the Assembly Governmental Organization Committee by a vote of 18-0 at the late April hearing.
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