History was made yesterday when California’s Governmental Organizations (GO) Committee voted in favor of Assemblyman Adam Gray’s online poker bill, AB 431. This marks the first time in the state’s history that an online poker measure has stayed afloat long enough to even receive a vote.
The GO Committee met on Monday, April 27, to discuss Gray’s measure. AB 431 was introduced in February of this year as a “shell” bill, creating only a basic framework for online poker regulation with many blank spaces to be filled in along the way. The Committee, Chaired by Assemblyman Gray, decided unanimously in favor of the proposition.
Reaction to Positive Vote on AB 431
Up until now, industry experts have strongly advised that no online poker bill had any chance of passage in the 2015-16 legislative session. Although the positive vote on AB 431 does not indicate imminent regulation, it does put a more optimistic spin on the situation.
“With AB 431 advancing through GO,” said BLUFF VP of Business Development, Steve Preiss, “the framework is at least in place for continued progress in bringing regulated online poker to California this year.”
However, he also noted that, “Outstanding concerns such as track participation still need to be resolved”. But overall, Preiss said, “today is clearly a win.”
The reactions from several major parties with heavy interests in the regulation of California online poker were as follows:
PokerStars Coalition – “Today’s passage of AB 431 (Gray) out of the Assembly Governmental Organization Committee represents a milestone for authorizing online poker in California… The vote today underscores the momentum building to help ensure that California finally passes iPoker legislation.”
Pechanga Chairman Mark Macarro – “We look forward to a meaningful process and arriving at comprehensive legislation that respects California’s longstanding public policy of limited gaming, protects children and the vulnerable, creates jobs, provides additional revenues for the State, and protects consumers and the integrity of the gaming industry from organizations that do not and have not respected U.S. law.”
Rincon Chairman Bo Mazetti – “Today is a historic day as a California legislative committee approves a bill that will lead to legalizing Internet poker in California… We look forward to the informational hearings and discussing the issues in greater detail. More importantly, we look forward to finding solutions to the sticking points and common ground through compromise.”
What’s next for the California Online Poker Bill?
Unfortunately, passing through the GO Committee is just one step on a long road of events that must occur before online poker becomes a legally regulated activity in the Golden State. The Committee’s vote simply pushes AB 431 on to the next stage.
According to sources, a series of amendments were made to AB 431 during the hearing, but they have yet to be officially filed. Chris Grove of OnlinePokerReport.com said, “it’s my understanding that the changes were relatively minor, or appeared relatively minor on face.”
What we do know is that those ‘relatively minor’ amendments got the attention of several parties that were previously opposed to Gray’ online poker bill. Once those amendments were agreed upon, the Pechanga and Agua Caliente tribes, among others, changes their stance on AB 431 from opposed to neutral.
Filling in the Blanks of AB 431
The online poker bill remains a shell for now, but all of those gaping holes will be filled along the way. According to Assemblyman Gray, that will take place throughout the upcoming Joint Senate/Assembly and GO hearings. Two joint informational hearings are slated for May 20 and June 24, with a third hearing to discuss two other online poker bills, Assemblyman Gatto’s AB 9 and Assemblyman Jones-Sawyer’s AB 167, on July 8.
There are currently four major topics that must be addressed before AB 431 is considered a complete legislative document. These include the regulatory body of the text and potential revenue sharing between the state’s gambling beneficiaries, as well as fees and tax rates for operators.
As tribal gaming advocate David Palermo reported, Gray believes the current online poker discussions should be a catalyst to “revisit the bifurcated system” that is California’s gambling industry. Such debates could have an enormous effect on the way both land-based and internet gambling are regulated in the state, and may directly impact the inclusion/exclusion of horse racing tracks.
As for taxation, Gray’s online poker bill does not call for a specific rate. However, as a valid comparison, AB 9 and AB 167 call for 5% and 8.5% tax rates on gross gaming revenue. That figure is phenomenally lower than the current 15% tax rate established for iGaming in New Jersey, and legislators may look to the Garden State to propose a comparable levy in California.