California Online Poker: Can Legalization Happen In 2016?

Californina online poker regulation 2016 chances

Legal online poker has been on the table for years in California, but there has been precious little progress despite a lot of chatter, and a number of different bills that would have regulated the industry.

But 2016 offers a new opportunity for those hoping to see the largest state in the U.S. allow online poker to take place within its borders.

Why could 2016 be different? How did we get here? And what’s the path forward for online poker legislation?

The newest CA online poker effort

After an effort to legalize online poker sputtered in 2015, there wasn’t much reason for optimism this year. But that all changed in February, when a new and in some ways very different iPoker bill surfaced.

The payoff for horse racing

That bill — AB 2863 — was similar to previous efforts, with one very major change. The bill included a $60 million subsidy to the horse racing industry, in exchange for allowing tribes and cardrooms to be the only online poker operators in the state. It’s a suggestion that has been raised in the past, but had never been included in a bill.

This has been one of the central issues in holding up California online poker regulation, to date, so the concession to the tracks was seen as a major sign of progress. There are still a number of details to be worked out, but the $60 million figure appears to be aimed at getting everyone back to the negotiating table.

Among the questions to be answered:

  • Is the horse-racing industry really prepared to stay out of the online poker market, after years of resistance to the idea?
  • Is $60 million enough to placate the tracks?
  • Is the $60 million figure realistic? Estimates of the online poker market make it seem like this number may not be in line with reality.

No ‘bad actor’ clause

The other major point of contention in online poker legislation has been the possible involvement of PokerStars in a regulated market. The current bill in front of the legislature does not contain so-called “bad-actor” language — a provision to stop poker operators that operated in violation of the Unlawful Internet Gambling Enforcement Act. The absence of such a provision would allow PokerStars to be in California.

The world’s largest online poker site is aligned with a number of tribes and cardrooms in the state, while another powerful tribal gaming coalition, led by the Pechanga tribe, has opposed PokerStars’ inclusion.

It’s not clear that the absence of the bad-actor provision actually means that the latter coalition has softened its stance at all, although PokerStars indicated it was optimistic about 2016, and it received a license to operate in New Jersey.

In fact, many still believe there is still resistance to PokerStars. And, after news this week about Amaya (PokerStars’ parent company) CEO David Baazov being charged with insider trading, it’s very possible that the rhetoric about PokerStars gets stirred up again.

Without progress between the two tribal coalitions on this front, it’s unclear that legislation will have a path forward in 2016.

2015 and before: The backstory on California online poker

Last year represented a lot of progress for online poker in California, but only because of the relatively little progress that had been made over the years that the legislature has considered the matter.

Despite that, there were at least three online poker bills in play at one time. And for the first time ever, an online poker bill in California passed a committee vote. That bill, authored by Assemblymember Adam Gray (also chair of the Governmental Organization committee from which it passed), was just a shell of a bill to be filled out at a later date.

But filling out the bill with actual regulatory language never happened, and Gray’s legislation — and the other bills — languished as the various stakeholders bickered about it behind closed doors and in the press.

Still, people were still talking about online poker, which for those hoping for legalization is better than the alternative of no conversation whatsoever.

However, that discussion has been going on for years, with the same issues providing a roadblock pretty much every time online poker comes up for discussion. Every year brings renewed hope — for instance, even in 2014 when legislation was shelved, there was reason to think progress could be made in the future.

Whether 2016 actually represents a departure from years past in California remains to be seen.

The path forward for CA online poker

The difference in opinion on who should be allowed to operate online poker sites has long been the biggest sticking point in California. If this question is answered once and for all, some believe the rest of the issues can be resolved (with the “bad actor” discussion still a major stumbling block, as well).

AB 2863 is again in front of Gray’s GO Committee, which is already very familiar with the issues at play, although a committee hearing has not yet been scheduled. We’ll know this spring if online poker has a real chance of making any progress in the Assembly and getting to the Senate.

Steve Ruddock laid out the timeframe:

  • A hearing and vote in GO will have to happen before April 22.
  • A hearing and vote in the Appropriations Committee will have to happen by May 27.
  • The full Assembly would have to pass the full bill (by a two-third majority) by June 3.

That’s a tight timeframe, given the contentious nature of the legislation in the past. If and when the GO Committee considers the bill and votes it up or down, we should have a much better idea of the prospects of legalized online poker happening in California this year.

Dustin Gouker

About

Having worked as a sports journalist for more than 15 years, Dustin is now an expert in the daily fantasy sports industry. His writing also focuses on regulated online gambling in the United States.