Clock is Ticking on California Legislature

Written By Steve Ruddock on August 7, 2014
The California legislature is running out of time on the yearly session and must act now if they want to pass an online poker bill.

If they plan on passing an online poker bill in 2014 the California legislature had better get a move on. The clock is ticking down on this legislative session, with just about two weeks remaining before the final buzzer sounds, and online poker has gone from a long-shot to a pipe dream.

Outside forces are certainly trying to get the legislature to act, from the 13 tribe coalition pushing their own bill to a group of 25 card rooms who recently sent a letter to two key individuals in the statehouse, Senator Lou Correa and Assemblyman Reginald Jones-Sawyer. And how can we forget the efforts of the Santa Ysabel tribe who are threatening to launch their own online poker website without the state’s permission.

With so many possible scenarios capable of being played out over the next couple of weeks let’s take a look at what will happen under the most likely scenario, which is the legislature not acting —The senate bill has already been pulled off the table according to the LA Times and the Assembly bill starting to look like a lost cause as well— and what that will lead to in California.

If the legislature punts

If the legislature does not act on online poker in the coming weeks we will learn one thing for certain; whether or not the Santa Ysabel tribe’s threats to launch are real or if the tribe was bluffing to try and get a favorable bill passed.

My position all along has been that the Santa Ysabel threat was little more than a bluff designed to either get the legislature to act, and even more likely to make sure that some sort of revenue sharing bill was discussed with smaller tribes unable to pay the stiff licensing fees and compete with the larger tribes and card rooms.

Santa Ysabel has stuck with the story that they are serious about launching, and if the legislature does punt they very well might.

While I don’t think their intention was to test the Indian Gaming Regulatory Act and the definition of Class II gaming, they do have all the pieces in place to do so, including a software provider, a seemingly willing payment processor, and a regulatory agency housing their servers in Canada.

Frankly, the Santa Ysabel tribe has little to lose (the tribe is already in severe debt from its failed foray into brick & mortar gambling) but they could alter online poker in the US, and not necessarily for the better.

The effect on partnerships

We will also see what becomes of the partnerships and coalitions that have formed this year.

What becomes of PokerStars tentative partnership with the Morongo Band of Mission Indians, the Bicycle Casino, the Commerce Casino, and Hawaiian Gardens? What about the coalition of 13 tribes? Or the card rooms?

Some of the partnerships were simply “the enemy of my enemy is my friend” relationships and others were tenuous at best. Given a few months to reset and rethink their positions it’s highly unlikely that these same partnerships will remain when the issue is taken up in the next legislative session.

This is especially applicable if (as I’ll soon explain) the threat of a Bad Actor clause is off the table.

If there is suddenly zero chance that a Bad Actor clause will be included in an online poker bill introduced down the road I would expect the Morongo group and the coalition of 13 tribes and the 25 card rooms to suddenly see their interests aligned, but rifts could form over other policy disagreements, such as revenue sharing and even race tracks.

Bad Actor clause will likely be off the table

Remarkably, if the legislature is unable to get an online poker bill passed it will likely lead to the possibility of a Bad Actor clause being included next year somewhere in the 0.0 range.

The reason I say this is that PokerStars is expected to be licensed in New Jersey in the very near future, and it would be very difficult for any future state to pass a bill with a Bad Actor clause that would cover companies licensed in other states.

It’s not impossible, but considering the legal fights that have already been suggested in California over the Bad Actor clause it seems highly unlikely that Bad Actor language would be applied if the company(s) in question are licensed in New Jersey.

There is also the not so small issue of Amaya Gaming suddenly falling into the Bad Actor category due to its ownership of PokerStars and Full Tilt Poker –virtually every casino/online casino uses Amaya licensed games.

Many pundits feel that certain tribes resolve against a Bad Actor clause was a stalling tactic to insure a bill was not passed — they essentially feigned a desire for online poker when they are actually against it but made sure the wedge issue was not resolved and killed the bill.

If this is the case then this will have backfired, as it only slightly delayed the inevitable and further aligned the many divergent interests in the state.

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Steve Ruddock

Steve Ruddock is a longtime member of the online gambling industry. He covers the regulated US online casino and poker industries for variety of publications, including,,, and USA Today.

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