California Online Poker Bills

Updated on April 26, 2019

California online poker has been on the radar of lawmakers for more than a decade. Here’s a look back at the legislative history:

California Online Poker Bill For 2017

In February 2017, California Assemblyman Reginald Jones-Sawyer introduced the state’s first online poker bill of the 2017/2018 legislative session.

The Internet Poker Consumer Protection Act, AB 1677, read like many other recent online poker efforts, and features the numerous compromises that have been forged over the years.

And like its predecessors, it failed to resolve the overarching issue that has been a key factor in California’s inability to pass online poker legislation: suitability, and whether or not PokerStars should be allowed access to the market.

The legislative session ended on Sept. 15, 2017 without any movement on AB 1677. This came as no surprise to CA watchers, as there was little expectation that 2017 would be any different from previous years when online poker bills went nowhere in the state.

It’s likely that we will see an online poker bill in California in 2018, however the shape any proposed legislation might take is unknown.

Here’s a look inside the 2017 bill, AB 1677.

Eligible operators

Jones-Sawyer’s bill authorizes licensed tribal casinos and card rooms to offer online poker games to anyone over the age of 21 and located inside California.

The state’s racetracks aren’t eligible to operate online poker sites, but they would still benefit via a yearly stipend.

In lieu of operating online poker sites, AB 1677 creates the California Horse Racing Internet Poker Account, which calls for California racetracks to receive a yearly stipend (95 percent of the first $60 million collected each fiscal year).

This same compromise was introduced by Assemblyman Adam Gray in 2016, and was amenable to all sides.

Racetracks would also be eligible to act as affiliates or sub-brands (a skin operating on the same network) to licensed online poker operators. The latter part is a step beyond the concessions the horseracing industry received in last year’s online poker efforts.

Per Jones-Sawyer’s bill:

“Racetracks would be allowed to act as service providers so long as at least 50 percent of the revenue from the partnership between the operator and the track goes to the track.”

Licensing

Jones-Sawyer’s bill would license California online poker operators for a period of seven years.

The cost of an online poker license is $12.5 million, or about $1.8 million per year.

The good news is, the up-front payment is deposited into a general online poker fund (the fund that would pay the horseracing subsidy) and credited against future taxes owed. Essentially it acts as a deposit that the state will draw on when taxes are owed.

Even though its credited against future taxes owed, the hefty up-front licensing cost will be prohibitive for smaller, independent operators, and a cost they may never fully recoup.

Based on Chris Grove’s analysis of the California online poker market, the industry as a whole will generate $215 million in Year 1, and $310 million at full maturity. Grove speculates that the market could support no more than three or four poker networks (there could be multiple brands operating on each network).

Tax rate

AB 1677 uses a progressive tax rate based on total online poker revenue generated by all operators. This tax structure was first seen in Adam Gray’s 2016 online poker bill.

Here’s how it works.

If the industry generates:

  • Less than or equal to $150 million, the rate percent is 8.847%.
  • More than $150 million and less than or equal to $250 million, the rate percent is 10%.
  • More than $250 million and less than or equal to $350 million, the rate percent is 12.5%.
  • Greater than $350 million, the rate percent is 15%.

On suitability and bad actors

Even if the state’s numerous and varied stakeholders agree to all of the above points, AB 1677 will still run into the same problem that has derailed previous online poker efforts: suitability.

This issue has divided the state’s stakeholders into two camps:

  1. The PokerStars coalition.
  2. The Pechanga coalition.

The PokerStars coalition is comprised of Amaya/PokerStars and the Morongo Band of Mission Indians, the San Manuel Band of Mission Indians, Bicycle Casino, Commerce Casino, and Hawaiian Gardens Casino. All of the tribes and card rooms in the coalition have partnered with PokerStars.

The Pechanga coalition is a group of around a half-dozen gaming tribes led by the Pechanga Band of Luiseño Indians and the Agua Caliente Band of Cahuilla Indians.

There is also a third, loosely affiliated coalition that includes the horseracing industry, card rooms, and tribes that lean towards the PokerStars coalition.

When it comes to the prickly issue of suitability, AB 1677 falls clearly on the PokerStars side of the ledger, leaving the determination of suitability completely in the hands of regulators.

this is PokerStars and its allies best-case scenario, and a better deal than PokerStars was ostensibly willing to accept last year.

In 2016 Assemblyman Gray tried to bridge the suitability gap by imposing a one-time payment of $20 million on operators who continued to accept wagers from US poker players after December 31, 2006.

Rumors suggested the proposal was some dozen votes shy of the number needed for passage and was scrapped, at which point Gray decided to give the other side’s proposal a go, and changed the suitability language of the bill to reflect the Pechanga coalition’s views.

This second effort would not only impose a fine, it required PokerStars to sit-out for a period of at least five years. This version also failed to garner enough legislative support and was never voted on.

California Online Poker Bills For 2015: First effort

The California Legislature had two bills to consider that would regulate online poker. The bills are AB 2291 and SB 1366.

SB 1366 appears to be exactly the same bill introduced as SB 678 in 2013. State Sen. Lou Correa is the sponsor.

AB 2291 is sponsored by State Rep. Reggie Jones-Sawyer. Both bills would only regulate online poker and would prohibit games banked by the house, including slots, video poker and table games.

AB 2291 is defined as the Internet Poker Consumer Protection Act of 2014. It would create two funds. The “Unlawful Internet Gambling Enforcement Fund” would receive a portion of the revenue to combat illegal offshore operators and Internet cafes that cater exclusively to online poker players. The “Internet Poker Fund” would be where taxable profits would go and be used towards social programs.

California would issue licenses for a 10-year period. A deposit of $5 million would be required. These funds would be used towards future taxes paid.

AB 2291 is an urgency statute. This means it would require a two-thirds majority to pass. It would go into effect immediately if it were to pass both the California House and Senate. If passed into law, California regulators would have 270 days to adopt regulations.

No Interstate Liquidity Agreements

AB 2291 would prohibit California from entering into any interstate online poker liquidity agreement. The state would automatically opt out of any federal program if given the option. There is a provision that defines what actions must be taken if a federal law required California to enter a national player pool.

Poker is a Skill Game

The bill acknowledges that “winning at poker involves some measure of skill” and that “skillful poker players can earn winnings in the long term”. This is the opinion used to explain why poker would be regulated and house games banned.

Experience Required

Licensees must have at least five years of gaming experience in California. Only card clubs and federally recognized tribes could participate. The racing industry is notably excluded from this bill. Companies on the approved list would be allowed to enter into partnerships. This would exclude some newer casinos in the state.

All Services and Employees Located in California

AB 2291 addresses issues that have been realized in other states. The bill would require all licensees, employees, servers, facilities, bank accounts and operations to be located in California. There are some exceptions for specialized equipment or employees.

Municipalities Cannot Opt Out

Local governments would be forbidden from regulating the industry. This includes additional taxes or an outright ban on regulated Internet poker.

Sites Live on Same Date

SB 2291 states that all licenses approved before the industry is live would be dated January 1, 2015. That is when all sites would go live. The date could be changed if there are delays. This is the same approach that New Jersey where the industry successfully launched in November 2013.

Bad Actor Clause

A “Bad Actor” clause was included. The date was left blank. This must be debated among legislators. This section would exclude any company that operated unlicensed online gaming in California during the period of time that has yet to be determined. It would also exclude brands, logos and player databases compiled through offshore online gambling.

Player Verification

Players must be 21 years of age or older to play. Operators must verify identities through a government database. Players that cannot be verified must submit additional documentation before playing. Social Security Numbers would be collected. Regulated sites would be obligated to issue appropriate tax forms.

Banking

The banking section is vague. Players could expect traditional deposit and withdrawal options. Cash transactions at associated brick and mortar casinos are specifically permitted. Player funds must be held in segregated accounts. No credit may be issued.

Responsible Gambling

Operators would be required to display responsible gambling messages with each player login. This includes ways to self-exclude and explanations about loss limit features. Players could implement daily loss, deposit and time limits directly in the software.

Affiliates

Marketing affiliates would be allowed under this bill. It is unclear how the “Bad Actor” clause would apply. At the very least, databases of players accumulated through offshore marketing would be considered tainted.

California Online Poker Support

The bill would mandate 24/7 online poker support. Employees would be required to be within California at the time of employment.

Key Elements Left Blank

There were several important aspects of the bill that were left blank. These will be debated by the California House. These items include bad actor clauses, taxes and some accounting procedures.

Full text of AB 2291

California Online Poker Bills For 2015: Second effort

California Assemblyman Reggie Jones-Sawyer has introduced AB 167, a new California online poker bill.  The bill is titled the Internet Poker Consumer Protection Act of 2015.

AB 167 Highlights

  • 4-yr licenses with 4-yr renewals
  • $10,000,000 one-time licensing fee.
  • Taxes taken from licensing fee at 8.5% of gross proceeds
  • Poker only
  • Players must be 21 years of age or older
  • Internet cafes illegal
  • 270 days for gaming commission to set regulations
  • Creates Internet Poker Fund and Unlawful Gambling Enforcement Fund

Who Could Offer California Online Poker?

AB 167 would allow licensed card clubs, Indian tribes, and racetracks to offer online poker sites.  These entities would be able to create joint partnerships, provided all involved qualify for a license.  A qualifying licensee must have at least five years of gaming experience while in good standing in California.

Tribes that accept wagers from outside of their reservation in violation of this law would be automatically excluded.  This may be aimed at tribes that have come under fire for spreading online bingo and other games.

Poker-Only

Poker would be the only game permitted.  Symbols or devices that mimic slots or other house games would be prohibited. Pai Gow Poker is specifically forbidden, even if banked by players and not the house.

Language in the bill states that the house can have “no stake in who wins or loses,” making it so that only games played among customers are permitted.  This may also protect players from some of the table segregation policies some sites in other markets have attempted to restrict winning players.

Affiliates

Marketing affiliates would be considered service providers.  Affiliates must go through the same licensing procedures that apply to software providers and other similar service providers.  This includes affiliates paid through any manner, not just revenue share.

Player and Operator Penalties

There are penalties that make offering unlicensed online gaming in California a felony.  The same penalties apply to players.

Players would not be permitted to connect to California poker sites in public locations.  It would also be illegal to create a business for the primary purpose of allowing online poker access.

Gaming Commission Duties

The gaming commission was left with the duty of creating many policies.  These include:

  • Underage and problem gambling
  • Resolution of player disputes
  • Gaming technical standards, including hardware and software
  • Licensing and work permit issuance and guidelines
  • Most Suitability standards
  • Poker game rules and charges

No Clear Bad Actor Clause

AB 167 does not include a clear bad actor clause.  The language states:

(5) The person has associated with the criminal profiteering activity or organized crime, as defined in Section 186.2 of the Penal Code.

(6) The person has contemptuously defied a legislative investigative body, or other official investigative body of a state or of the United States or a foreign jurisdiction, when that body is engaged in the investigation of crimes relating to poker, official corruption related to poker activities, or criminal profiteering activity or organized crime, as defined in Section 186.2 of the Penal Code.

It also excludes those that have been convicted of a felony at any point or many misdemeanors in the past 10 years.  This may keep companies and individuals that have been indicted in the past out of the market, but not the current version of PokerStars, at least based on this language.

Rake and Tournament Fees

Rake would be charged through the standard used in California poker rooms. A set amount per hand that may be tied to the amount at certain stages of a cash game would be taken as oppose to the traditional percentage of the pot used by all other poker sites. It can be changed based on the limits. Tournament fees would be taken and added onto the amount that is included in the prize pool.

Sites Would Launch on Same Day

All licenses go into effect on same day. The suggestion in AB 167 is one year after regulations are set, but the gaming commission may change that. Companies that wish to cease operations must provide 90 days notice to the gaming commission.

Employees and Equipment Based in California

All employees with contact with players must be located in California. Player support must be available 24 hours a day, 7 days a week. All major components of the online poker business must also be located in California.

Player Verification

California poker sites must verify that a player is 21 years of age or older before accepting action. This will be done by comparing the submitted information to government databases. A credit card or other financial instrument must match the address confirmed through this database. Players that cannot be verified must go through a documentation check.

Geolocation would be required to determine whether a player was located in California at the time of play.

Banking

All credit and debit card deposits must have the words “Internet poker” in the description. Cash and money orders could only be accepted in person at licensed gaming establishments. Credit may not be extended.  Regulators could approve any financial instrument for deposits and withdrawals.

Problem Gambling

Problem gambling information must be displayed when a person registers an account and with every login to an online poker account. Players must be able to set limits on deposits, losses, and time played.

Account Creation

Accounts may be created in person, by mail, and over the Internet. Players must provide a Social Security Number to create an account.

Full bill text of AB 167 may found here.

California Online Poker Bills For 2015: Third effort

California Assemblyman Mike Gatto has introduced a new online poker bill to legalize online poker in California. AB 9, titled Internet Poker Consumer Protection Act of 2015, and was introduced on December 1, 2014.  The bill would allow card clubs and tribes with state gaming compacts to operate online poker rooms to players located in California at the time of play.

New Proposals in AB 9

The first major development is the inclusion of new language under the bad actor clause. The date of December 31, 2006 was left intact. Any person or entity that operated in the U.S. in violation of state or federal law would be automatically excluded. New language that appears to be aimed directly at PokerStars and its acquisition by Amaya Gaming appears in AB 9:

In the Legislature’s judgment, a knowing decision to purchase or otherwise acquire that data for use in connection with Internet poker in the state bears directly on the applicant’s suitability and must be considered in any determination whether to license that applicant under this chapter.

AB 9 would also allow California to opt into interstate or international player pools. This would require an affirmative legislative act.

Account creation policies were drastically changed by the new proposal. Players would be required to open an account in person at a licensed gaming establishment or satellite office. These satellite offices appear to be card clubs and tribal casinos that do not actively offer online poker but may have partnered with existing sites to supply payment processing and player identification services.

First deposits must also be made in person. Subsequent deposits would be permitted electronically. Withdrawals over a certain amount in a day or seven-day period would require pickup in person at a participating card club, tribal casino or satellite office. The amount that would trigger a withdrawal pickup was left blank in the bill.

A current amendment proposal would eliminate these in-person requirements.

AB 9 also lowered the minimum number of years that a gaming establishment would need to have operated a live casino to qualify for an interactive license to three.  A previous bill known as SB 1366 set a three year minimum.  That number was five in last year’s draft.

Policies Included in Previous Bills

Affiliates must be licensed and would be bad actors under the same guidelines that a poker site and its vendors are. This includes employees of affiliate businesses. Affiliates would be required to file quarterly reports.

An Internet Poker Fund would be established that would collect all taxes and fees. Some of the revenue would go towards the Regulatory Enforcement Fund. This department would pursue companies that continue to operate in California without proper licensing. The target would be offshore sites.

Rake would be collected on a per hand basis from cash games. This is similar to how live poker is raked. Admin fees on tournaments entries are permitted under the bill.

Internet Cafes would be banned under AB 9. These types of businesses operating under the sweepstakes café model have been targeted by the state in the past.

Regulators would have 180 days to draw up online poker policies. Licenses would be issued for a ten-year period. Sites would be required to post a $5 million deposit. The tax rate would be 5%. The amount of the licensing fee would be announced at a later date. An unsuccessful site would be required to give 90 days’ notice before shutting down.

All customer support employees and bank accounts holding player money must be in California. Sites would be barred from extending credit to players. All primary server equipment would also be stored in the state.

Problem gambling is address with opt out times of no more than five years unless overturned by regulators. A player that self excludes would do so at all licensed sites. Problem gambling information would be displayed whenever a player logged in or out of the software.

In the event of a court challenge, AB 9 would remain on the books unless one of three key provisions was struck. One is that the only permissible game is poker. Another is the striking of any portion of the bad actor clause. Also, if the guidelines for qualifying gaming companies were successfully challenge. If any of these sections of AB 9 were thrown out by a court, the entire law would be voided.

AB 9 is an urgency statute. This means that it requires a two-thirds majority vote in both the Assembly and Senate. It could then go into law immediately upon being signed by the governor.

Bill text: AB 9

Statement from Assemblyman Gatto

California Online Poker Bills For 2015: Fourth effort

AB 2863 was a bill in the California Assembly that would make online poker legal in California.  The bill would create regulations to control the industry.

This includes suitability, taxes, and software requirements.  AB 2863 is sponsored by Assemblyman Adam Gray.  He is chairman of the Committee of Governmental Affairs.  This committee hears all debates on gambling issues in the California Assembly.

Horse racing industry receives up to $60 million

AB 2863 looks to fix one major issue some tribes had with previous California online poker bills.  The first $60 million in annual tax revenue generated by the state’s online poker operators would go towards the horse racing industry.

The horsemen and other employees would receive 95 percent of this money.  Of that 95 percent, 95.4 percent would go towards purses.  Horsemen retirement and insurance funds would receive 2.3 percent of it.  This would go towards present and retired jockeys. The other 2.3 percent would go towards pensions of other employees at the state’s racetracks.

The remaining five percent would go towards the California Fair and Exposition Fund.  This supports the administering agencies, state, county and district fairs.

Licensing fees and taxes

AB 2863 does not address tax or licensing rates.  Those portions of the bill are left blank.  The amounts will be debated in committee and between interested parties.

AB 431, a previous version of this bill, would have required licensed California online poker rooms to pay a tax rate of 15 percent.  This money would be collected from a $15 million deposit made by operators to receive the initial license, another requirement under AB 431, the previous draft. Both of these numbers are not yet determined under AB 2863.

Each license could host up to two websites. Partnerships between qualified entities are permitted.  Card clubs and California Native American tribes with five or more years of gaming experience are the only groups that may be approved.

Licenses would run for seven years.  Renewals would also be for seven years.  AB 2863 would sunset on January 1, 2024 unless the state legislature extended it or deleted this clause in the future.

There is no bad actor clause in AB 2863.  The suitability of a company or individual would be left up to gaming regulators following standard licensing processes.

State regulators would have 270 days to draft regulations.  The licensing process would begin within 150 days.  All sites would launch on the same day to create a level playing field.

Operator rules

Poker is the only game that would be permitted under AB 2863.  It must be player against player.  Banker games like Pai Gow Poker are expressly forbidden under AB 2863.

Cash games and tournaments are allowed under the bill.  Standard California per-hand fees would apply to cash games.  Tournaments would have an admin fee attached that must be fully disclosed to players.

Support must be available 24 hours a day, 365 days a year.  Any employee providing support and other positions with player contact must be located in California.  The same goes for servers, key employees, records and bank accounts.

Problem gambling information must be prominently displayed.  This would occur when a player creates an account, visits the cashier or logs into the site.  Loss, time and deposit limit features must be available to players.

Players must be at least 21 years old to play.  Geolocation services must be used to determine that a player is in California at the time of play.  Identity verification is required for all new accounts.  The site may use databases provided by third parties to verify identities.  The player must supply photo identification if the site is unable to verify the new account’s legitimacy.

Accounts could be made in person, over the phone, through the mail or over the Internet.  Cash deposits could only be made at a licensed casino related to the poker site.

Read the Full AB 2863 Bill here.

California Online Poker For 2014

The California Senate has a new online poker bill to consider. SB 1366, titled The Internet Poker Consumer Protection Act of 2014, was released on February 21. It is sponsored by California Sen. Lou Correa. He also sponsored last year’s SB 678, which was nearly an identical bill to SB 1366.

The bill is considered an urgency statute. It requires a two-thirds vote to pass. The bill would become law immediately after passage.

Poker Only

SB 1366 would only regulate online poker to players located within California at the time of play. Casino games banked by casinos would be forbidden. Online poker operators and providers would receive a license for 10 years and pay a tax rate of 10 percent. Card clubs and tribal casinos would be permitted to offer online poker. Racetracks are not included in the bill.

Licensing Requirements

There would be no limit to the number of licensees in the state. Owners may operate more than one site in the state. Site owners, operations and employees must be based in California. Bank accounts and accounting records must be kept in the state. Operators must have at least three years of casino experience in California to receive approval.
SB 1366 would allow the state to enter into interstate and federal online poker networks in the future. The only requirement is that the agreements comply with California law, including this bill.

Illegal Operations

Internet cafes would be banned by this bill. Municipalities would be forbidden from regulating or taxing the industry.

Illegal offshore sites are targeted in two ways. The businesses would be declared illegal with potential law enforcement penalties. Players would also risk having finds seized if caught playing on unregulated sites.

Special Tribal Section

SB 1366 recognizes tribes as a special situation that requires separate regulation. Federally recognized tribes could be set up under a different regulatory regime than commercial card clubs. This leaves the state government out of some of the approval process. For example, a tribe that already has a gaming compact does not have to go through an additional licensing process for online poker.

Skins Permitted

SB 1366 would allow licensed operators to network operations. This would include skins and partnerships. All skin owners must be able to pass the same licensing process as primary operators. Skins would be nothing more than glorified affiliates that would only provide a brand and logo and not have any involvement in the actual operations of the network or site.

The fee schedule for skins was intentionally left blank. This would be a point up for debate.

Bad Actor Clause

Any company that accepted illegal or unlicensed bets from Americans after December 31, 2006, would be barred from participating in the regulated California online poker market. This includes those that “knowingly facilitated or otherwise provided services with respect to bets or gambling games using the Internet”. Individuals and companies that fall under this clause could not work with licensed operators, provide promotional material or receive permits.

Marketing Affiliates Permitted

Marketing affiliates are specially permitted under SB 1366 as long as they do not fall under the bad actor clause.

Out of State Access

SB 1366 allows players outside California to access accounts for purposes other than gaming. This may include contacting support or initiating banking transactions.

Player Verification

Players must be at least 21 years of age to play. Verification must be performed on every player by using a database provided by regulators. A player that cannot get verified through the automated system must complete an age verification kit. Any player caught forging documents is subject to substantial fines.

Banking

Sites must hold player funds in a segregated account. Players may deposit by credit card and bank account transfer. Cash and money order deposits are specifically forbidden.

Problem Gambling

Problem gambling is addressed in SB 1366. A self-exclusion feature must be displayed when players register and login. Players may set deposit limits, loss limits and a maximum time per session. The software must remind a player once per hour how long the session is and the results. This feature allows players to immediately quit the games.

Support

Phone support must be available 24 hours a day, seven days a week. It must be staffed by California-based employees.

Player Taxes

Players that win more than 300 times the buy-in when the total win is $600 will see 5 percent of the win withheld for state taxes. This withholding occurs regardless of the player’s previous losses. An annual report is filed with the state that discloses a player’s total deposit amount that includes total wins and losses. Players also receive a copy of this document.

Full text of SB 1366

California online poker for 2013: First effort

California State Senator Roderick Wright introduced SB 51 on December 19, 2012. The bill could be heard by the California Legislature as soon as January 19, 2013.  SB 51 would legalize online poker within the state lines of California.  No other games besides online poker would be legalized in California through this bill, although online horse racing is already legal in California.

SB 51 is considered an urgency statute.  This is due to the budget crisis in California.  An urgency statute goes into law immediately but requires a two-thirds vote in both the senate and the house to pass.

Tax Revenue

Senator Wright predicts that SB 51, also known as the Internet Gambling Consumer Protection and Public-Private Partnership Act of 2013, would generate $200 million in tax revenue its first year through licensing fees and taxes on gross revenue.  This would be done by requiring licensed operators to post a $30 million deposit on future taxes.  The tax rate would be 10% of gross revenue, which means that 10% of all cash game fees and tournament rake would go towards the state’s general fund in the form of taxes.  There would also be an increase in state income taxes through the new industry and the jobs it creates.

Winning players would also be required to pay income tax on their winnings that would be easily tracked through the site’s software.  Players would be required to provide online poker rooms with their Social Security Number and tournament winners of $600 or more and 300 times the buy-in would receive a tax notification.  A 5% tax would be held on qualified net tournament winnings.  The state would also be aware of all player’s wins and losses, regardless of whether the players received tax forms on winnings.  This would add to the tax revenue in the state.

Player Requirements

In addition to providing their Social Security Number, players would also have to prove that they are 21 years of age or older.  They would also have to prove that they are physically located in California until regulated online poker expands into other states.

Players would enjoy many safeguards that have not been available to them from offshore operators.  Players would enjoy 24 hour phone support 365 days a year.  Operators would also be required to hold funds in segregated accounts.  Some of the biggest online poker rooms that accepted U.S. players in the past failed to do so and players lost all funds in these rooms.

Responsible gambling programs must be made available.  This includes players being shown where to get help for gambling addiction in the software.  Players may also opt out of California online poker by filling out a self exclusion form.

There are more regulations that would help players that do not wish to self exclude but wanted to set limits.  Players could set daily deposit limits and loss limits over a specific period of time.

Players would be reminded how long they had been playing while at the tables.  Once an hour a pop up would tell players the amount won or lost during their session, the amount of time that they had been playing and every six hours a player would have to confirm that they have seen their session statistics.

Players could not be extended credit.  This would prevent players from losing money they did not have.

Players would be protected from collusion, robotic play and other forms of cheating.  California online poker rooms would be required to monitor all play and have safeguards in place to detect cheating.  Players that were caught cheating would be banned from California online poker.  They could also face prosecution as poker rooms would be obligated to report cheaters to the state.

Players that are concerned about privacy would have some regulations on their side.  Operators would not be able to sell player information to a third party, although they would be allowed to use that information to market to the player.  Government agencies would be exempt from this clause.  Operators would be required to notify players annually with information on how their personal information was used over the past year.

In addition to player safeguards, there are other player friendly features in the bill.  Players would be allowed to multi table.  Player to player transfers would also be allowed.  Player pools could also be networked to expand liquidity.  The bill also allows for interstate player pools should the state government decide to enter pacts with other states.  International player pools would be allowed if the federal government approved.

Players would also not have to worry about their local government banning online poker offered by approved California online poker rooms.  Local jurisdictions are preempted from restricting access to regulated online poker rooms.

Players would not be allowed to deposit cash or money orders.  Credit cards and ewallets would be acceptable forms of payment.

Operator Requirements

Operators would be required to either be a commercial card club, tribal casino or horse racing facility that actively accepts live or offtrack wagers.  An “online advanced deposit wagering site regulated by the California Horse Racing Board” would also qualify to offer online poker.  This would seem to apply to a company like TVG that already legally offers online horse racing wagers in California.  Betfair is the parent company of TVG.

Applicants would be required to pay between $1 million and $5 million for a license application.    This process would include background checks on the company and all of the company’s officers.  Employees of the company would be required to pass a similar check.  The fees for employee background checks would likely be $100 or less per person.

Companies that accepted players from the United States after December 31, 2006 would not be able to receive a license in California.  Their software and brand names could also not be used in the state.  These companies that accepted U.S. players after 2006 could not participate in regulated California online poker in any way.  Subcontractors would not even be allowed to be in business with companies that accepted U.S. players after that date.  This means that you will not be seeing PokerStars or Full Tilt Poker in the California online poker market.

All operators, subcontractors and employees would be required to be located within California.  There are some small exceptions that apply to specialized services that may be needed in the case of game security or software updates.  All bank accounts and player funds must be held in California banks.  Accounting companies handling online poker books must also be located in California.

Operators would be licensed for five years.  If a licensee is found to have violated the regulations they risk a suspension or revocation of their license.

Online poker only internet cafes would be banned.  Players must play from their home or other non commercial locations that are not directly profiting from providing an online poker service.

California brick and mortar poker rooms take a charge per hand instead of a percentage of the pot like casinos in most states do.  California online poker rooms would do the same.  Poker rooms may alter their charge depending on the limit of the game.  This may cause issues with networking into other state’s player pools as the rake structure would be incompatible with other states.

Operators would be required to submit monthly reports to the state.  This would include detailed information on what the operator owes the state.  It would also include player data such as the player’s name and their wins and losses.

Affiliates

Affiliates would be allowed in California.  Background checks would be required on affiliates but they would not be required to go through the licensing process.

The full text of the bill can be found here.

California Online Poker For 2013: Second effort

California Senator Lou Correa introduced California SB 678 on February 22, 2013. The bill is titled the Authorization and Regulation of Internet Poker and Consumer Protection Act of 2013. The bill is sponsored by a group of tribes led by the Sam Manuel Band of Mission Indians.

The bill would allow California gaming companies to offer online poker within the state. It would not legalize any other forms of online gambling, though online horse racing is already legal in California.

The bill would require financial safeguards to ensure player funds were safe. It would also make the minimum age to play online poker in California 21 year old. While this mirrors other state’s legislation, it goes against the minimum age of 18 that a number of tribal casinos and the state’s horse racing industry allow. It also requires players to be physically located within California while seated at a real money table. Location and age verification services would be required to guarantee that all players that attempt to play online poker in California are legally allowed to play.

There is also a bad actor clause.  Any gaming company that has violated federal law would be excluded.

The bill also addresses an issue with internet cafes that has already become a problem in California. No business would be allowed to use a business model that provides computers for the sole purpose of online poker or other gambling games.

Problem gambling information must be prominent within the online poker room’s website and software. These options include player loss limits, self exclusion and cool off periods.

There are two other online poker bills up for consideration in California during this legislative session. California State Senator Roderick Wright, a proponent of gambling expansion in California, introduced SB 51 that would allow card clubs, tribal casinos, racetracks and online horse racing operators to offer online poker. A different bill has been introduced by different tribal casino operators that would give most of the online poker operations to reservation casinos.

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