New California Online Poker Bill Drafted by Tribes

Posted on May 17th, 2013 by Todd Wilkins

New California Online Poker Bill Drafted by TribesEight prominent California Indian tribes have collaborated and drafted an online poker bill that calls for intrastate poker only and excludes racetracks.

Led by the Pechanga Band of Luiseño Indians, a draft of the Internet Poker Consumer Protection Act of 2013 was released in an effort to allow the state’s other tribal gaming interests to provide input to the proposal and perhaps join in to lend support. While acknowledging the difficulty in pleasing all parties concerned, the tribes hope to prompt discussions among lawmakers with the draft as the basis of those talks.

The bill limits Internet gaming in the state to poker-only. While most other states contemplating online gambling proposals include a full menu of casino games, the California tribes continue to fear that such legislation would cannibalize the existing revenue stream currently enjoyed at their land-based gambling operations.

Also differing from most other states, the tribal proposal restricts online poker to an intrastate format and expressly prohibits both interstate and international compact agreements. Furthermore, should online poker someday be passed by federal lawmakers to encompass the entire United States, California would opt out of such a framework and go it alone.

This would be detrimental to the rest of the nation due to California’s ranking as the most populated state. With more than 38 million residents, the Golden State is practically a country unto itself and is one of the few states likely to enjoy a viable online poker regime without requiring joining forces with other states in order to increase its player pool.

In line with previous tribal proposals such as that of the now defunct California Online Poker Association (COPA), the latest draft permits only tribes and card rooms who currently offer live poker to participate. That leaves out the state’s horse racing interests, a matter which has continuously caused problems in advancing online poker legislation.

Tribes and card rooms who have been operating for at least the past five years would be eligible for an online poker license, with one website permitted for each licensee. There is no limit on the overall number of licenses to be granted. The licenses would be vaild for 10 years with an additional 10-year renewable option provided that full compliance of regulatory standards are met during the initial 10-year period.

The tribal proposal mentions no figures with regard to tax rates and fees. Those details would need to be ironed out in discussions with lawmakers. The tribes merely suggest that the rates must be of a reasonable nature that would allow for an adequate profit margin without placing undue burdens on the card rooms and tribes who are licensed operators.

As was done in Nevada but not New Jersey, a bad actor provision excludes participation by any operator who operated in the U.S. market following enactment of the Unlawful Internet Gambling Enforcement Act in 2006. The tribal proposal goes a bit further in excluding possible subcontractors who provide software or geolocation services. Those companies would not be permitted to participate if they had been operating before California’s online poker law is enacted, which seemingly excludes existing companies.

All native tribes and card rooms would launch their websites on the same day, with the proposal mentioning January 1, 2015 as a possible startup date. This provision would allow equality in the marketplace and prevent certain sites from getting a jump on others. Online poker in Nevada was launched on April 30 when Ultimate Poker beat its competition to the punch and began accepting real-money wagers. Time will tell if that site dominates the market based on its ability to be first.

There appear to be a considerable number of unanswered questions with the latest tribal proposal. If the proposed draft is eventually introduced in the state legislature, much more discussion and negotiation will be required. The most glaring omissions are the lack of specific taxation rates and the exclusion of horse racing interests.

The deadline for introducing a bill in the current legislative session has expired. It could be accomplished with political wrangling that includes a special vote. However, two other bills are before state legislators that will likely be considered first.

Senator Roderick Wright’s SB 51 is virtually the same as a bill he and Senator Darrell Steinberg were pushing last year. Wright’s proposal allows racetracks and advance deposit wager firms to be eligible for licensing. This has never sat well with tribal concerns who feel that the horse racing industry knows nothing about poker and that licenses should be reserved for those who currently offer the game.

Senator Lou Correa proposed SB 678 on the last day possible for this session in February. Seen as a placeholder bill, that bare-bones proposal calls for the state’s Gambling Control Commission to institute an online poker framework. SB 678 is said to have some support from tribes, as it also excludes racetracks.

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