A planned vote on California’s widely discussed online poker bill did not take place on Wednesday in the Assembly Appropriations Committee. Nevertheless, Committee Chairwoman Lorena Gonzalez told media that members would vote on the proposed legislation by the end of the month. A hearing on the bill is scheduled for June 29 but it could be moved to June 22.
Sponsored by Assemblyman Adam Gray, AB 2863 was amended last week, after it had been approved by the Governmental Organization Committee earlier this year. The amendments released last Wednesday were primarily concerned with two issues that have been preventing the bill from advancing through the Legislature more quickly.
The first issue is related to the way online poker operators would be taxed, in case the industry gets legalized and regulated within the state’s borders. Assemblyman Gray calls for a gradually increasing tax rate on annual gross gaming revenue generated, which starts from 8.47% and rises to 15% for companies that generate $350 million or more. Under the bill, a $12.5-million license fee is also to be paid by everyone who wants to provide online poker options in California.
The other issue that makes the state’s road to legalized and regulated online poker longer and bumpier than expected is a certain suitability language that has long been opposed by a coalition of six California-based Indian nations, led by the Agua Caliente Band of Cahuilla Indians and the Pechanga Band of Luiseño Indians. The tribes have repeatedly pointed out that the online poker bill should include a “bad actor” provision that would make it harder for PokerStars to enter the state’s online poker market when it is established.
As mentioned above, certain amendments were introduced last week so as for all or at least most of the concerned parties to be pleased with the bill. However, the fact that no vote occurred on Wednesday is indicative of the fact that more could be done in that direction.
After the Wednesday hearing, several proposals emerged regarding the bad actor provision and the financial issues that are still holding the bill back. The Appropriations Committee recommended that certain limitations are imposed on applicants that utilize assets, including customer databases and lists, in order to gain advantage.
The proposed amendment to Assemblyman Gray’s bill mainly concerns PokerStars and the way it could utilize databases from its former operations in the US. Another important change that was mentioned on Wednesday was a proposed delay on when certain operators should be granted a California online poker license. In other words, service providers that operated in the state between January 1, 2006 and December 31, 2011 should be given the green light to return to California no earlier than January 1, 2021.
As for the financial amendments proposed after the hearing, those were focused on the $12.5-million license fee and the $60-million annual subsidy for the state’s horse racing industry. Under the first proposed change, half of the license fee could be offset by reduced gaming revenue taxes. Thus, more operators would be given the chance to enter the California online poker market, once open.
Under Assemblyman Gray’s bill, the amount of $60 million would annually be contributed to the state horse racing industry. In exchange, local horse racing operators would not enter the online poker market. However, many expressed doubts that that amount may not be generated or if generated and given to the horse racing industry, nothing or not much could remain for the rest of California.
Under the recommended amendment to the bill, 10% of the gross gaming revenue tax would go to the specially established General Fund and the remaining 90% would be contributed to horse racing until the originally promised amount of $60 million is reached. And once reached, all tax revenue would be directed to the General Fund.
Although the bill seems to need more amendments to be introduced, it has gained quite a lot of support from shareholders, legislators, and residents of the state. And it could be said that the delayed vote on the proposed legislation was not the worst possible outcome, especially given the fact that there were numerous indications that a vote is to occur by the end of the month and it would likely be a positive one.
