California Online Gambling
Goin’ Back to Cali…
In the US state of California, the case for online casino gambling is still under much construction. Several roadblocks for furthering legislation in favor of online poker have made the ability to wager for real money online in California a “wait and see” state.
Interestingly enough, California was initially considered to be the state to watch regarding legalized online wagering. Specifically, online poker has great potential in this state. Considering its well-known neighbor, Nevada, many proponents for online gambling believed that California would, at the very least, legalize online poker through interstate compacts, namely Nevada. This has yet to come to fruition, but there is still a fair amount of traction made that could still produce law in the near future.
Proposed Legislature Failure
Several attempts at getting online poker legislature passed have failed to make it into actual law in the state of California. In the US, the current states that are considering the legalization of various forms of online casino activity each have unique aspects to their potential law. As for California, it is focused on legalizing online poker, largely because California lawmakers consider poker more of a game of skill than traditional casino games. Many industry insiders thought California would be one of the very first states to legalize after the federal government opened the door for individual states to legalize their own forms of gambling online. This has not been so.
Politics is politics, and in the case of California this is very true. California was struggling financially at the time US states were permitted to move ahead with legalization of online casinos. Finding the idea of casino revenue an attractive one, California was still nowhere near the financial weakness of European, which has launched the most casinos online to date in the US.
California initially went with the idea of working with out-of-state online casinos to pool players wanting to play poker (interstate compacts), wherein players could play against each other from their legalized location. Since its initial interest in online gambling, California has witnessed some improved financial status and pressure from casino operators in Nevada – all of which has caused much delay in getting in on the action. Current land-based casinos in California are tribal properties, and online gambling was not initially embraced by tribes, on the premise it would cannibalize land-based income. Politics here is tricky. The big debate is now all about what games to provide and the fight for and against the ability to play poker via an interstate compact.
The latest attempts at legislative activity took place in February 2014, when two would-be bills were either amended or put forth for consideration just in time for the 2014 legislative session. Both bills are answers to previous bills with gaming selection and tribal-based concerns, and directly debate interstate capabilities. One bill is for interstate activity, the other against.
The first (updated) bill is AB 2291, sponsored by Assemblyman Reggie Jones-Sawyer, who has been working with several tribal groups from the beginning to get this bill in place, notably including the Pechanga Band of Luiseño Indians. This bill is focused on making tribal groups eligible for licensees and addresses previous interstate limitation. While the bill specifically will “prohibit, among others, a federally recognized California Indian tribe that operates a gaming facility accepting bets from players within the state, but who are not physically present on Indian lands when making bets from operating an online poker site”, it is designed to protect current land-based tribal income.
AB 2291 states that a 10-year non-transferrable license with automatic renewal would be in place. No limitation on how many licenses will be awarded is mentioned. Renewals are only provided if the operator continues to be in proper standing with state regulation. License fees (used to deduct taxes from) include a one-time fee of $5 million and quarterly taxes of 5% are imposed on all gross gaming revenue (taken from the $5 million until it is depleted).
AB 2291 won’t permit interstate activity, but it leaves some room where “bad actors” are concerned. Bad actors are casino operators that had previous dealings with players before the federal crackdown against online gambling. Just as passionately as this bill is against interstate activity, its “bad actor” provision only addresses wagers taken from California residents, rather than from any US resident.
Additionally, the date used to determine the taking of non-legal online wagers is typically stated as anything after Dec. 31, 2006, which is not mentioned in this bill. Pechanga.net posted a cover letter addressed to tribal leaders that stated this and other “controversial sections” of the legislation – like the number of available licenses – had been intentionally left blank “as a demonstration of our commitment to continuing our good-faith efforts to reach tribal consensus through dialogue.”
AB 2291 does not permit forms of “electronic sweepstakes” devices via so-called internet cafés. In other words, no location on land may attract players with any marketing ploys, such as sweepstakes.
The latest form of AB 2291 has been labeled an urgency statute, meaning it would take effect instantly upon passage by two-thirds of the state legislature. Regulations guiding online poker operations would need to be adopted within 270 days of the bill’s passage, making for a possible January 1, 2015 launch.
The second bill, SB 1366, is an updated version of SB 678 that was previously filed by Senator Lou Correa. Basically, it allows for interstate activity and states California’s ability to opt in or out of any federal online casino poker outline, while permitting interstate compacts.
SB1366 also boasts an unlimited number of licenses valid for 10-year terms like AB2291. But, it ups the taxation on operators. Monthly (not quarterly like AB2291) taxes of 10% would be imposed on all gross gaming revenue, and a $10 million fee would be used to deduct taxes from until being depleted.
Time Will Tell
Both bills have their positives, negatives and trade-offs. Stay tuned as we will update with any new standings in the state of California. Currently, the earliest potential date for any law to take place and for any online poker room to “go live” online in California is January 1st, 2015.
You can visit the California Gambling Control Commission at their CGCC Website. The state of California takes the integrity of gambling in California seriously and they also have The Bureau of Gambling Control which operates along side the Gambling Control Commission focusing on support, investigatory, auditing, compliance functions and tribal gaming in the state of California.