California Online Poker Bills: A Closer Look

Michael Jones : January 7th, 2011

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The state of California currently has two active pieces of legislation (with a third possibly coming into the mix) that would regulate intrastate online poker.

What would these bills mean for the state? Let’s take a closer look.

For complete coverage of online poker regulation issues in the US, check out our Poker Regulation News page.

The Correa bill

State Sen. Louis Correa (D-Santa Ana) introduced legislation in December that that would allow regulated intrastate poker and provide licenses to operators within the state. The bill is SB 40; you can read the full text of the bill here.

Here’s the opening passage of the bill:

The Gambling Control Act provides for the licensure of certain individuals and establishments that conduct controlled games, as defined, and for the regulation of these gambling activities by the California Gambling Control Commission. Existing law provides for the enforcement of those regulations by the Department of Justice. Any violation of these provisions is punishable as a misdemeanor, as specified.

The Wright bill

State Sen. Rod Wright (D-Los Angeles) introduced legislation in December that would regulate online gambling and set up a framework for providing licenses in the state. The bill is SB 45, and is similar to a bill Wright introduced last year. Here’s the full text of the bill.

Here is the opening passage of the bill:

The Gambling Control Act provides for the licensure of certain individuals and establishments that conduct controlled games, as defined, and for the regulation of these gambling activities by the California Gambling Control Commission. Existing law provides for the enforcement of those regulations by the Department of Justice. Any violation of these provisions is punishable as a misdemeanor, as specified.

A third bill?

A third bill regarding regulation of online poker appears set to be introduced in the legislature; there’s a story on this new bill from EGR.

It’s unclear how this bill will differ from other two bills, or why a third bill is necessary. It was drafted by the Poker Voters of America, according to the report.

However, Capitol Weekly has an article, same date that seems to contradict EGR; we’ll update once it gets sorted out.

What do the bills cover?

The Correa bill pertains only to online poker. The Wright bill is meant to address online poker, mainly, although it seems to leave the door open for licensing other types of online gambling.

What do the bills mean for poker players in California?

The bottom line for both bills is pretty much the same. Online poker players in California would be cut off from the rest of the online poker world (i.e. PokerStars, Full Tilt, and other U.S.-facing online poker rooms), if one of the bills passes. Players in California would only play against each other on online poker rooms run by state licensees. Estimates put the number of online poker players in California in the hundreds of thousands to over a million.

This would be the model currently in place in jurisdictions like Italy, which issues licenses to online poker operators. There are .IT versions of Full Tilt and PokerStars where Italians play other Italians only.

Who supports the bills?

The California Online Poker Association supports the Correa bill. COPA is a consortium of Indian tribes, led by the Morongo tribe, that hope to receive a license to operate online poker once a bill is passed.

The California Tribal Business Alliance is a group of four tribes in California that last month opposed the Correa bill, according to The Capitol Weekly, a publication covering the California legislature. Here’s the whole story. According to the story, the CTBA is currently neutral on the Wright bill.

Who can receive licenses?

It appears that the tribes in California, in some shape or form, will be the frontrunners to receive a license. However, multiple licenses can be issued, and it appears that anyone who presents a plan to offer legitimate online poker could beconsidered for a license, under either bill.

What kind of taxes and fees will there be?

Player winnings would be taxable under both bills. Fees would be paid for licenses under the bills, and it appears that tribes that would run online poker sites would be exempt from state taxes on revenue generated. That would likely not be the case with non-tribal licensees.

What’s next for the bills?

California has been looking at the issue of intrastate online poker since 2008, with no success in passing a bill. Whether the current bills in the legislature will have more success than past efforts remains to be seen.

The legislature is currently in session, and any action on these bills would have to take place this year. The last day to pass a bill in this session is Sept. 9.

The Wright bill is technically further along than the Correa bill, as the official status of the bill says it has gone through a “first reading.” Bills are not actually “read” in legislatures, but a first reading indicates the bill has progressed past an introduction.

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