California Online Poker Bill Proponents Get Ready for the Real Fight

Summer Progress Report for California Legal Online Poker Legislation

In February of 2016, Assemblyman Adam Gray and Assemblyman Reggie Jones-Sawyer introduced AB-2863, more commonly known as the California Online Poker Bill. The bill proposes a way to legalize and regulate Online Poker in the state of California.

Later, in April of that same year, the bill got a major victory by gaining passage by the Assembly Governmental Organization Committee with an unanimous 19-0 vote. While this was celebrated, it soon became evident that the battle for legalized online poker had just begun.

In early June, the California Online Poker Bill got support from a never before seen coalition of race tracks, card rooms, worker unions and some local native american tribes. At the same time the bill picked up some powerful opposition from a tribal coalition headed by two of the most politically powerful native american tribes in California.

The Opposition

The ‘‘Tribal Coalition’’ is headed by the Pechanga Band of Luiseño Indians and the Agua Caliente Band of Cahuilla Indians and it also includes:

• Barona Band of Mission Indians
• Lytton Band of Pomo Indians
• Table Mountain Rancheria
• Viejas Band of Kumeyaay Indians
• Yocha Dehe Wintun Nation.

That list doesn’t seem so impressive, especially when compared to the list of proponents (below). However their power lies not in their size but in their political pull. There needs to be consensus from the tribal governments in order for the California Online Poker Bill to pass.

The opponents of the AB-2863 cite the amendments relating to suitability standards and taxation as their primary issue. In layman’s terms, they have a problem with what they deem to be ‘‘bad actors’’ (IE: PokerStars) being allowed to operate in the state.

In a letter sent to bill author Adam Gray the The Pechanga/Agua coalition clarified:

“At a time when California was making painful budget cuts to education, public safety and social services … offshore poker sites evaded paying tens of millions of dollars in California taxes while breaking the law by taking bets from California and the U.S.,”

Source: Online Poker Report

AB-2863 already excludes sites that accepted online gambling after December 2011 (same year as ‘‘Black Friday’’), already refusing a license to sites and networks such as Bovada and WPN. The Tribe Coalition, however, believes this cut off date is too lenient to those who operated illegally for the five years between the Unlawful Internet Gaming Enforcement Act (UIEGA) of 2006 and Black Friday in 2011.

The Pechanga/Aguas Calientes coalition wants to change the cut off date to December 2006, the same year the UIGEA passed. Thus absolutely refusing the entry of the industry giant PokerStars and it’s sister site Full Tilt Poker. The new cut off date would allow other established sites such as PartyPoker, 888 and WSOP to operate in the state, however.  

The Proponents

A larger and more diverse group has showed support for AB-2863, they include:

• Bo Mazetti, Chairman, Rincon Band of Luiseño Indians
• Gene Whitehouse, Chairman, United Auburn Indian Community
• Robert Smith, Pala Band of Mission Indians
• Lynne Valbuena, Chairwoman, San Manuel Band of Mission Indians
• Robert Martin, Tribal Chairman, Morongo Band of Mission Indians
• Haig Papaian, Chairman & CEO, Commerce Casino
• Ron Sarabi, General Manager, Hawaiian Gardens Casino
• Hashem Minaiy, Managing General Partner & CEO, The Bicycle Hotel & Casino
• Nick Menas, Vice President, Corporate Development and Government Relations, Amaya / PokerStars
• Nick Coukos, President, Thoroughbred Owners of California
• Josh Rubinstein, Chief Operating Officer, Del Mar Thoroughbred Club
• Doug Burge, President, California Thoroughbred Breeders Association
• Barry Broad, Legislative Representative, The Jockeys Guild
• Chris Korby, Executive Director, California Authority of Racing Fairs Barry Broad, Legislative Director, California Teamsters Public Affairs Council
• Alan Balch, Executive Director, California Thoroughbred Trainers
• Brad McKinzie, General Manager, Los Alamitos Racing Association
• Rene A. Bayardo, Government Relations Advocate, SEIU California
• Stephen Chambers, Executive Director, Western Fairs Association
• Cliff Munson, President, California Fairs Alliance
• Ted Kingston, Owner, Lake Elsinore Casino

(source: Online Poker Report)

The proponents of the bill defend it by citing its completeness. It takes care of major blind spots that have handicapped past online poker legislation. The bill as it stands at the time of writing this article includes the following:

• Bad actor clause: Despite the Tribal Coalition’s protests, the bill does punish PokerStars and other post-UIGEA operating sites. Either wait 5 years to be eligible for a license or pay a $20 million fee.
• The horseracing industry: Stops it from entering the online poker market but gives them a $60 million subsidy.
• Taxation rates: Concerns over a crippling flat rate, the bill proposes a more reasonable formula based upon the annual cumulative total of gross gaming revenues for all licensed operators during the calendar year.

It Gets Ugly

PokerStars eligibility for licence is the line in the sand, as it has been for other online poker legalization efforts in the past. While both sides claim to be willing to negotiate on this particular issue, no side seems to be willing to give an inch. At least not without talking a mile first.

Language is very powerful when it comes to arguments. The wrong words can be the difference between a civil disagreement and a fist fight, and at this point we may just have a fist fight.  

The word ‘‘obstructionist’’ was thrown around liberally at first, particularly by the poker press, followed by very real threats to ‘‘kill the bill’’ if the Tribal Coalition’s demands aren’t met. The Coalition implies that the proponents of the bill are only looking out for corporate interests and not of the people of California.

The head butting came to an all time high, however, during a June 13th meeting where Gray and the Chairman of the Pechanga Band of Luiseño Indians, Mark Macarro, got into a heated and loud argument over the bad actor clause in the bill. The meeting took place few days before California Online Poker Bill passed the Assembly Appropriations Committee.

The Assembly Appropriations Committee wasn’t a walk in the park.

First it was delayed after concerns regarding some of the bill’s language, and just days before the hearing. The Tribal Coalition released a survey showing that 52% of the state’s likely voters oppose legalized online gambling.  All of their protests just seem to be make the Online Poker Bill stronger as it moved out of the Committee and is headed to the Assembly Floor.

‘‘A Significant Concession’’

Late in June, Gray and the Coalition met to discuss the Online Poker Bill. Gray, who came to the meeting with two cameramen and with someone who was described as a ‘sergeant at arms’, began the meeting by reading the section of the criminal code that deals with threatening a legislator.

This disrespectful display came at a really bad time, as one lobbyist noted. The Coalition came to the meeting with full intention to compromise but took offence to Gray’s theatrics.

Soon after, The Pechanga/Aguas Calientes Coalition released a list of demands to cease its opposition to the bill.   While some preemptively let out a sigh of relief, it soon became obvious that the Coalition was discussing the Gray’s terms of rendition, rather than a feasible compromise.

The letter, addressed once again to Adam Gray, demanded for PokerStars to receive a 10-year ban from offering online poker in California. They would then be required to pay a $60 million fine prior to being deemed suitable for license. This is in addition to all associated entry fees and regulation costs. The Coalition referred to this terms as a ‘‘significant concession’’ from their part.

For a group trying to stop Online Poker from happening within its borders they sure are good at it. This puts the Proponents in a pretty bad spot, as now they have to negotiate further and take these terms into consideration. If they don’t take this grenade and treat it as an olive branch, they will be accused of obstructing the proceedings.

This came just before the efforts for legalization in the state of California took a blow when the full Assembly vote on AB-2863 had to be pulled out when it became clear that it was twelfth votes shy of a majority needed to get it to the Senate. The vote was rescheduled for August, after summer recess.

And that’s that has been your recap of the progress of the California Online Poker Bill, the Poker world’s favorite soap opera. It even ends on a cliffhanger!

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