Assemblyman Gray makes bad actor compromise in Cali poker amendment

Assemblyman Adam Gray has amended his bill to legalise online poker in California, setting out tax rates based on collective revenue and attempting to compromise on the disputed issue of ‘bad actor’ clauses.

This compromise would allow PokerStars to enter the market even with such a clause in place.

Assembly Bill 2863 aims to block operators that took bets in the United States after December 31st, 2011, from entering the market, altering the standard start date for such a clause which has historically been December 31st, 2006.

The 2006 date was originally set to reflect the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA). It has been pushed to 2011, presumably to acknowledge the year in which the Department of Justice cracked down on iGaming operators in the US .

Gray’s amended bill also sets out tax rates based on collective statewide revenue, with companies earning up to $150m taxed at 8.847 per cent. Those with revenue between $150m and $250m will pay a 10 per cent tax; revenue of $250m and $350m will be taxed at 12.5 per cent and companies earning more than $350m will be taxed at 15 per cent.

Licensing fees for operators have also been raised from $10m to $12.5m.

The bill was first introduced in February this year, originally without any ‘bad actor’ language, and allows federally recognised California Indian tribes and card clubs that have been active for five years or more to apply for seven year operating licences. These licensees will be able to operate two skins under one licence, with liquidity pooling permitted.

While the amendments are yet to be formally filed, PokerStars’ coalition of partners in California has hailed Gray’s attempt at a compromise on the bad actor issue, something that has frequently proved to be a stumbling block for iPoker legislation in the state.

The coalition, comprising Morongo Band of Mission Indians, San Manuel Band of Mission Indians, California's three largest card clubs – Commerce Casino, Hawaiian Gardens Casino and Bicycle Casino – and PokerStars owner Amaya said in a statement: “We applaud Assemblymember Adam Gray for moving the ball forward on iPoker and addressing the final two key issues in his bill AB 2863.

“This is a step in the right direction and we look forward to working with him and bill co-author Assemblymember Frank Bigelow in the coming weeks to get AB 2863 across the finish line.

“Our coalition has long-supported a competitive online poker marketplace in California that offers choices and strong consumer protections; rigid suitability standards; strict oversight of operators and licensees; and provides a financial return to the state,” it explained.

“Our coalition commends Assemblyman Gray and his leadership both last year and this year to authorize and regulate online poker. For too long this issue has left consumers vulnerable and we are hopeful that 2016 brings closure, and a safe, regulated and competitive marketplace.”

It remains to be seen whether California’s other tribes can accept the compromise, with little time remaining for the bill to pass. The state’s legislative session ends August 31st, but the Assembly does not sit in July due to its summer recess. Aside from the state Budget Bill, which is subject to a vote on June 15th, the deadline for new bills to pass into law expired on June 3rd.


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