California Introduces New Online Poker Law

California legislature building in SacramentoWhile most of the news regarding sports betting in the United States comes out of New Jersey, online poker is quietly becoming a reality around the nation. California is the latest state to push hard for legalization, with lawmakers introducing four bills in 2015 alone, and efforts to legalize online poker dating back to 2008.

The latest from California involves new legislation introduced on February 22, 2016, AB 2863. The bill only takes online poker into consideration, and calls for horse racing tracks in the state to receive up to $60 million from online poker companies in a revenue sharing agreement.

As we wrote months ago, online gaming in California was a point of contention between the racetracks and casino operators, especially tribal casinos that wanted to keep tighter control of the online card game market. The tribes did not want to open up online poker to horse racing operations. The California tribal casinos are the richest in the nation, worth an estimated $7 billion a year.

This new bill would create a California Horse Racing Internet Poker Account, with the first $60 million in revenue collected per year being deposited into it. The money would come from licensing fees and tax revenue.

Another issue that has been fought over is the role of PokerStars in the online gambling market. The company was prohibited from operating in the US back in 2011, after it was alleged to be in violation of the 2006 federal Unlawful Internet Gambling Enforcement Act. However, under the California legislation, it would be allowed to apply for a license to operate within the state. Again, the tribal casinos are opposed to this idea.

Under AB 2863, the state is proposing two levels that companies can apply for – operators and service providers. Only the tribes that operate casinos would be allowed to apply as operators, with marketing affiliates and platform providers allowed to apply as service providers.

The bill does not establish a comprehensive plan for how online poker would be regulated within the state. Its focus is creating standards that all operators and service providers would have to live up to, as well as empowering the California Gaming Control Commission to address other aspects that will need regulation.

The legislation has a long road ahead to be made law. It needs to be voted in favor of by two-third of the members of the Assembly, at which point it would advance to the Senate. If it receives approval in the Senate, then it will be presented to governor Jerry Brown. Although Brown has not come out either for or against online poker in the state, experts believe he is likely to sign it into law.

Online gaming prognosticators are not optimistic that California will fully legalize online poker this year, but the steps taking towards it in 2015 and the beginning of 2016 are positive developments for the future.