For perhaps the billionth time this century, an online poker bill has been introduced into the state legislature. If history is any guide, there will be some amount of pouting on both sides leading ultimately to nothing. The bill, Assembly Bill 1677 (AB 1677), also termed as the Internet Consumer Protection Act, was introduced by Assemblyman Reginald Jones-Sawyer last week and will now begin the tedious process of seeking approval.
The bill would impose the licensing fee for a cardroom or tribe to function an online poker room at $12.5 million. The license would be valid for seven years. The tax rate on gross revenue is progressive; which implies, the rate increases the more an operator earns. If an operator’s gross gaming revenue is less than or equal to $150 million, it will be taxed at 8.847%. From that value up to $250 million, the rate will be 10 percent. Below $350 million, the tax rate is 12.5 percent, and greater than $350 million, the rate is 15 percent.
The chief reason nothing has ever materialised in regards to online poker in California is because a hardline group of Native American tribes have been adamant that they get everything they want, reluctant to compromise on most points.
These groups desire as few entities as possible to be able to run an online poker room. Thus, AB 1677 presents a compromise, not allowing California racetracks to acquire licenses. In exchange for being excluded, the racetracks would share in 95 percent of the first $60 million collected by the state. Furthermore, racetracks could be employed as service providers and partner with an operator, but at least half of the partnership’s revenue would have return to the racetrack.
The hardline tribes have fought a long battle against allowing PokerStars to have any chance to be included in the California online poker industry. As such, they have always wanted a “bad actor” clause in any legislation, disallowing operators who offered games to Americans after the passage of the UIGEA in late 2006. This bill does not include a bad actor clause, rather letting the state regulators to determine whether or not a license applicant qualifies for a license.
Due to its position as the most populous state in the country, California is the white whale of the online poker industry. If the game were made legal and regulated in the state, any operator who obtained a license could make a big bucks. Addtionally, the states that have legalized online poker – currently New Jersey, Nevada, and Delaware – would queue up to for interstate compacts with California to boost their player pools.
The prospects of this happening seem bleak, though.
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