Tea for Two: Competing California Online Poker Bills Introduced


(Updated with correction, below.)

Two bills seeking to create a framework for the authorization and regulation of online poker were introduced on Friday in the California state legislature, in advance of a deadline for the submission of new measures to be considered during the state’s 2013-14 legislative session.

The competing bills, backed by different factions among the state’s political powerful tribal-operated casinos, were both introduced as “urgency” bills, making them eligible for fast-track consideration during the state’s 2014 legislative agenda, and would as a result require two-thirds approval for passage.  Both bills are poker-only measures, eschewing other forms of online gambling — and in the case of one of the bills, attempts to create a ban within the state on other forms of online, casino-style gaming.

First up is the latest effort from State Sen. Lou Correa, who dropped his SB 1366 bill, titled the Internet Poker Consumer Protection Act of 2014.  This is the third effort for Correa in submitting a California online measure.  Correa has worked closely with the powerful San Manuel Band of Mission Indians in creating his online poker bills, and the new SB 1366 is simply a reintroduction of last year’s SB 678.

Correa introduced SB 678 last February, amended it in August, but the bill languished and never received a full legislative vetting.  One of the more controversial elements in the San Manuel-backed Correa measures (including the latest) is the omission of California’s pari-mutuel operations from the short list of entities eligible for online-poker licensing by the state.  That privilege would be extended only to the state’s tribes and a small number of independent poker-only card rooms scattered throughout the state.

Correa also introduced the short-lived SB40 bill back in 2011, which in similar matter encountered legislative headwinds from both anti-gambling factions and competing tribal interests.

Of somewhat greater interest is a new bill introduced on Friday by California Assemblyman Reggie Jones-Sawyer.  The bill, designated as (Assembly Bill) AB 2291, is in large part a reworking and shifting to poker-only of an earlier measure introduced last year by State Sen. Roderick Wright.  Wright, however, was recently convicted on voter tampering and perjury charges, and with a May sentencing in his future, is likely to be unavailable for the championing of an online-poker measure.

Jones-Sawyer has become the primary sponsor of a bill to rival the Correa offering.  The Jones-Sawyer bill is backed by the powerful Pechanga Band of Luiseño Indians, the Agua Caliente Band of Cahuilla Indians, and a handful of other tribes.

Those tribes which have been identified publicly as backing the new Jones-Sawyer measure are not among those affiliated with the old and short-lived COPA (California Online Poker Association), which disbanded in 2012, and the smaller and still-running California Tribal Business Alliance.  (This information in the original version of this report was in error, and is corrected here.)

Despite that, the body of the new Jones-Sawyer bill was clearly crafted using the 2013 Wright bill as a template, with whole swatches of language from the 2013 copied verbatim into the new measure.

Some of the major shifts in focus in the new Jones-Sawyer bill include the following:

1) A shift from “gambling” to “poker” throughout the bill, with the respective ban on other forms of online gambling also included;

2) The introduction of various forms of consumer protection clauses, including the ban on so-called “internet cafes”;

3) The dropping of references to the federal UIGEA, though references to other federal mandates remain;

4) The retention of language that would establish the playing of online poker (and all other forms of online gambling) on unauthorized, non-tribal sites as a misdemeanor for players.  In addition, the bill’s language appears to require players to be physically present on tribal lands to play online.

Taken in sum, and despite the claim (below) that any of the controversial elements have been (for the time being) removed pending negotiation, the bill as a whole represents something of a militant and hard-line approach, with its demand for tribes-only control of online gambling remaining, and that to include only online poker.  The Jones-Sawyer bill is quite reminiscent of the the federal Reid-Kyl bill, in that under the guise of regulating online poker, it is actually a plan for a California-wide ban on all other forms of Internet gambling.

As for the Pechangas, they are a primary presence behind the new Jones-Sawyer measure.  On Friday, Pechanga.net published an open letter to the state’s tribal leaders advising them of the dropping of the new bill and advising them that many of the most controversial elements that were present in an earlier form of the bill circulated last year had been left blank in the new SB1366 measure.  However, that doesn’t mean that things such as bad-actor provisions can’t be added back in via later amendment.

According to the Pechanga memo:

While most of the language of the bill is similar to what we circulated almost a year ago, this version intentionally leaves open controversial sections, like the so-called bad actor provisions and the number of sites per license. We did so as a demonstration of our commitment to continuing our good-faith efforts to reach tribal consensus through dialogue.
As most of you know, the exact language of an introduced bill rarely if ever is what makes it through the process. We fully expect to see the bill evolve as our tribal conversations continue and as we make our way through the legislative process. But please rest assured, we as tribal leaders are committed to moving forward with a bill that protects tribal rights and honors the commitments we have made to the people of California.
The new Jones-Sawyer bill is interesting is that it incorporates whole large chunks of the old Wright bill while reworking it as a poker-only measure.  AB 2291, like Correa’s SB 1366, asks to be added to California’s gambling codes as the Internet Poker Consumer Protection Act of 2014, but this is an entirely different, competing bill.
Among the bill’s key elements, according to the text of the 74-page submission:
  • The preemptive statewide ban on offering other forms of online casino-style gambling (as mentioned above);
  • The preemptive ban on the creation of “internet cafes,” small-scale retail locations which offer direct access to unlicensed real-money games, often using a workaround to evade state gambling laws.  This is part of the new “consumer protection” aspect of AB 2291;
  • A preemptive ban on California being forced to recognize any federal-level regulation regarding online gambling.  In other words, no matter what the feds would pass, the state doesn’t have to adhere to it;
  • A preemptive ban on California entering shared-player compacts with other states such as Nevada in an attempt to increase player liquidity.  This clause is a direct strike against Nevada casino interests, who have openly coveted the possible California online-poker market.  The penalty for a state-authorized violation would be severe: a full refunding of all fees paid to the state by the licensed operators;
  • A call for the creation of the Unlawful Gambling Enforcement Fund and a separate Internet Poker Fund;
  • A one-time licensing fee of $5,000,000, to be credited against future revenue — in other words, a $5 million deposit against profits.  This number was actually $5 million in the original Wright bill (2012) bumped to $10 million in Wright’s later version, then dropped back to $5 million here;
  • Would grant automatically-renewable 10-year licenses to approved operators.
There’s lots more, and in a future post, we may compare and contrast last year’s Wright bill to this one from Jones-Sawyer.  The new AB2291 shifts significantly from last year’s SB51, despite incorporating many pages of the old bill’s language.
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