California online poker bill wins committee vote, but ‘bad actor’ hurdle remains

TAGs: ab 2863, Amaya Gaming, California, PokerStars

california-online-poker-committee-voteCalifornia’s latest online poker bill received a favorable vote in the state Assembly Governmental Organization Committee on Wednesday, but the thorny question of ‘bad actors’ has yet to be resolved.

Following over two hours of testimony and debate, Assemblyman Adam Gray’s AB 2863 passed by a vote of 18-0, although a few pols qualified that they might vote differently on the Assembly floor if the bill’s kinks weren’t worked out. Chief among these kinks is determining the specific parameters of what defines a ‘bad actor.’

Gray got the proceedings rolling by emphasizing his bill’s ability to offer “consumer protections” to California’s existing online poker players. This theme was immediately echoed by the bill’s co-sponsor Reggie Jones-Sawyer, and later by many other bill backers, suggesting the ongoing quest to legalize daily fantasy sports has not gone unnoticed.

Poker Players Alliance spokesman John Pappas kicked off the witness testimony by immediately referencing the collapse of Lock Poker. Pappas then offered a real-time demo by Googling “can I play online poker in California” to show the committee just how many internationally licensed operators continue to serve the California market.

Next to offer support for AB 2863 was a parade of the state’s tribal groups, including those that have aligned themselves with Amaya Gaming’s PokerStars brand. They repeated previous positions from earlier hearings about leaving the issue of the ‘suitability’ of online technology partners up to the state’s gaming regulators, rather than enshrining such language in the actual legislation.

Then came the tribes belonging to the so-called Pechanga coalition that recently succeeded in convincing Gray to amend AB 2863 to require legislators to specifically define the criteria that would render a technology provider unsuitable to participate in the state’s online poker market.

Agua Caliente chairman Jeff Grubbe officially expressed neutrality on AB 2863, but effectively said his tribe’s support wouldn’t be forthcoming until legislators nailed down the suitability issue. The bill’s existing language bars anyone convicted of a felony, while Grubbe suggested there should be “an alternative standard for illegal conduct not requiring a felony conviction.”

Pechanga chairman Mark Macarro also took no official position on the bill, but raged against unnamed poker stars who continued to serve the US market following the 2006 passage of the Unlawful Internet Gambling Enforcement Act.

In doing so, Macarro said these operators had “built brand-name recognition, sophisticated software and strong customer bases,” suggesting that Pechanga et al object to PokerStars’ new owner Amaya being allowed to use the Stars brand, software or database in a regulated California poker market. But, you know, otherwise, sure.

As expected, Macarro also brought up the “very troubling revelation” that Quebec securities regulators had filed insider trading charges against Amaya CEO David Baazov.

Next up were the state’s racing interests, many of whom indulged in tedious resume recitations and piercing insights from the likes of Teamsters rep Barry Broad, who blew the lid off the hearing with his claim that “jockeys are the guys on the back of the horse.”

More impressive was the number of racing’s rank-and-file who made their way to the microphone, including a half-dozen or so pari-mutuel clerks, most of whom expressed very personal fears for their futures if California continued to be the only state in the union whose racing industry didn’t receive some kind of subsidy from other gaming activities.

Most of the state’s racing stakeholders dropped their opposition to the bill after Gray added an amendment promising them up to $60m per year from the state’s share of online poker fees and taxes.

Gray was subsequently asked by Assemblyman Jim Cooper what exact percentage of the online poker win did the state need to collect to hit that $60m target. Gray claimed the initial year would likely hit the target due to the upfront license fees, which previous drafts of his bill had put at $15m. But Gray hedged on the formula for later years, saying much would depend on the success of the market.

The lone racing voice to express opposition on Wednesday was the Stronach Group, which expressed concern that Gray’s $60m kickback was “not protected in the long term.”

The Stronach Group rep also rejected the price racing would have to pay for that $60m bribe, namely, foregoing the right to operate their own online poker sites. Stronact believes racing, as the only current stakeholder currently allowed to offer online wagering in the state, deserves the chance to compete openly in the poker field.

There were two other stridently opposed voices making themselves heard on Wednesday, including the reliably histrionic Rev. James Butler and one of Sheldon Adelson’s factually challenged lackeys at the Coalition to Stop Internet Gambling, who shone a flashlight under his chin while informing the hearing that the internet is “a very dark and dangerous place.”

When it came time for the pre-vote deliberation, Assemblyman Cooper called the suitability issue the bill’s “800lb. gorilla” and wondered how Gray would unite the divided tribes. Gray promised to hold meetings with stakeholders every two weeks to nail down the ‘bad actor’ specifics.

Rep. Marie Waldron asked Gray if he expected this suitability issue to be resolved before AB 2863 moved from the Assembly floor to the state Senate (assuming a favorable floor vote). Gray said he hoped to have the language finalized before the bill hit the floor, after which the entire dais linked arms and sang a lusty chorus of High Hopes.


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