AB 2291 Online Poker Bill Details

By John Mehaffey

Update 1/23/15 : AB 167 is the current California online poker bill introduced by State Rep. Reggie Jones-Sawyer for the 2015 legislative year.

The California Legislature now has two bills to consider that would regulate online poker. The bills are AB 2291 and SB 1366.

SB 1366 appears to be exactly the same bill introduced as SB 678 in 2013. State Sen. Lou Correa is the sponsor.

AB 2291 is sponsored by State Rep. Reggie Jones-Sawyer. Both bills would only regulate online poker and would prohibit games banked by the house, including slots, video poker and table games.

AB 2291 is defined as the Internet Poker Consumer Protection Act of 2014. It would create two funds. The “Unlawful Internet Gambling Enforcement Fund” would receive a portion of the revenue to combat illegal offshore operators and Internet cafes that cater exclusively to online poker players. The “Internet Poker Fund” would be where taxable profits would go and be used towards social programs.

California would issue licenses for a 10-year period. A deposit of $5 million would be required. These funds would be used towards future taxes paid.

AB 2291 is an urgency statute. This means it would require a two-thirds majority to pass. It would go into effect immediately if it were to pass both the California House and Senate. If passed into law, California regulators would have 270 days to adopt regulations.

No Interstate Liquidity Agreements

AB 2291 would prohibit California from entering into any interstate online poker liquidity agreement. The state would automatically opt out of any federal program if given the option. There is a provision that defines what actions must be taken if a federal law required California to enter a national player pool.

Poker is a Skill Game

The bill acknowledges that “winning at poker involves some measure of skill” and that “skillful poker players can earn winnings in the long term”. This is the opinion used to explain why poker would be regulated and house games banned.

Experience Required

Licensees must have at least five years of gaming experience in California. Only card clubs and federally recognized tribes could participate. The racing industry is notably excluded from this bill. Companies on the approved list would be allowed to enter into partnerships. This would exclude some newer casinos in the state.

All Services and Employees Located in California

AB 2291 addresses issues that have been realized in other states. The bill would require all licensees, employees, servers, facilities, bank accounts and operations to be located in California. There are some exceptions for specialized equipment or employees.

Municipalities Cannot Opt Out

Local governments would be forbidden from regulating the industry. This includes additional taxes or an outright ban on regulated Internet poker.

Sites Live on Same Date

SB 2291 states that all licenses approved before the industry is live would be dated January 1, 2015. That is when all sites would go live. The date could be changed if there are delays. This is the same approach that New Jersey where the industry successfully launched in November 2013.

Bad Actor Clause

A “Bad Actor” clause was included. The date was left blank. This must be debated among legislators. This section would exclude any company that operated unlicensed online gaming in California during the period of time that has yet to be determined. It would also exclude brands, logos and player databases compiled through offshore online gambling.

Player Verification

Players must be 21 years of age or older to play. Operators must verify identities through a government database. Players that cannot be verified must submit additional documentation before playing. Social Security Numbers would be collected. Regulated sites would be obligated to issue appropriate tax forms.

Banking

The banking section is vague. Players could expect traditional deposit and withdrawal options. Cash transactions at associated brick and mortar casinos are specifically permitted. Player funds must be held in segregated accounts. No credit may be issued.

Responsible Gambling

Operators would be required to display responsible gambling messages with each player login. This includes ways to self-exclude and explanations about loss limit features. Players could implement daily loss, deposit and time limits directly in the software.

Affiliates

Marketing affiliates would be allowed under this bill. It is unclear how the “Bad Actor” clause would apply. At the very least, databases of players accumulated through offshore marketing would be considered tainted.

California Online Poker Support

The bill would mandate 24/7 online poker support. Employees would be required to be within California at the time of employment.

Key Elements Left Blank

There were several important aspects of the bill that were left blank. These will be debated by the California House. These items include bad actor clauses, taxes and some accounting procedures.

Full text of AB 2291