AB 2863 – California Online Poker Bill

AB 2863 is a bill in the California Assembly that would make online poker legal in California.  The bill would create regulations to control the industry.  This includes suitability, taxes, and software requirements.  AB 2863 is sponsored by Assemblyman Adam Gray.  He is chairman of the Committee of Governmental Affairs.  This committee hears all debates on gambling issues in the California Assembly.

Horse racing industry receives up to $60 million

AB 2863 looks to fix one major issue some tribes had with previous California online poker bills.  The first $60 million in annual tax revenue generated by the state’s online poker operators would go towards the horse racing industry.

The horsemen and other employees would receive 95 percent of this money.  Of that 95 percent, 95.4 percent would go towards purses.  Horsemen retirement and insurance funds would receive 2.3 percent of it.  This would go towards present and retired jockeys. The other 2.3 percent would go towards pensions of other employees at the state’s racetracks.

The remaining five percent would go towards the California Fair and Exposition Fund.  This supports the administering agencies, state, county and district fairs.

Licensing fees and taxes

AB 2863 does not address tax or licensing rates.  Those portions of the bill are left blank.  The amounts will be debated in committee and between interested parties.

AB 431, a previous version of this bill, would have required licensed California online poker rooms to pay a tax rate of 15 percent.  This money would be collected from a $15 million deposit made by operators to receive the initial license, another requirement under AB 431, the previous draft. Both of these numbers are not yet determined under AB 2863.

Each license could host up to two websites. Partnerships between qualified entities are permitted.  Card clubs and California Native American tribes with five or more years of gaming experience are the only groups that may be approved.

Licenses would run for seven years.  Renewals would also be for seven years.  AB 2863 would sunset on January 1, 2024 unless the state legislature extended it or deleted this clause in the future.

There is no bad actor clause in AB 2863.  The suitability of a company or individual would be left up to gaming regulators following standard licensing processes.

State regulators would have 270 days to draft regulations.  The licensing process would begin within 150 days.  All sites would launch on the same day to create a level playing field.

Operator rules

Poker is the only game that would be permitted under AB 2863.  It must be player against player.  Banker games like Pai Gow Poker are expressly forbidden under AB 2863.

Cash games and tournaments are allowed under the bill.  Standard California per-hand fees would apply to cash games.  Tournaments would have an admin fee attached that must be fully disclosed to players.

Support must be available 24 hours a day, 365 days a year.  Any employee providing support and other positions with player contact must be located in California.  The same goes for servers, key employees, records and bank accounts.

Problem gambling information must be prominently displayed.  This would occur when a player creates an account, visits the cashier or logs into the site.  Loss, time and deposit limit features must be available to players.

Players must be at least 21 years old to play.  Geolocation services must be used to determine that a player is in California at the time of play.  Identity verification is required for all new accounts.  The site may use databases provided by third parties to verify identities.  The player must supply photo identification if the site is unable to verify the new account’s legitimacy.

Accounts could be made in person, over the phone, through the mail or over the Internet.  Cash deposits could only be made at a licensed casino related to the poker site.

Read the Full AB 2863 Bill here.

Three other bills were previously introduced. Those bills are AB 167, introduced by California Assemblyman Reggie Jones-Sawyer, and AB 9, introduced by California Assemblyman Mike Gatto.  AB 431 was the original 2016 draft.