AB 9 – Internet Poker Consumer Protection Act of 2015

By John Mehaffey

California Assemblyman Mike Gatto has introduced a new online poker bill to legalize online poker in California. AB 9, titled Internet Poker Consumer Protection Act of 2015, and was introduced on December 1, 2014.  The bill would allow card clubs and tribes with state gaming compacts to operate online poker rooms to players located in California at the time of play.

New Proposals in AB 9

The first major development is the inclusion of new language under the bad actor clause. The date of December 31, 2006 was left intact. Any person or entity that operated in the U.S. in violation of state or federal law would be automatically excluded. New language that appears to be aimed directly at PokerStars and its acquisition by Amaya Gaming appears in AB 9:

In the Legislature’s judgment, a knowing decision to purchase or otherwise acquire that data for use in connection with Internet poker in the state bears directly on the applicant’s suitability and must be considered in any determination whether to license that applicant under this chapter.

AB 9 would also allow California to opt into interstate or international player pools. This would require an affirmative legislative act.

Account creation policies were drastically changed by the new proposal. Players would be required to open an account in person at a licensed gaming establishment or satellite office. These satellite offices appear to be card clubs and tribal casinos that do not actively offer online poker but may have partnered with existing sites to supply payment processing and player identification services.

First deposits must also be made in person. Subsequent deposits would be permitted electronically. Withdrawals over a certain amount in a day or seven-day period would require pickup in person at a participating card club, tribal casino or satellite office. The amount that would trigger a withdrawal pickup was left blank in the bill.

A current amendment proposal would eliminate these in-person requirements.

AB 9 also lowered the minimum number of years that a gaming establishment would need to have operated a live casino to qualify for an interactive license to three.  A previous bill known as SB 1366 set a three year minimum.  That number was five in last year’s draft.

Policies Included in Previous Bills

Affiliates must be licensed and would be bad actors under the same guidelines that a poker site and its vendors are. This includes employees of affiliate businesses. Affiliates would be required to file quarterly reports.

An Internet Poker Fund would be established that would collect all taxes and fees. Some of the revenue would go towards the Regulatory Enforcement Fund. This department would pursue companies that continue to operate in California without proper licensing. The target would be offshore sites.

Rake would be collected on a per hand basis from cash games. This is similar to how live poker is raked. Admin fees on tournaments entries are permitted under the bill.

Internet Cafes would be banned under AB 9. These types of businesses operating under the sweepstakes café model have been targeted by the state in the past.

Regulators would have 180 days to draw up online poker policies. Licenses would be issued for a ten-year period. Sites would be required to post a $5 million deposit. The tax rate would be 5%. The amount of the licensing fee would be announced at a later date. An unsuccessful site would be required to give 90 days’ notice before shutting down.

All customer support employees and bank accounts holding player money must be in California. Sites would be barred from extending credit to players. All primary server equipment would also be stored in the state.

Problem gambling is address with opt out times of no more than five years unless overturned by regulators. A player that self excludes would do so at all licensed sites. Problem gambling information would be displayed whenever a player logged in or out of the software.

In the event of a court challenge, AB 9 would remain on the books unless one of three key provisions was struck. One is that the only permissible game is poker. Another is the striking of any portion of the bad actor clause. Also, if the guidelines for qualifying gaming companies were successfully challenge. If any of these sections of AB 9 were thrown out by a court, the entire law would be voided.

AB 9 is an urgency statute. This means that it requires a two-thirds majority vote in both the Assembly and Senate. It could then go into law immediately upon being signed by the governor.

Bill text: AB 9

Statement from Assemblyman Gatto