Steve Ruddock California online poker DFS

When it reconvenes in early January, one of the first orders of business for the California Assembly will be a trio of gaming expansion bills.

Gaming expansion is a familiar topic in the California state legislature, considering this is the ninth consecutive year legislators have looked into online poker. 2016, however, will see the focus switch from online poker to a more comprehensive approach that includes online poker, daily fantasy sports, and sports betting.

On January 6, the Assembly will discuss three separate bills:

  1. AB 167 – An online poker legalization bill introduced by Assemblyman Reggie Jones-Sawyer in January of 2015;
  2. AB 1437 – A bill authorizing daily fantasy sports that was introduced by Assemblyman Adam Gray in September of 2015;
  3. AB 1441 – A second bill introduced by Assemblyman Gray in September that would legalize sports betting should the federal prohibition on sports betting (1992’s PASPA law) be changed.

Here’s a closer look at each of these measures.

Online poker

Online poker has turned into California’s white whale, as it seems no matter what progress is made, the state’s many (and often adversarial) stakeholders will never fully agree on the who, what, and how of legalizing online poker in the Golden State.

To its credit, the state keeps trying, but in true whack-a-mole fashion, for every solution, more and more issues seem to arise.

Despite a lot of movement on an online poker bill in 2015, AB 431 (an online poker shell bill introduced by Assemblyman Gray last year), including passing the Governmental Organization Committee and the Appropriations Committee, the assembly will begin online poker talks in 2016 with AB 167, a more complete – but more contentious – online poker bill introduced by Assemblyman Jones-Sawyer.

AB 167 currently lacks favor with the Pechanga Coalition, as it doesn’t clearly exclude PokerStars new owners, Amaya Gaming, from procuring a license, and it seems to explicitly allow racetracks to apply for operator licenses. For a deeper understanding of these factions and what they desire, I recommend this column.

AB 167 has several key sticking points, including the seeming lack of “bad actor” language that would prohibit PokerStars from applying for a license in California, as well as the inclusion of racetracks. The Pechanga tribe has stated it would be willing to offer race tracks some form of revenue sharing and affiliate program, but seems steadfast in opposing tracks from gaining full operator licenses.

Essentially, for AB 167 to have any chance of gaining a consensus, let alone passage in 2016, the bad actor language will have to be agreed upon out and racetracks will have to agree to revenue sharing in lieu of operator licenses, or Pechanga and its allies would have to soften their opposition on this issue.

DFS

California is still looking into the legality of daily fantasy sports under its state laws (the potential conflict seems to be whether or not DFS violates the state’s prohibitions on pool selling, based on the rhetoric at a recent hearing) but that could be solved if the legislature passes Assemblyman Gray’s AB 1441, which calls on the industry to regulate itself, but requires licensing fees and taxes be paid to the state.

That being said, Gray’s bill was introduced before the DFS controversies broke in early October, and given the current zeitgeist, self-regulation seems to be unlikely at this point in time. The alternative is to keep the framework of AB 1441 but impose some level of regulatory oversight to the state.

Either way, attorney Daniel Wallach has raised the question as to whether or not any amount of state oversight would bring the federal PASPA law into the mix… which segues nicely into the third bill the Assembly will consider.

Sports betting

Gray’s sports betting bill, AB 1441, would seem to be the most hopeful of the three, but the way it’s drafted makes it about as noncontroversial as possible. AB 1441 is merely a preemptive move by the legislature to get out in front of potential sports betting legalization should things change on the federal level. For a deeper look at PASPA, and what states are doing to circumvent the law I recommend this column.

Essentially, the passage of AB 1441 would have no immediate impact on California’s ability to accept sports bets, but it would prepare California to quickly craft regulations should PASPA be gutted or repealed.

Image Nagel Photography / Shutterstock.com

Steve Ruddock
Steve Ruddock - Steve is one of the most recognizable names in the online poker media space. He brings his deep knowledge and equally deep well of opinions to his coverage at CaliforniaOnlinePoker.com.