John Mehaffey

There has been one common theme coming out of California’s bills over the past couple of years. It is the intent to keep California’s online poker liquidity within its borders.

Most bills have specifically addressed this by requiring California online poker to be intrastate. Some have required California to opt out of any federal online poker law that would create a national network if that opportunity is available in the future.

All of the language that attempts to keep California online poker intrastate is unnecessary. Percentage games are considered illegal in California under Section 337j, enacted in 1997 and amended the next year. This portion of the law reads, in part:

A fee may not be calculated as a fraction or percentage of wagers made or winnings earned. The amount of fees charged for all wagers shall be determined prior to the start of play of any hand or round.

California card clubs rake at different point in a hand. For example, a poker room may rake a set amount before the flop, after the flop, and after the river card is exposed.

This is not how poker rooms in other states rake pots. No online poker sites rake in this way either.

Standard Rake

Most poker rooms rake a percentage of the pot. The typical rake in live games is 10% up to a predetermined amount. Online poker rooms typically rake 5% up to a maximum amount. The existing poker sites in Delaware, Nevada and New Jersey rake 5% or 5.5%, depending on the room and state.

This type of rake structure is illegal in California. That term will carry over to regulated poker sites, unless it is addressed in a new law.

Without a change of law, California would be incompatible with these sites. At the present time, there appears to be no effort to change the California laws that make percentage games unlawful. There is no financial benefit for card clubs to change their policy, nor is there any serious movement by players to change the law. A change in drop policy could also open up card clubs to banking games like Pai Gow, which is something that would be opposed by other interests.

Time Charge

Some poker rooms charge a set amount per half hour to play in higher limit games, as opposed to taking a percentage of the pot. This is called a time charge. This type of fee is legal in California. This type of charge is not found online.

Rake Structure Leaves California Intrastate Pool Likely

California’s unique rake structure nearly guarantees that it can never join forces with other states. One exception may be if it launches regulated poker in the next year or two and can become the hub of a future network. Considering the opposition to interstate liquidity in California, that seems like a long shot.

John Mehaffey
John Mehaffey - John is a writer for multiple online poker publications and is the author of the popular Online Poker Payment Processing Report. Read more from John by following @John_Mehaffey on Twitter.