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Committee Vote on California Online Poker Bill Postponed

Posted on by John Lathram

California Poker BillAn anticipated committee vote on Adam Gray´s “Internet Consumer Protection Act” was postponed yesterday after last-minute amendments were introduced.

Yesterday´s hearing of the Californian Assembly Appropriations Committee took a different direction than had been anticipated following the last minute introduction of amendments to Adam Gray´s Internet Consumer Protection Act. The amendments addressed concerns regarding taxation and suitability standards that had been raised prior to the hearing by Committee Chair Lorena Gonzalez.

As members of the Committee and parties with an interest in regulated online poker in California had not had the opportunity to absorb the implications of the amendments, it was agreed that yesterday´s hearing would be reduced to one hour and a vote held at a later date (possibly in two weeks´ time) once any objections to the amendments had been heard.

How the Committee Hearing Progressed

The hearing started with Adam Gray explaining to the Committee the efforts that had been made over the past two years to find a consensus among stakeholders. Although admitting that a consensus was still to be found, he claimed “we are closer than ever to passing an iPoker bill” – explaining to the Committee that issues raised by the horseracing industry had been resolved via a $60 million subsidy.

Four advocates of the Internet Consumer Protection Act shared the six minutes allocated to supporters of the bill to express how good the bill was for the horseracing industry and consumers (!). The basic message to the Committee was that the bill was a good bill and they would like to move forward with it as quickly as possible. A series of other supporters then briefly stepped up to the microphone to explain which organization they represented and express their approval of the bill.

Jeff Grubbe – Chairman of the Agua Caliente Tribe used the full six minutes of time allocated to those opposed to the bill to attack “bad actors” and demand a level playing field so that no one company dominated the market. The objections raised by Grubbe illustrate the chasm that exists between those in favor of the bill and those opposed to it, and can be viewed here (scroll down to “Assembly Appropriations Committee”. Chairman Grubbe´s testimony starts at 26:35).

Amendments Discussed – But More Work Required

The meeting continued with some of the proposed amendments being discussed between Adam Gray and Lorena Gonzalez. Both are agreed that, should regulated online poker in California fail to generate more than the $60 million subsidy for the horseracing industry, 10% of the tax receipts should be paid into the General Fund. Both also agreed that half of the $12.5 million licensing fee should be offset against operators´ tax liabilities.

Disagreement still remains over a bad actor clause. In his address to the Committee, Chairman Grubbe mentioned that PokerStars had illegally extracted millions of dollars from Californian players between 2006 and 2011, and one of the proposed amendments suggested that operators who provided a service in California during this period should not be allowed to apply for a license until 2021 unless they pay a fine of $20 million. Grubbe and those opposed to the participation of PokerStars feel that a $20 million fine for a company the size of PokerStars amounts to a “Get Out of Jail Free” card.

The meeting concluded with a brief questions and answers session in which Adam Gray answered questions from the Committee members regarding the horseracing subsidy, the graduating scale of taxation, and the cost to the DOJ and California Gambling Control Commission. Gray´s final words were that integrating all the amendments into his bill could create more problems than they solve and that who dominated the market should be the least of the state´s concerns.

#iGaming Wars Begin and PPA Gets Called Out for Being a PokerStars Shill

Both during and following the hearing for online poker in California, the Poker Players Alliance went on the attack against the coalition of tribal interests opposed to the participation of PokerStars in a regulated Californian market. During the testimony of the Agua Caliente tribe´s chairman Jeff Grubbe, the PPA tweeted:

This was followed at the end of the hearing by another tweet potentially deepening the chasm between those in favor of Adam Gray´s Internet Consumer Protection Act and those opposed to the proposed legislation.

John Pappas´ outburst immediately drew criticism from not only those opposed to the current proposals for online poker regulation, but also many neutrals monitoring the proceedings. The replies that we are able to publish accused the Poker Players Alliance being in the pocket of PokerStars, while some replies we cannot publish expressed concern that the PPA was failing to represent the interests of Californian online poker players.

Gray has been given two weeks to find some consensus over the amendments to his bill before the Californian Assembly Appropriations Committee meets again. Whether this is enough time to heal the divisions between the stakeholders and reach agreement on further bad actor concessions, time will tell.

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