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Time Runs Out for Regulated Online Poker in California

Posted on by John Lathram

California PokerWith the legislative calendar finished for 2017, time has run out for regulated online poker in California this year, with little hope for future prospects.

Back in February, Assemblyman Reggie Jones-Sawyer introduced a bill to regulate online poker in California. The Assemblyman himself gave the bill little hope of success due to the precedents that had been set in 2016 with regard to operator suitability, the subsidy to the horseracing industry and the low levels of tax revenues the bill would generate.

Players were also unhappy with Jones-Sawyer´s bill as it ring-fences the Californian market, made playing at an unregulated poker site a felony, and lacked the mechanisms to ensure fair play and protect their bankrolls from rogue operators. The bill was referred to the Assembly´s Governmental Organization Committee in April, where it has remained ever since.

The deadline for committees to send bills to the Assembly Floor passed at the beginning of September. However, there is always the chance that a last minute amendment can be tagged onto an unrelated bill after the deadline has passed. That chance has now gone due to California´s legislative calendar having closed for 2017, and the Assembly being in recess until January next year.

So, What Went Wrong This Year?

Basically nobody bothered. PokerStars – conscious of the fact its participation in a regulated market was in doubt – failed to make any effort. The Poker Players Alliance – without its previous source of funding – focused on screwing up online poker legislation in Michigan, and the would-be affiliate “poker news” sites directed their attention to New York and Pennsylvania.

There was no repeat of the PokerStars-funded Californians for Responsible iPoker campaign, no public meetings for John Pappas to wave his mobile phone around in, and Online Poker Report – the would-be affiliate most likely to benefit from regulated online poker in California – published just six stories about online poker regulation in California, compared with 81 (to date) relating to events in Pennsylvania.

There were also problems within the pro-PokerStars coalition. Following on from the David Baazov insider trading allegations in 2016, two of the coalition´s brick-and-mortar casinos were raided by the FBI in April in connection with money laundering charges. Then, in May, the San Manuel Band of Mission Indians said enough is enough and left the coalition to concentrate on more important tribal matters.

Little Hope for Future Prospects

If there is to be regulated online poker in California – ever – the suitability issue has to be sorted out. If PokerStars had put its hand in the air five years ago, and taken a ban for having provided a service to Californians post UIGEA, it would be back in the market by now. But no, PokerStars wants a piece of the action now, and so is preventing everybody else getting any.

However, even if PokerStars conceded its position in the suitability issue, there is still the horseracing industry to appease. Regulated online poker in California is never going to happen while the horseracing industry is getting 95% of the first $60 million in tax revenues. No responsible government would pass a law like that. If the horseracing industry cannot compete and support itself, it should fold.

Then there is the licensing fees and tax rates to sort out. Authors of previous bills have made ambitious promises about how much revenue regulated online poker in California will generate. Most of it is pie in the sky. The state can probably support no more than four operators, and the sport is no longer as popular as it was at the end of the last decade. If you set unrealistic expectations, you are going to fail.

Finally, the lobbying effort has petered out. Without PokerStars, the PPA and would-be affiliates driving public interest, who really cares? There are multiple opportunities to play online poker in California – they are just not regulated and taxed. Considering the proposed legislation to regulate online poker in California lacked any player protections, there is no benefit to regulation as far as players are concerned.

That is why there is little hope for the future prospects on regulated online poker in California.

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