California Online Poker Bill Edit Seeks Tribal Racetrack Support

California Online Poker Bill Edit Seeks Tribal Racetrack Support with Generous $60 Million In Concessions and Other Boons

In May of 2015, California Assemblyman Adam Gray introduced bill AB 431, which sought to authorize online poker betting in the state. After almost nine months of debate and delay, Assemblyman Gray proposed another draft of AB 431, which contains two major edits: one, AB 431 gives huge concessions to California horse racetracks, and two, grants the bill urgency status. It will take two thirds majorities in both chambers of the California Legislature before the Governor Brown can officially sign it into law.

AB 431 states that California’s online poker taxes would total 15% of all revenue collected. Card clubs and tribal groups at least five years old would be allowed to apply; then, they would deposit an advance $15 million towards paying off that 15%. Licenses would be valid for seven years. All applicants must be based in California. AB 431 contains no “bad actor” clause, but the bill would make an Unlawful Gambling Enforcement Fund for policing purposes.

AB 431’s original text would have allowed licensed horse racing operators to also acquire online poker licenses. This was staunchly opposed by the Pechanga Band of Luiseno Indians, and their coalition which includes the Agua Caliente Band of Cahuilla Indians, the Barona Band of Mission Indians, the Lytton Band of Pomo Indians, the Yocha Dehe Wintun Nation, and the Viejas Band of Kumeyaay Indians.

However, the bill’s original opponents may now have been won over by state funding to the tune of $60 million annually. This funding would come from newly legal online poker revenues, mostly from the first $60 million earned, although 5 percent of that sum would be given to the Fair and Exposition Fund by the Treasury.

In order to afford this sum, online poker must net California an estimated $400 million per year. This is seen as a steep goal. In the first year of legalization, Californian online poker is thought to rake in only $215 million, and industry growth would take several years.

Tribes have been suspicious of this hefty amount, but some have agreed to let negotiations continue without active opposition. These tribes include the Pala Band of Mission Indians, the United Auburn Indian Community, The Rincon Band of Luiseno Indians, the Morongo Band of Mission Indians, and the San Manuel Band of Mission Indians.

Another lesser boon to racetrack operators is the ability to gain additional funds from pairing with online poker companies. From AB 431’s text: “An agreement between a licensed operator and a service provider that is a horse racing association operating pursuant to Chapter 4 (commencing with section 19400) shall insure that at least 50% of the gross gaming revenue that the licensed operator derives from the service provided by the service provider is paid to the service provider.”

Though AB 431 has generated some support, the lack of a “bad actor” clause continues to alienate unfriendly tribes. But the Pechanga coalition wrote last Friday that with just a few more changes ensuring suitability standards, they would “commit to engaging in good-faith negotiations with you…to resolve this outstanding issue before the bill is brought to the Assembly Floor for a vote.”