Bad Actor Concession Appears in Latest CA Poker Bill

Posted on by Tim Hernandez

CaliforniaA small, but significant, addition to Adam Gray´s Californian Internet poker bill would appear to have been introduced to appease those opposed to bad actors.

Next week´s hearing of the California Assembly Governmental Oversight (“GO”) Committee to discuss Internet poker in California was largely expected to be dominated by the contentious issues that have held back the progress of regulation during the past seven years – primarily the participation of the horseracing industry and operators who provided an online poker service to Californians after the passage of UIGEA.

A proposed $60 million subsidy for the horseracing industry from tax revenues has not been received well by all stakeholders – even some within the horseracing industry itself – while a recent letter to Adam Gray from tribal leaders opposed to the participation of PokerStars described the absence of a bad actor clause as a significant – if not pivotal – aspect of the bill.

Gray U-Turns on Bad Actors

According to an article in last month, Assemblyman Gray said that he would ignore objections to his Internet poker bill to see it passed. He claimed that the horseracing subsidy is non-negotiable, he was unconcerned by bad actor issues and that proposals to playing online poker on an unregulated site a felony would stay despite objections by players.

However, Gray appears to have softened his stance on bad actors. In the preamble to AB2863, Gray has added the words:

The bill would become operative when criteria are established by statute addressing involvement in Internet betting prior to the state’s authorization of Internet poker pursuant to its provisions.

Under § 19990.405 of the bill´s content, Gray practically repeats his message to the tribes opposed to PokerStars´ participation with the addition of the following clause:

The act that added this subparagraph shall not become operative until criteria are established by statute to address involvement in Internet betting prior to the state’s authorization of Internet poker pursuant to this chapter.

Inasmuch as the language of the two clauses might be sufficient to appease stakeholders who have been calling for the inclusion of a bad actor clause, it does smell a bit like Let´s get this bill through first and we´ll discuss the details afterwards – making one wonder how many more U-turns Gray is prepared to make.

Regulatory Oversight Issues Still to be Addressed

Speculating on what might else be discussed at the hearing of the California Assembly Governmental Oversight Committee, Steve Ruddock from has suggested that issues concerning the regulatory oversight of Internet poker need to be addressed.

Ruddock highlights that California has two gaming regulatory bodies that report to different branches of the government. The California Gambling Control Commission (CGCC) answers to the Governor, and the California Bureau of Gambling Control (CBGC) reports to the Attorney General. Both are mentioned comprehensively throughout Gray´s proposals – the CBGC being referred to as the “Department [of Justice]”.

Concerns have been raised about either regulatory body´s ability to oversee Internet poker in California due to a lack of resources – including from within the CGCC and CBGC. At last year´s joint “informational” hearing of the Assembly and Senate “GO” committees, both departments sent the same message – we are under-funded, under-resourced and under-staffed.

It should also be note that California´s tribal gaming is practically self-regulated. The state does have some say on what games can be played in tribal brick-and-mortar casinos, but most of the regulation of tribal casinos is subject to the terms of the federal Indian Gaming Regulatory Act (IGRA). The tribes prefer it that way because it prevents the State of California from interfering too much in their activities.

It could be a fascinating hearing.