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California GO Committee Passes AB 431 i-Gaming Bill

Posted on by Tim Hernandez

CaliforniaYesterday´s meeting of California´s Governmental Organization “GO” Committee concluded with a unanimous vote in favor of the passage of Adam Gray´s AB 431.

The current status of Adam Gray´s AB431 is that it is a two-page document proposing the regulation of online poker in California. There is no content relating to which stakeholders would be allowed to apply for licenses or how the online poker would be operated. It is effectively a “shell” Bill that will be filled out as discussions between regulators and stakeholders progress.

The passage of AB 431 onto California´s Assembly was significant inasmuch as it was the first time an i-gaming Bill has made it through the committee stage. Although purely a procedural vote to beat a May 1st deadline, the 20-0 vote also indicated that committee members were strongly in favor of keeping the Bill alive so that it could be discussed further.

Primary Objective Achieved

The primary objective of yesterday´s hearing was to keep AB 431 alive. Had the vote gone against the passage of the Bill, it would have effectively killed off all attempts to introduce any form of i-gaming legislation in 2015 – and probably in 2016 as well. Consequently, potential objections from the racetracks and the Pechanga Tribe were forestalled with a few tweaks to the language of the Bill.

The tweaks had the effect of moving those originally opposed to the passage of AB 431 to a “neutral” position. However, with there being a great deal of disagreement between potential stakeholders, there is still a lot of work to be done. Further committee meetings are scheduled over the forthcoming months to discuss the issues dividing the interested parties, when the content of AB 431 will all be fleshed out.

Issues Still to be Resolved

Despite the passage of AB 431, the issues that still have to be resolved appear insurmountable. The racetracks have a powerful lobby inside the Assembly and the Senate, and California Governor Jerry Brown has previously stated that he will not agree to any legislation that excludes the racetracks from participating.

The Pechanga Tribe claims that the participation of the racetracks amounts to an expansion of gambling – a move rejected by Californian voters in 2014 – and they are also opposed to the possible participation of “bad actors” (companies who continued to provide an online gambling service to Californians after the passage of UIGEA) and those with “tainted assets” (companies who have subsequently purchased the assets of bad actors – Amaya Gaming/PokerStars).

Reaction to the Bill´s Passage

While pro-regulation campaigners were celebrating a “historic” day, statements released by stakeholders in any future Californian i-gaming were more pragmatic. A statement from the Amaya-led coalition of selected tribes, card rooms and PokerStars heralded the passage of AB 431 as a “milestone”, but acknowledged that it was just the first step in a long process.

The Rincon Band of Luiseño Indians said that it was time to “end the politics and solve the final issues”, but there were barbs in the statement from the Pechanga Tribe – who look forward to legislation that “protects consumers and the integrity of the gaming industry from organizations that do not and have not respected U.S. law” – a thinly-veiled indication that the tribe will continue to opposed the participation of PokerStars in the regulation of online poker in California.

Dates for Your Diary

Three specific dates are scheduled for the GO committee to further discuss i-gaming legislation. On 20th May a joint Senate/Assembly GO committee meeting will hear an “Overview of Gambling in California – Legality, Authorization and Regulation”, followed by a meeting on 24th June to hear “The Legality of Internet Poker – How Prepared is California to Regulate It?” Neither of these meetings will result in a vote.

Possibly the most important forthcoming hearing will be on 8th July, when the GO committee will debate Mike Gatto´s AB 9 and Reggie Jones-Sawyer´s AB 167. By then, the foundations of any final legislation should be in place, and this hearing will determine the final content of a Bill to be debated by the Californian Assembly.

No doubt there will be many behind-closed-doors meetings taking place over the next couple of months, and various concessions made to interested parties. At least there has been some movement for i-gaming legislation in California and hopefully the momentum will continue.

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