One day after the New York State Senate approved a bill to license and regulate intrastate online poker, 3,000 miles away, the California Assembly Appropriations Committee discussed the merits of AB 2863. The bill, introduced by Assemblyman Adam Gray, would license and regulate online poker in California.

Gray opened up the hour-long hearing by saying, "It's time we pass a sensible iPoker bill in California so people can play in a safe, regulated environment."

The two biggest roadblocks for a bill making it to the Assembly floor thus far have been the involvement of horse racing tracks and how the state should treat so-called "bad actors," companies that took real money online poker bets after 2006's Unlawful Internet Gambling Enforcement Act and after 2011's Black Friday.

"We have addressed both of the issues raised by the opposition," Gray said. "We have not yet come to a consensus on [suitability language]." Gray added that he has been meeting with stakeholders and adding amendments to make the bill "stronger." An amendment was added to the bill that would ship $60 million to horse tracks, which has seemed to gotten that coalition on board.

"The bill protects consumers," Gray said. "AB 2863 extends consumer protections to California players… and protects the public interests by ensuring activity is sanctioned and regulated by the state… It establishes safeguards against money laundering, fraud, and identity theft."

He closed his opening remarks by pointing out, "We are closer than ever to passing an iPoker bill."

Lorena Gonzalez, chair of the committee, then said, "We are attempting to get at an iPoker bill… We are going to continue working on the fiscal issues." It was clear from that comment that a vote would not occur during Wednesday's hearing, but instead debate with representatives from both sides would occur.

Four supporters of Gray's online poker bill then voiced their desire for a vote to take place in the near future, including one coalition member who said, "We have come to a place where the language is something we can accept and live with… We'd like this bill to move forward sooner rather than later."

A representative from the teamsters and jockeys guild voiced his support as well, saying, "This bill will provide for our unions money for things like retirement, health care, and things that are needed and have suffered as a result of the changing economics."

Robert Smith of the Pala Band of Mission Indians told lawmakers, "I'd like to move forward… We think it's good for California and consumer protection."

Josh Rubinstein, Chief Operating Officer for Del Mar Thoroughbred Club, said the horse racing industry has issued its support of AB 2863. "The horse racing industry has been conducting online gaming for 16 years," he said. "This is something that can happen and we have been doing it for many years."

Agua Caliente Chairman Jeff Grubbe then spoke for six minutes to voice his opposition to the bill over its suitability standards. "My tribe is now willing to accept the concept of a revenue stream for horse racing," he said, noting that Agua Caliente has overcome a major hurdle. "However, the dollar value needs to be refined… This was a major concession for us."

Grubbe pointed out that AB 2863 has a $20 million "get out of jail free card." An operator deemed a "bad actor" can still participate in the market as long as it pays a fine of $20 million to cover things like back taxes and legal fees. He then singled out one such "bad actor" in Amaya Gaming, the parent company of PokerStars. "Trouble follows this company," he said.

Gonzalez, for much of the hearing, said that online poker was more of a fiscal issue than anything else. She voiced two major concerns: (1) companies didn't pay taxes to Califronia when they offered games online and (2) one site could have too large of a market share.

"Market share should be the least of the state's concerns," he said, "but instead making sure we have a consumer protection level playing field… This is a big issue that we have boiled down [to two issues]. We are really down to the suitability issues and what we deem as 'bad actors' and the time certain individuals should or should not be operating in California… This is an activity that's going on every day… It is absolutely in our interest."

Before closing, Gray projected that first-year online poker revenues could be between $350 million and $1.4 billion.

Next Steps

The next scheduled meeting of the California Assembly Appropriations Committee is June 29. Gray and Gonzalez plan to work on a series of amendments over the next two weeks. The bill could be addressed on June 29 or at an earlier hearing if it's deemed ready for a vote.

"It's a long time coming," AB 2863's sponsor said. "It's a difficult issue. That's why it's taken a decade."