If you can’t beat them, pay them off.
California lawmakers appear to be taking the road less traveled in order to resolve one of the major hurdles blocking California iPoker regulation.
Despite reports of all four California bills having missed a key legislative deadline, AB 431 actually had a new draft filed late last month in an attempt to finally regulate the online poker industry in the state.
This new draft of the bill includes one major concession to the horse racing industry that may clear a path for a bill to finally come to a vote.
Bill Calls for Payments to Industry Up to $60 Million Annually
News broke of the new draft of AB 431 late last week with the announcement that the bill includes a provision that will pay the California horse racing industry up to $60 million annually in exchange for not operating online poker in the state.
According to the provision California tracks will be paid 95% of the first $60 million collected by online operators. The remaining 5% will go to the State Treasury.
The majority of money received by the industry, 95.4%, will go to purses. Afterwards, 2.3% will go to the California jockey’s retirement fund. Finally, the last 2.3% will go to fund the racing employee’s pension fund.
Other Bill Details
As presently drafted operators will put forward a $15m deposit that will go towards taxes. Sites will be taxed at 15% of gross revenues.
In addition, sites will pay fees for problem gambling, regulatory services and for the licensing process itself. Each license will be good to host two websites and the bill will allow tribes and card rooms to partner together.
Only card clubs and Indian tribes with a minimum of five years of experience in the gaming industry will be eligible for an iPoker license. Licenses will be good for seven years with renewals available for another seven years.
Like in other states, only players physically located in California may play and all servers for online poker sites must be located in California.
Interestingly the bill includes a provision that will repeal regulated online poker on January 1, 2024 unless the legislature votes to continue offering iPoker.
Odds of Horse Racing Industry Accepting Are Good As Bill Stands
As the bill presently sits there’s a good chance that the horse racing industry will accept this proposal.
Why wouldn’t they? This gives them guaranteed revenue every year without them having to deal a single hand.
While this isn’t exactly the revenue-sharing deal we recommended last year it is definitely one that will be advantageous for all parties.
Keep in mind that Governor Jerry Brown will not sign a bill unless the horse racing industry is somehow included.
The only thing that could throw a monkey wrench in lawmakers' plans is if they go to tinkering with the compensation model.
There are reports that the horse racing industry will not accept anything less than what is already in the bill so it would benefit lawmakers to leave the draft as-is.
Should this finally resolve the matter of racetrack participation the roadway to iPoker regulation may finally start to open.
The bad actor issue is now largely moot thanks to PokerStars receiving a license in New Jersey.
As we’ve been saying for about a year, if the racetrack matter is resolved, it will be just a matter of time before iGaming becomes regulated.
Will it happen in 2016? Let’s just say that we’re much more optimistic now than we were just a week ago.