California recently held another hearing on online poker, where policy makers and various gaming interests discussed the matter. Overall, there were no tremendous breakthroughs that indicate the state is ready to legalize the game in the near future. In fact, there were three ugly issues that were a theme throughout the hearing; luckily, there was one bright spot too. This being said, let’s discuss 3 reasons why California won’t legalize online poker any time soon, along with one reason why they might.
3 Reasons why California iPoker won’t pass
1. Certain Tribes aren’t budging on Bad Actor Clause – Sponsored by Assemblyman Adam Gray, AB 431, which is the leading iPoker bill in California, could eventually contain a “bad actor” clause. And it’s pretty clear that the bad actor clause is meant to keep PokerStars from participating in the market. The Agua Caliente Band of Cahuilla Indians, Pechanga Band of Luisefio Indians, Yocha Dehe Wintun Nation and Committee member Jim Cooper all oppose Stars’ iPoker participation. Cooper debated with PokerStars rep Eric Hollreiser in a discussion that did nothing to show any progress towards confirming or leaving out the bad actor clause.
2. Tax Rates and Licensing Fees could be High – The most-recent iGaming legislation in Pennsylvania proposes an enormous 54% tax rate on operators, which would be very discouraging to potential applicants. California hasn’t really given any such figures, but comments from this hearing don’t look favorable. Anita Lee, senior fiscal and policy analyst for the Legislative Analysts’ Office, noted that high tax rates and licensing fees could keep some operators from launching iPoker sites.
3. Horse Tracks still fighting to get in – Besides not wanting PokerStars in the iGaming market, certain tribal gaming interests also don’t want race tracks taking part either. Pechanga Band chairman Mark Macarro explained the stance by saying, “Only card rooms and tribal casinos are allowed to offer live poker. Race tracks have zero history regulating and managing live poker.” Mike Pegram, board chairman of the Thoroughbred Owners of California, does not agree with Macarro’s assessment. “If this iPoker will happen and horse racing is not involved in it, it will destroy the game,” Pegram explained. “Because when you take the only growth segment that we have in our model and then throw direct competition on it, I don’t think the future would look very good.”
One Reason why California Online Poker will pass
While Macarro adamantly opposes PokerStars and race tracks being involved with California iPoker, he did offer some semblance of a compromise. Here’s a look at what he said:
“We are realistic about the politics of this issue. That is why Pechanga is prepared to support other opportunities for the racing industry to participate and benefit from online poker. We respect the sport of horse racing and recognize the importance of the jobs that rely on the industry. That’s why Pechanga can support legislation that specifically shares revenue derived from online poker for the benefit of the racing industry.”
This is still not what the horse racing industry has in mind regarding iPoker, especially with the shared revenue being unspecified right now. But it at least shows Pechanga, the most stubborn tribe, is beginning to consider some sort of compromise. As for PokerStars, though, tribes like Pechanga are still refusing to budge.