Saturday February 13,2015 : AMENDMENT TO CALIFORNIA BILL RAISES HOPES FOR LEGALISED ONLINE POKER (Update)
 
Officials confirm that a new amendment to bill AB431 could solve the racetrack involvement problem…but will the tribes agree?
 
The week ended on a more optimistic note in California as news emerged (and was confirmed) that recent amendments to Assemblyman Adam Gray's shell bill AB431 could clear one of the main current obstacles to online poker legalization – the involvement of the racetracks.
 
Gray's solution is fairly straightforward – give the racing industry a $57 million a year share in the revenues via a tax and licence fee mechanism in order to keep racing companies from competing in the market.
 
Speculation on the amendment arose last week following a letter from two of the California tribal interest groups to Gray expressing concern at another of his bills – AB1437 – seeking to regulate daily fantasy sports (see previous InfoPowa report).
 
The letters suggested that an overall bill on e-gaming may be the way forward, and one particular phrase stood out in both communications…it asked:
 
“Why are Internet poker operators expected to pay $60,000,000 annually to the Horse Racing Internet Poker Account in the draft amendments to AB 431, yet DFS operators would have no such obligation?”
 
Enquiries soon confirmed that such an amendment has been added to AB431 and seems to have the support of the California Thoroughbred Breeders Association, whose lobbyist Robyn Black applauded the addition but cautioned that some of the tribal interests may not support it.
 
Sources have since revealed that the amendment proposes that of the first $60 million collected each year, 95 percent will go into a California Horse Racing Internet Poker Account, which would contribute to purses, commissions, and incentive awards to be disbursed by racing associations or fairs, and pensions for jockeys and pari-mutuel employees.
 
It also makes provision for racetracks to serve as service providers to licensed operators, allowing horse racing service providers to claim at least 50 percent of the gross gaming revenue generated for an operator.
 
Respected online gambling analyst Chris Krafcik subsequently posted that his sources had confirmed the new amendment and indicated that it had broad support from the racing industry.
 
However, as bitter experience has shown over the past eight years in California, there can be many a slip between cup and lip, and much will continue to depend on the elusive achievement of a consensus among the many interested parties.
 
Whether a nascent online poker industry will be able to sustain a $57 million payment to racing is just one hurdle on the way forward.
 
Krafchik's Eilers Research has projected that a mature online poker market in California could generate up to $273 million a year in revenues.
 
There is speculation that Assemblyman Gray will push AB431 forward again next week, probably through the Government Organisation Committee which he chairs, and prior to the February 19 deadline for fresh bills in this Legislative season.