Calif. Online Poker Bill Unveiled - Poker Legislation

ktulu22 · 04-24-2009, 05:21 PM

Calif. Poker Bill Unveiled by Christopher A. Krafcik
A copy of a highly anticipated bill has been released -- the California Online Poker Law Enforcement Compliance and Consumer Protection Act -- that would see online poker regulated on an intrastate basis in the Golden State.
The bill was submitted to the California Legislative Analyst earlier this year, and is likely to be amended should it pass through the Legislature.
In its current form, the bill instructs the California State Gambling Commission, in conjunction with the state Department of Justice, to draft and adopt regulations for the implementation of an online intrastate poker network.
Key Points

Ensures that Internet poker is only offered for play in a manner that is lawful under the Unlawful Internet Gambling Enforcement Act, 31 U.S.C. §§ 5361 et seq. (UIGEA).
Limits licenses to current gaming establishments, licensed by California, as well as to California tribes with compacts
Mandates wagering hub -- or hubs -- be located within the state
Specifies only poker games already approved for play at land-based, licensed gambling establishments may be offered online
Recommends a gross receipts tax structure that mirrors the structure currently imposed on land-based card rooms in California
Requires each Internet Web site to have an individual, when opening an account, place a limitation on the amount of funds that may be transferred into that account within a 24-hour period
Requires that each Internet Web site provide for withdrawals from the wagering account only by check, made payable to the account holder and sent to the address of the accountholder, or by an electronic transfer to the same financial account from which the verified accountholder is authorized make deposits into a wagering account To view a copy of the bill in full, clickhere: http://www.igamingnews.com/articles/...iaDraftLaw.pdf

More on this story as it develops

Grasshopp3r · 04-24-2009, 06:10 PM

This is excellent news as it will hopefully force Congress to act.

tangled · 04-24-2009, 07:21 PM

Quote:

Originally Posted by Grasshopp3r

This is excellent news as it will hopefully force Congress to act.

Why? I think it is great news too, but I don't see why it would force Congress to act. I don't even know the chances that it will pass.

DrVanNostrin · 04-24-2009, 07:32 PM

Quote:

Originally Posted by ktulu22

Ensures that Internet poker is only offered for play in a manner that is lawful under the Unlawful Internet Gambling Enforcement Act, 31 U.S.C. §§ 5361 et seq. (UIGEA).

What's the deal with this part?

**TheEngineer** · 04-24-2009, 07:36 PM

Quote:

Originally Posted by DrVanNostrin

What's the deal with this part?

That (mostly) means it has to be intrastate only with a means of age verification.

permafrost · 04-24-2009, 07:47 PM

Quote:

Originally Posted by ktulu22
Ensures that Internet poker is only offered for play in a manner that is lawful under the Unlawful Internet Gambling Enforcement Act, 31 U.S.C. §§ 5361 et seq. (UIGEA).

Quote:

Originally Posted by DrVanNostrin

What's the deal with this part?

“in a manner that is excluded under UIGEA” would be better

DrVanNostrin · 04-24-2009, 07:48 PM

Good to hear.

JPFisher55 · 04-24-2009, 08:00 PM

IMO, this is a useless bill. Who is going to play at a poker site that pays the same tax that CA imposes on land based casinos and that only offers games with the limits, time, rake or fee schedule as land based casinos? Who will play at a site that only offers cash out by check? This is what I fear from state regulation and taxation of online gambling and why I fear any state opt-out for online poker in Rep. Franks' new bill.

LeapFrog · 04-24-2009, 08:08 PM

Quote:

Originally Posted by JPFisher55

IMO, this is a useless bill. Who is going to play at a poker site that pays the same tax that CA imposes on land based casinos and that only offers games with the limits, time, rake or fee schedule as land based casinos? Who will play at a site that only offers cash out by check? This is what I fear from state regulation and taxation of online gambling and why I fear any state opt-out for online poker in Rep. Franks' new bill.

from the pdf

Quote:

i) Require that each Internet Website provide for withdrawals from the wagering account only by check, made payable to the account holder and sent to the address of the accountholder, or by an electronic transfer to the same financial account from which the verified accountholder is authorized make deposits into a wagering account. The account holder may also withdraw funds from the wagering account at a gambling establishment by presenting verifiable personal and account information.

I'm not familiar with the specifics of California games or rakes. What would those be? On the surface that sounds bad though.

***Ryan*** · 04-24-2009, 08:19 PM

So does the PPA have a guess on how likely this is to pass?

GMan42 · 04-24-2009, 08:46 PM

Quote:

Originally Posted by JPFisher55

IMO, this is a useless bill. Who is going to play at a poker site that pays the same tax that CA imposes on land based casinos and that only offers games with the limits, time, rake or fee schedule as land based casinos? Who will play at a site that only offers cash out by check? This is what I fear from state regulation and taxation of online gambling and why I fear any state opt-out for online poker in Rep. Franks' new bill.

I assume the tax they speak of refers to what the site pays, not the players. Also, I see no mention of rake, time charge, etc. having to be the same, just that they only offer games that are spread at B&M (for example, they can't spread Crazy Pineapple or whatever if it's not an approved game in the cardrooms).

*TT* · 04-24-2009, 09:00 PM

http://www.igamingnews.com/articles/...iaDraftLaw.pdf

This is the first step in the future of online poker legalization, the next step is the introduction of a federal bill which will amend the wire act to allow states to create compacts with one another to allow multi-state poker rooms ala the compacts that exist for horse racing and lotteries. Remember this day... someday we will all look back and see that this bill in California state was the tipping point.

Quote:

CALIFORNIA ONLINE POKER LAW ENFORCEMENT COMPLIANCE,
AND CONSUMER PROTECTION ACT
(DRAFT)
January 15, 2009
SECTION 1. The Legislature finds and declares the following:
(a) Leading gaming consultants estimate that in 2008 United States citizens wagered
more than ten billion dollars ($10,000,000,000) online at off-shore, non-United States Internet
gambling Web sites, that this amount is likely to grow steadily over the next decade and that
every week more than 1,000,000 California citizens play poker on the Internet.
(b) Currently, 2,300 Internet gambling Web sites operate outside the United States,
unregulated by any United States governmental entity. Questions often arise about the honesty
and the fairness of the games played on these Internet Web sites, whether and/or how customer
financial information is protected and about the true purpose for, and use of, proceeds generated
by these unregulated Internet Web sites.
(c) The presence, operation and expansion of offshore, unlicensed and unregulated
internet poker sites available to Californians endangers the current and future economic health of
California gaming establishments, both land-based licensed card rooms and tribes with
compacts, who are currently unable to compete with these unregulated and unlicensed sites for
online patronage by California consumers.
(d) In 2006, Congress passed and the President signed the Unlawful Internet Gambling
Enforcement Act of 2006 (Public Law 109-347); hereafter UIGEA. While UIGEA prohibits the
use of banking instruments, such as credit cards, checks, or fund transfers for interstate Internet
gambling, it has not eliminated illegal, unregulated Internet gambling, nor has it provided any
increased protection for participants in the United States and California.
(e) Declaring that intrastate wagering permitted by individual states is not considered
“illegal internet gambling” under the terms of UIGEA, Congress included specific provisions
and an exemption in UIGEA for individual states to permit Internet gambling within their own
borders under certain conditions, including a means of reasonably insuring prevention of
underage Internet gambling and verification of a player’s physical presence in the state.
(f) The State of California currently maintains and enforces substantial regulatory and
law enforcement efforts to protect thousands of Californians who play poker for money live in
licensed California card rooms, yet provides no licensing requirements, regulatory structure or
law enforcement tools to protect millions of Californians who play exactly the same games daily
for money online.
(g) In order to protect the millions of Californians who play poker online, and allow
state law enforcement to license, regulate internet poker sites that can ensure these consumer
protections, it is in the best interest of the state and its citizens to authorize, implement and create
a licensing and regulatory structure and system to allow licensed gambling establishments to
operate government-regulated Internet poker wagering Web sites, offering similar poker games
as permitted in licensed land-based card rooms, as a way of protecting Californians and ensuring
that the poker games they are playing are honest and fair and providing the law enforcements and
regulatory tools necessary to provide those protections.
SEC. 2 For the purpose of this chapter the following definitions apply:
“Internet Poker” means the offering and play of poker games approved by the Department of
Justice for play on-line through the modality of the Internet. Internet Poker, as defined herein,
shall be deemed a “controlled game” under Penal Code section 337j, and to the extent consistent
with the provisions of this Chapter, subject to all laws and regulations that apply to controlled
games.
SEC. 3 The Gambling Control Commission and the Bureau of Gambling Control within the
Department of Justice shall prepare draft regulations containing suggested guidelines for the play
of poker on the Internet pursuant to the Unlawful Internet Gambling Enforcement Act of 2006
(Public Law 109-347), and provide a structure for regulation of intrastate poker offered on the
Internet by gambling establishments and tribal casinos authorized to operate in California . In
preparing these suggested guidelines and structure, the commission and the bureau shall include
safeguards to address the issue of underage gambling, compulsive gambling, and effective law
enforcement oversight of the operation of Internet poker n which millions of Californians already
participate with no current protections by California law enforcement agencies.. The purpose of
this article is to provide a legal alternative to the illegal gambling currently conducted on the
Internet. Therefore, nothing in this chapter, which authorizes Internet activities for licensed
gambling establishments, shall be construed to expand "gambling," as used in Article 13
(commencing with Section 19960).
Licenses to operate intrastate Internet poker websites under this Act shall be issued only to
current Gaming Establishments licensed by the State of California and California tribes with
gaming compacts. The guidelines, regulations and structure prepared by the commission and the
bureau shall at a minimum do all of the following:
a) Ensure that Internet Poker is only offered for play in a manner that is lawful under the
Unlawful Internet Gambling Enforcement Act, 31 U.S.C. §§ 5361 et seq. (UIGEA).
b) Create a process by which the enforcing agencies can ensure that authorized Internet
Poker is only offered for play to a player physically present within the borders of the State of
California at the time of play and who is twenty-one years of age or older.
c) Require that each Internet website utilize the services of an approved, independent
third party to perform identification, residence, and age verification services for persons
establishing an account.
d) Require that the Wagering Hub or Wagering Hubs, shall be located within the
boundaries of the State of California.
e) Require that Internet Poker is only be offered for play by a Gambling Establishment
located within the boundaries of the State of California, and licensed to do so by the commission
pursuant to the Gambling Control Act, Business and Professions Code section 19800 et seq.
(Internet Poker Provider). A licensed gambling establishment shall not offer Internet poker
independent of that network and no unlicensed entity or person shall be permitted to accept
wagers or allow any Californian resident to play internet poker for money. Such unlicensed
activity would violate the terms of this Act as well as terms of the intrastate exemption contained
in the Federal Unlawful Internet Gambling Act of 2006.
f) Require each licensed gambling establishment desiring to conduct intrastate Internet
poker to register with the commission to engage in that activity
g) Require a licensed gambling establishment to conduct the Internet poker games in a
manner similar to the conduct of other games played in their establishments. Only those poker
games approved for play at land-based licensed gambling establishment within California may
be offered for play on the gambling establishment's Internet Web site. The licensed gambling
establishment may collect fees from players in the poker games pursuant to the player fee
collection methods approved for use within the licensed gambling establishment.
h) Create a process to protect each player’s private information and prevent to the extent
possible from fraud and identity theft. Enforcing agencies may require Internet websites to
utilize personal identification numbers and other technology so that only the accountholder has
access to the wagering account, and enforcing agencies may update technological requirements
under this section as necessary to provide the highest level of security available to protect
consumers’ personal financial information and prevent fraud and identity theft to the extent
possible..
i) Require that each Internet Website provide for withdrawals from the wagering account
only by check, made payable to the account holder and sent to the address of the accountholder,
or by an electronic transfer to the same financial account from which the verified accountholder
is authorized make deposits into a wagering account. The account holder may also withdraw
funds from the wagering account at a gambling establishment by presenting verifiable personal
and account information.
j) Ensure that licensed gambling establishment will allow regulatory agency to access the
premises to visit, investigate, and place expert accountants, and other persons deemed necessary
to ensure strict compliance with its regulations concerning credit authorization, account access,
and other security provisions. “Premises” shall include all electronic records held and
transactions by the licensed gaming establishment in connection with online operations
conducted under this Act.
k) Require that a licensed gambling establishment offering Internet poker provide
registered players, in person, by mail or electronically, with information on problem gambling,
including a card or electronic banner at sign-on of each online session that displays a 24-hour
problem gambling hotline telephone number or website link.
1) Require that a licensed gambling establishment's Internet Web site contain information
relating to problem gambling, including a telephone number that an individual may call to seek
information and assistance for a potential gambling addiction.
m) Require each Internet website to have an individual, when opening an account, place a
limitation on the amount of funds that may be transferred into that account within a 24-hour
period. The Internet Web site shall adopt procedures to ensure that the player may not deposit
more funds into the account than the amount specified on the application. If, after the account is
open, an individual wishes to increase the amount of funds that may be transferred, the Internet
Web site may increase the amount after obtaining the appropriate identification. However, that
increase shall not be effective until 48 hours after the change is requested.
n) Create a structure that will allow the enforcing agencies to impose an advance fee to
the licensed gambling establishment offering Internet poker. The fee shall be used to pay for the
cost of implementing and administering the program, fund a gambling control program any
extra money shall be deposited into the California’s general fund.
o) Create a recommendation for a gross receipts tax structure that mirrors the structure
currently imposed on land-based card rooms in California. This shall not be considered a new
tax, but an extension of the current gross receipts tax imposed on legal, licensed card rooms in
California to a new revenue stream created by this Act for licensed operators. Revenue from this
source shall be deposited in the general fund.
SEC. 4. The enactment of this act authorizes the play of Internet poker upon approval by the
California Gaming Commission of the draft structure and regulations required by this Act. The
Commission may impose such regulations, pursuant to Section 3 of this Act, on the Wagering
Hub or Hubs as well as on individual licensees.
SEC. 5. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556
of the Government Code, or changes the definition of a crime within the meaning of Section 6 of
Article XIII B of the California Constitution.

LeapFrog · 04-24-2009, 09:12 PM

Quote:

Originally Posted by *TT*

This is the first step in the future of online poker legalization, the next step is the introduction of a federal bill which will amend the wire act to allow states to create compacts with one another to allow multi-state poker rooms. Remember this day... someday we will all look back and see that this bill in California state was the tipping point.

I'm not going to get super excited here until I know what the rake is.

*TT* · 04-24-2009, 09:21 PM

Quote:

Originally Posted by LeapFrog

I'm not going to get super excited here until I know what the rake is.

the legalization of online poker will likely bring four things that players will not like -

1) higher rake

2) the possibility of taxation of winnings in addition to traditional income tax

3) state control. Feds have never had the ability to dictate the legality of online poker, this is the domain of states.

4) state level crackdown on sites not licensed and regulated within the state, this could be very bad news for FullTilt/PokerStars/Cake/Merge/Bodog/Cereus

crashjr · 04-24-2009, 09:22 PM

I didn't draft this, but it is substantially similar to how I thought it would read.

This is a wholesale importation of California B&M practices to an online medium. Also, as I suspected:

Quote:

e) Require that Internet Poker is only be offered for play by a Gambling Establishment located within the boundaries of the State of California, and licensed to do so by the commission pursuant to the Gambling Control Act, Business and professions Code section 19800 et seq. (Internet Poker Provider). A licensed gambling establishment shall not offer Internet poker independent of that network and no unlicensed entity or person shall be permitted to accept wagers or allow any Californian resident to play internet poker for money. Such unlicensed activity would violate the terms of this Act as well as terms of the intrastate exemption contained in the Federal Unlawful Internet Gambling Act of 2006.

I don't think that this interpretation of the UIGEA is correct. Still, it makes it illegal for PS and FTP to provide games in California.

Interesting.