The passage of California’s online poker legislation has been stalled due to a disagreement over the clause related to the treatment of bad actors. The seven-tribe coalition led by the Pechanga and Agua Caliente tribes have recently sent a letter to Assemblyman Adam Gray, the sponsor of AB 2863 detailing a list of acceptable measures to mitigate the bad actor clause.
The tribes have expressed their opposition to PokerStars entering California’s gaming market due to the poker site having offered unlicensed gaming services to residents even after the federal Unlawful Internet Gambling Enforcement Act (UIGEA) was rolled-out.
They believe that this has given an unfair advantage to the brand and want to make sure that PokerStars does not benefit from tainted assets such as databases, software and its brand image.
In light of their vehement opposition Gray had recently changed the provisions of the legislation by including a ban of five years on operators who continued their service post-UIGEA, but added a clause by which the operators could get around it with a $20 million fine. The tribal coalition has rejected this measure saying that this fine amount was negligible for a company the size of PokerStars.
According to the terms detailed in the letter, any company that provided gaming services to U.S. customers’ post 2006 would need to face a 10-year ban starting the day the first legal bet in the state is accepted.
The tribe has pointed out that this was a substantial concession from its previous requirement of an outright ban. The 10-year ban will be applicable on the tainted assets of the company as well. Further, the coalition has said that the bad actors must pay $60 million to the state’s proposed Internet Gaming Enforcement Fund after the 10 year ban. This fund aims to regulate the market by controlling access to unlicensed sites.
The final requirement in the letter is that Gray modifies the bill’s non-severability provisions to avoid the possibility of future lawsuits repealing the clauses suggested by the tribal coalition.
The coalition has highlighted that the 10 year ban has a precedent. Before Nevada could regulate the online gambling industry in 2013, state legislators put in place a 5 year ban on bad actors. The tribes’ letter stated that these remedies allow Gray to achieve the primary goals of his legislation while ensuring that bad actors face the consequences for their illegal actions.
With the state legislature having ended its current session, the bill will have to wait until July 31 when the state legislature reconvenes for one month.