California Poker

Proponents of U.S. regulated online poker have had California on their radar ever since the UIGEA locked the biggest industry players out of the country. Considering that the entry of California into the legal iPoker space would effectively quadruple the size of the U.S.’s nascent market, not to mention provide a nice tax revenue boost to a state sorely in need, who can really blame them?

California is home to one of the most prosperous live poker industries on the planet, and at 38 million residents, of which more than two million played online poker at some point prior to Black Friday, the possibilities for growth are seemingly endless.

Unfortunately, years of infighting among lawmakers and various state tribes have delayed what seems like the inevitable passage of a bill. But with each passing year, the powers-that-be have come closer to resolving their issues – to the point where most industry experts believe that California is on the precipice of becoming the fourth U.S. state to legalize online poker.

Can Players from California Play Real-Money Online Poker?

Online poker is not regulated by the state of California. As of now, players in the state are best off visiting one of California’s numerous tribal casinos and card rooms.

Those who live in Europe and other countries have it easier, as there are a multitude of reputable real-money online poker sites amenable to new players.

Is Online Poker Legal in California?

California’s gambling statutes, unlike those of other states, make an allusion to online gambling. As part of its 2007 amendment to charitable gambling law, the following was added:

No fundraiser permitted under this section may be operated or conducted over the Internet. Business and Professions Code Section 19987(o)

Also, in 2010, a California bill legalized the placing of horse racing bets over the Internet ^[1]. In a unique twist, the online betting would take place in an exchange type setting, with odds updating in real-time and gamblers permitted to place bets as the race was taking place.

Otherwise, there is no mention of online poker or Internet gambling in general within the statues. However, the legality of online poker in California can be inferred, starting with how the law defines gambling:

Every person who deals, plays, or carries on, opens, or causes to be opened, or who conducts, either as owner or employee, whether for hire or not, any game of faro…hokey-pokey, or any banking or percentage game played with cards, dice, or any device, for money, checks, credit, or other representative of value, and every person who plays or bets at or against any of those prohibited games, is guilty of a misdemeanor[.] Penal Code Sec. 330

Note that in the aforementioned definition, players and operators are grouped together.

Although poker is not mentioned specifically, it’s reasonable to assume that if a pot is raked, then it would qualify as a percentage game, and thus be illegal.

But what if a game is not raked? If instead of a rake, a flat fee is charged, the game would appear to be exempt from the law. Thus, players would be safe to participate in tournaments, Sit & Goes and timed cash-games, without fearing charges.

Illicit operators, on the other hand, have a more difficult time escaping the law. Business and Professions Code Section 19850 states that anyone who exposes for play any controlled game or who is compensated for keeping, running, or carrying on any controlled game must receive a valid state gambling license from the commission.

Operators who host unregulated games are subject to small fines and upwards of six months jail time.

Although we’re not a legal authority on the matter, it appears that the only scenario where players can be prosecuted for playing online poker is if they’re participating in an unregulated raked game. By extension, because online cash games are raked, players who play on offshore sites while situated in California are technically violating the law, although we’re hard pressed to believe that these players would be prosecuted for such a crime.

For more on California gambling law, please refer to the “References” section ^[2].

Legislation Timeline

February 2008: In the wake of the UIGEA, Assemblyman Lloyd Levine introduces AB 2026 – a bill to assess the viability of state regulated online poker in California.
April 2009: A draft bill entitled the California Online Poker Law Enforcement Compliance and Consumer Protection Act, calling for the regulation of intrastate online poker is introduced, but fails to generate much attention.
2010: SB 45 is introduced by State Senator Roderick Wright.
February 24, 2012: Wright, along with State Sen. Darrell Steinberg, introduces SB 1463. Despite California’s high budget deficit, fears of widespread gambling addiction and resistance from the state’s tribal factions ultimately leave SB 1463 dead on the committee floor.
December 19, 2012: Wright tries again, this time introducing SB 51 as an urgency statute. ^[3]. Wright projects that SB 51 would generate more than $200 in first-year tax revenue by forcing operators to pay $30 million of their future profits forward. SB 51 proposes a tax rate on all Internet gambling activities at 10 percent and restricts online gaming to poker.
2013: Two more bills emerge. The first, Senator Lou Correa’s Authorization and Regulation of Internet Poker and Consumer Protection Act of 2013, (SB 678) is proposed in February. It calls for the California Gambling Control Commission to set up a regulatory iGaming framework. Then, in May eight of California’s most influential tribes collaborate on the Internet Poker Consumer Protection Act of 2013. Notable about the legislation is that it includes a bad actor clause, which would exclude any operator that participated in the U.S. post-UIGEA from receiving a license. Despite a more positive reception, infighting over what types of companies were qualified to operate online poker rooms prevented lawmakers from moving forward on the bills.
February 21, 2014: SB 1366 and its companion bill in the Assembly (AB 2291) are introduced by Senator Lou Correa and Reggie Jones-Sawyer, respectively. The online poker-only bills receive the support of multiple tribes including the Pechanga and the San Manuel Band of Mission Indians.
April 23, 2014: PokerStars, the Morongo Band of Mission Indians, and three of California’s biggest card rooms (The Bicycle, Commerce Casino and Hawaiian Gardens) announce that they have partnered up with the intention of launching PokerStars as its front facing brand, once regulated online poker goes live ^[4]. In the months that followed, their alignment would be vehemently opposed by CA’s other influential tribes, all of whom remained adamant about the inclusion of a bad actor clause in any iPoker legislation.
Current: With an August 31, 2014 legislation deadline looming, both of California’s pending iPoker bills run the risk of being left for dead.

California Gambling History

The Golden State’s gambling history dates back to the mid-19^th century gold rush. Back then, CA was predominately inhabited by male prospectors, many of whom were looking for a form of entertainment. Thus, the first card rooms were constructed.

But when families began to immigrate to California in the 1850’s and 60’s, an anti-gambling sentiment began to take over, resulting in a statewide ban on banked gambling games in 1860. Although all card games outside of poker were technically prohibited, the new law was rarely enforced.

It wouldn’t be until 1933 that horse racing was legalized in the state, and another 51 years after that until the public passed Proposition 37, which legalized a statewide lottery.

In 1997, the Bureau of Gambling Control and the California Gambling Control Commission was set up to monitor and regulate California’s gambling industry. By 2000, Indian tribes were given the right to construct Las Vegas inspired casinos. This would technically grant them an edge over the card rooms, in that they were permitted to spread house banked table games, including games involving dice.

Regulated Gambling Options in California

California is a haven for all types of gamblers. The state boasts more than 100 card rooms, a swatch of tribal casinos, limited forms of charitable gambling, pari-mutuel wagering and a state run lottery. Furthermore, as of 2010 Internet wagering on horse racing is legal in California.

If you can think it, you can probably find it – except for online poker that is. But it appears that will change within the next year or two.

Other Recent Headlines

In July 2014, the Santa Ysabel tribal nation made headlines by announcing that it would be rolling out a real-money online poker room ahead of iPoker legislation ^[5]. Although a play-money version of the software already exists, there are those who perceived the announcement as a well-timed bluff intended to force legislators to recognize the wants of the state’s smaller tribes.

The Future of Regulated Online Gambling in California

After years of political infighting, California’s vested parties appear relatively close to passing online poker legislation. However, several hurdles – one which is major – still exist. The Morongo, PokerStars and its other allies have made their position clear – nix the “bad actor” clause or we’re not onboard. And although California’s other tribes won’t go as far to admit it, the general consensus among the poker community is that they fear PokerStars would monopolize the market, in effect causing them to miss out on greater revenues. It’s for this reason that legislation may not be passed until 2015.

Other issues include whether or not horse racing operators should be included in the iPoker rollout, and the legality regarding smaller tribes going rouge.

That being said, it’s still a near certainty that California will regulate online poker. The question now is when?