California Poker Laws
There is no law in California specifying the legality or illegality of online poker. After many years of trying to regulate internet poker, there is still no change in California’s poker laws.
Latest Developments Regarding Online Poker in California
Despite his decision not to introduce a California online poker bill in 2018, Assemblyman Reggie Jones-Sawyer said he remains optimistic about a combined sports betting/online poker bill in 2019. Jones-Sawyer said that much depends on the outcome of the US Supreme Court’s case, Murphy v. NCAA, which is expected to decide the future of federal sports betting law for the near-future.
If the SCOTUS strikes down the Professional and Amateur Sports Protection Act (PASPA) as unconstitutional, it would open the door for California casinos to offer legal sportsbooks. Such a development would be so lucrative for land-based casinos, that a combine sportsbook/online poker bill might succeed.
Jones-Sawyer said of the prospects for California online poker in 2019,
“It is active because the Supreme Court ruling will make it more viable. That’s what is happening now. We will get there, we just may go through a different door than the traditional one. Sports wagering raises all tides.”
Going forward, the plan is to wait until sports betting is legalized and try to push online poker with a larger gambling expansion bill in 2019. Until then, the fight for online poker in California is on a permanent hold.
The Road to Legalizing Online Poker in California
Legislators in California have been trying to legalize online poker for more than 10 years. While there has been some progress, there is still no legal internet poker in the state.
The process began after the Unlawful Internet Gambling Enforcement Act was passed by the US Congress and signed into law in 2006. When PartyPoker exited the market, California began to consider legalizing online poker within its borders. As one of the states with the largest percentages of online poker players, combined with the strong land-based poker market, legislators knew the market could be a lucrative one.
Below is a summary of the various Bills introduced, the advocates supporting online poker and a synopsis of events over the last 5 years.
State Summary: California 2018
No one introduced a 2018 California online poker bill, including Reggie Jones-Sawyer, Adam Gray, or Mike Gatto. It appears all have decided the effort would be futile for 2018. Reggie Jones-Sawyer summed up the California’s iPoker situation in 2018: “There’s some other issues with tribes and cardrooms that probably need to be resolved before we can move forward with this thing. I’m hoping we resolve some of that this year.”
Assemblyman Jones-Sawyer suggested 2018 should be a year of reconciliation, saying, “There’s been a little progress in that area.”
Despite the lack of legislative activity, the Assemblyman suggested that lawmakers are laying the groundwork for a new effort in 2019. Part of the process is allowing emotions to subside, while explaining the economic benefits which everyone could reap from online poker. Jones-Sawyer said,
“The best thing that came out of those discussions was the fact that we were discussing it. People were very open and honest about their feelings for online poker. I think we provided, here in our office, a safe place to express their feelings.”
State Summary: California 2017
In 2017, Assemblyman Reggie Jones-Sawyer introduced a new bill: The Internet Poker Consumer Protection Act. Jones-Sawyer sought to gain support from the California horse racing industry by offering to give 95% of the first $60 million collected to California horse tracks. California’s government would collect a $12.5 million Internet poker licensing fee for a gaming license which would extend for 7 years. Other elements of Mike Gatto’s and Adam Gray’s previous bills were included in the Internet Poker Consumer Protection Act’s language.
Once again, the bad actor clauses caused the bill’s defeat. In many ways, it was a regression, because Reggie Jones-Sawyer did not include a 5-year ban, but instead called on the California Gaming Commission to decide on PokerStars’ fate, much like Mike Gatto’s 2015-2016 bill. This received a flat rejection from the Pechanga-Agua Caliente-Pala group.
State Summary: California 2016
Mike Gatto said in a press release that Assembly Bill 9 followed “time-tested business practices”. Calling on the various sides to compromise for the sake of the lost revenues to their gaming operations and the state, Gatto added, “The status quo is a lost opportunity. California could receive significant revenue for merely regulating and legitimizing an industry that Californians already participate in but send their dollars overseas. California has led the world in computer and Internet innovation, and there is no good reason why we can’t continue to lead with a sensible online-poker framework.”
AB 9 failed to move the Pechanga coalition. The fact of the matter was, any gaming group PokerStars partnered with was likely to collect 70% of the online poker revenues. It simply made no sense for those not allied with PokerStars to allow them into California, especially since those parties probably had a legitimate sense of grievance PokerStars had collected hundreds of millions of dollars of illegal cash during its bad actor period. Though 80% of online gamblers would not have visited a land-based casino in their state anyway, the remaining 20% of online poker players might not make as many trips to tribal casinos in California — so AB9 did not make economic sense for those tribes in opposition.
Those backing PokerStars had other issues by the spring of 2016: Amaya Group was mired in legal troubles. Jason Baazov, CEO of Amaya, was being investigated (along with 12 others) for insider trading stemming from the $4.9 billion buyout of PokerStars. Baazov had to step down from his position in the company, which was another PR black eye for the PokerStars coalition.
San Manuel Withdraws PokerStars Support
The situation caused the San Manuel Band of Mission Indians to withdraw support for the PokerStars alliance. Jacob Coin, San Manuel Band Executive Director of Public Affairs, sent a letter to his former political allies saying the tribe was withdrawing support for measures like Mike Gatto’s AB 9. One anonymous California tribal gaming executive told the Sacramento Bee that the San Manuel tribe’s decision was a “titanic shift in the landscape” of California online poker.
AB 1437: California Daily Fantasy Sports
Meanwhile, California Assembly Governmental Organization Committee Chairman Adam Gray introduced a daily fantasy sports legalization bill: AB 1437 or the “Internet Fantasy Sports Game Protection Act”. Early on, AB 1437 had tremendous support, as it passed in the General Assembly by a 62-1 vote in January 2016.
Fantasy sports legislation has the advantage that many lawmakers play fantasy sports and are less likely to be swayed by anti-DFS lobbyists. That does not always apply, because the California tribal casinos began opposing the bill in February 2017. Adam Gray’s bill failed to gain support in the California Senate, despite a clause that would pay a stipend to California racetracks from the DFS fund.
Adam Gray’s legislation contained another innovation that some thought might satisfy all sides, and which did get the sides talking. AB 1437 included a softened bad actor clause that would ban PokerStars from California online poker for 5 years. This presumably would give its competitors a 5-year head start on building a player database and customer loyalty. John Pappas of the Poker Players Alliance criticized the clause. Pappas even challenged Adam Gray’s contention that the 5-year ban was the result of negotiation by the two sides. Whatever the case, AB 1437 went down to defeat like all other California online poker bills since 2010.
State Summary: California 2015
Sen. Edwin Correa once again introduced a bill, this time called “Authorization and Regulation of Internet Poker and Consumer Protection Act of 2015”. Once again, the bill contained a bad actor clause. Once again, the two factions could not agree on whether to ban PokerStars or allow it into the state. An attempt at negotiation took place in June 2015, when the various Native American tribes met to discuss the legislative stalemate. Nothing came of the meeting, so Edwin Correa’s 2015 version of SB 1366 failed, too.
Reggie Jones-Sawyer tinkered with AB 2991 to create a refined bill he hoped would pass muster with both sides: Assembly Bill 167. Assemblyman Jones-Sawyer joined with Assemblyman Mike Gatto to sponsor AB 167, which read: “The person [who] has been convicted in a court of competent jurisdiction of a felony consisting of either having accepted a bet over the Internet in violation of United States or California law, or having aided or abetted that unlawful activity.”
The term “person” was the key element of Assembly Bill 167. In August 2014, Amaya Gaming of Montreal, Canada had bought PokerStars’ parent company for $4.9 billion. Amaya’s CEO Jason Baazov now controlled PokerStars, instead of the executive staff which defied the UIGEA and had been indicted in the 2011 Black Friday indictments. Thus, the bill would allow PokerStars to enter the California online poker market, because Amaya’s executives had nothing to do with PokerStars’ role as a supposed “bad actor”. Pechanga’s and Agua Caliente’s leaders were no more impressed by AB 167 than previous bills, so the measure failed.
AB 167: New Bad Actor Language
In December 2015, Assemblyman Mike Gatto made a lone attempt to rescue California online poker: Assembly Bill 9. He modified the wording of AB 167, so AB9 stated that any company that “has purchased or acquired the covered assets of any entity” is still considered a bad actor. Gatto’s innovation is the bad actor would not be banned outright.
Instead, the Californian Gaming Commission would be given the authority to waive any penalties against a bad actor if “by clear and convincing evidence” showed the license applicant deserved a California online poker license. PokerStars could enter California if the Gaming Commission decided it deserved entrance. The bill was introduced late in the year, so Mike Gatto would have to wait until 2016 to receive his answer.
State Summary: California 2014
Edwin Correa introduced Senate Bill 1366, also known as the “Authorization and Regulation of Internet Poker and Consumer Protection Act of 2014”. This online poker bill once again contained a “bad actor” clause to ban PokerStars from California online poker. A coalition of California tribal casino operators supported SB 1366, led the Pechanga Band of Luiseno Indians, the Agua Caliente Tribe, and the Pala Tribe.
Opposition to SB 1366 came from The Morongo Tribe of Cabazon and the San Manuel Band of Mission Indian, along with California commercial poker rooms the Bicycle Club, the Commerce Club, and Hawaiian Gardens. The Morongo Tribe and the Bicycle Casino had signed partnership deals with PokerStars, the world’s leading online poker site.
PokerStars generates 70% of the Internet poker revenue in the global card playing market. Its huge player pool and popular poker software is an unbeatable combination. PokerStars’ inclusion in the California online poker market would give the Morongo Tribe and the commercial poker clubs a massive advantage, so the Pechanga, Pala, and Agua Caliente tribes joined to block PokerStars’ inclusion in California gaming.
Assemblyman Reggie Jones-Sawyer proposed AB 2991, another attempt to legalize online poker. Jones-Sawyer, who represents South Los Angeles, would sponsor similar iPoker bills in 2014, 2015, and 2017. In August 2014, though, both Edwin Correa and Reggie Jones-Sawyer pulled their poker bills, because of the impasse between California’s land-based gaming operators.
State Summary: California – 2013
State Sen. Roderick Wright supported SB 1485, also known as “Gambling Consumer Protection and Public-Private Partnership Act of 2013”. Senate Bill 1485 would have legalized online poker in California. Sen. Wright had sponsored the “Gambling Consumer Protection and Public-Private Partnership Act of 2012” the previous year, as well as bills in 2010 and 2011.
Like the previous incarnations of Wright’s proposal, the bill did not gain enough support in the California Senate. Roderick Wright’s own legal troubles might have contributed to the defeat, as he would be charged on 8 charges of corruption on January 28, 2014. He would be convicted later in the year, then sentenced to 90 days in jail and banned from public office for life in September 2014.
SB 678: Edwin Correa’s Online Poker Bill
Meanwhile, California State Sen. Edwin Correa introduced SB 678, also known as the “Authorization and Regulation of Internet Poker and Consumer Protection Act of 2013”. Senator Correa’s bill was introduced at the same time that online gambling bills were being passed in Nevada, Delaware, and New Jersey. The consensus opinion suggested the Internet poker act would pass, but factions inside California’s large and complex land-based casino industry split on the issue.
Edwin Correa’s bill differed from Roderick Wright’s in that it had a “bad actor” clause in it, which would have banned PokerStars for its activities from 2007 to 2011, when it accepted US players in defiance of the UIGEA federal ban on online poker. This would become a perennial problem for those who supported California online poker legislation.
Roderick Wright’s and Edwin Correa’s 2013 California online poker bills were supported by former members of the California Online Poker Association (COPA), an organization formed in October 2011 to lobby for legal online poker. COPA originally consisted of tribal casinos and commercial private poker clubs across the state, but its membership split in October 2012 over disagreements in how they saw California’s online poker industry working.
2007 – 2012
Talks began in 2007 but the first official online poker bill was introduced in 2010 by State Senator Roderick Wright. His Internet Gambling Consumer Protection and Public-Private Partnership Act failed to gain momentum that year, but he continued to sponsor the bill for several years going forward.
Problems were apparent from the start on a number of fronts. Most Native American tribes were not prepared to accept online poker as a new facet of their gambling businesses, and the horse racing industry opposed bills because they wanted the opportunity to get in on the online poker action as well, and racetracks were not included in proposed legislation. There were also the significant number of card rooms that wanted to offer poker, as many of them already offered it in their land-based facilities. This put a lot of different interests at the same table for negotiations.
California Poker Laws Pertinent to Online Games
The document – the California Gambling Control Act Business and Professions Code – containing all of the gambling regulations published by the state of California is 552 pages long, 13 of which are simply the table of contents. Since the entire publication deals with gambling laws for the state, we will provide a shorter summary.
California law declares, per the Gambling Control Act, the following:
- California strictly regulates pari-mutuel wagering on horse racing but prohibits commercially-operated lotteries, banked or percentage games, and gambling machines.
- Gambling establishments were first regulated in 1984, now employing more than 20,000 people in California and contributing more than $100 million in taxes and fees to the state government.
- Gambling can be addictive and shouldn’t be promoted or actively legitimized.
- “Unregulated gambling enterprises are inimical to the public health, safety, welfare, and good order. Accordingly, no person has the right to operate a gambling enterprise except as may be expressly permitted by the laws of this state and by the ordinances of local governmental bodies.”
- Only city and county voters can approve new gambling establishments.
- The document regulates businesses that offer otherwise lawful forms of gambling games.
- Gambling should be free from criminal and corruptive elements, conducted honestly and competitively in suitable locations.
- All gambling operations and persons significantly involved must be licensed.
- Gambling establishments must remain open to the general public.
- Licenses and permits are revocable privileges.
- Local governments regulate hours of operation, number of tables, and wagering limits.
- People can be excluded or ejected from gambling establishments.
- Accurate records of all transactions must be kept.
The basis for poker and other card games to be allowed is because the state ruled that they are controlled games when the house is not in charge. For exampled, a banked game, by the law’s definition,
“does not include a controlled game if the published rules of the game feature a player-dealer position and provide that this position must be continuously and systematically rotated amongst each of the participants during the pay of the game, ensure that the player-dealer is able to win or lose only a fixed and limited wager during the play of the game, and preclude the house, another entity, a player, or an observer from maintaining or operating as a bank during the course of the game.”
And it also mentions, “The house shall not occupy the player-dealer position.” For games like 21 or blackjack, a player serves as the house and the dealer simply deals the cards and enforces game rules. For poker, the house is not the bank, and rake collected from each hand is not dependent upon wins or losses.
For other parts of the law, it’s important that gambling is defined as “to deal, operate, carry on, conduct, maintain, or expose for play any controlled game.” And a player is a “patron of a gambling establishment who participates in a controlled game.” Gambling establishments seem to be land-based only.
The internet is mentioned throughout the document but primarily in reference to online fundraisers and raffles, which are prohibited unless authorized by the US Department of Justice.
However, the internet is specified in the Class III Gaming section with reference to gambling on tribal lands. Tribes are not permitted to
“offer such games (banking or percentage card game) through the use of the internet unless others in the state are permitted to do so under state and federal law.”
This reference keeps Native Americans from launching an internet poker site without others in the state being authorized to do the same. The state law must change before tribes will be allowed to offer online poker.
All in all, online poker is not addressed in any state law or under the regulations set forth by the California Gambling Control Commission. The law is specific, however, about tribes not being allowed to offer any card games over the internet. However, the definition of gambling is tricky, as it specifies any controlled game, and the Gambling Control Act is very specific about gambling providers requiring licenses.
Disclaimer: This is not written by an attorney and is not or should not be construed as legal advice. Please consult an attorney for help interpreting these laws as they pertain to any given situation.
Is Gambling Legal in California?
Gambling is very prevalent in California. In addition to the lottery, there are racetracks, card rooms, and Indian casinos throughout the state.
There are more than 150 casinos and card rooms within the borders of California, with nearly half of them on Native American reservations. Many of the Indian casinos offer the full casino/resort experience, complete with poker rooms, table games, slot machines, bingo, and electronic games, along with restaurants and hotel accommodations.
More than 100 card rooms offer poker, and other table games are permitted when players are charged fees to play. In essence, players serve as the “house” so they compete against each other and not the traditional house. Those establishments are popular for the card games themselves, but poker is also a big attraction in many of them. The poker rooms are some of the most frequented in the country outside of Las Vegas and Atlantic City, with Commerce Casino (card room) offering more than 200 poker tables, making it the largest poker room in the world.
Pari-mutuel wagering on horse racing was legalized as far back as 1933. World-renowned racetracks are located in Southern California as well, with Hollywood Park and Santa Anita among the most recognized. And some, like Hollywood Park, also offer poker rooms.
As for the Indian casinos, there are 61 tribal governments that have entered into gaming compacts with California for Class III gambling, which puts the California Gambling Control Commission in partnership with California Tribal Gaming Agencies to regulate gambling under the Indian Gaming Regulatory Act. Voters authorized this in 1998, and though some court battles ensued, tribal gaming went into full effect in the year 2000.
Frequently Asked Questions
Question: Do Californians still play online poker?
Answer: There are many players in California who play online poker on the sites that still cater to US players. They cannot, however, play on sites like PokerStars. Until the state legalizes online poker specifically for its residents, players continue to frequent offshore poker sites like the ones recommended on this page.
Question: Did the Poker Players Alliance push for California online poker?
Answer: The PPA played a major role in pushing for online poker legislation over the course of the past 10 years, but the PPA sided with PokerStars and its coalition, as PokerStars had been a major donor to the PPA for much of its existence. When the opposition wanted to lock PokerStars out of the market for at least five years, the PPA was part of the group that opposed it and refused to compromise.
Question: Can individual card rooms offer online poker?
Answer: They cannot offer real-money poker online until the state passes a law authorizing them to do so. Unless the tribes and card rooms are all allowed to participate in that form of online gambling, the card rooms are not permitted to do it and could lose all gambling licensing if they tried.
|CA Gambling Resources