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Pechanga Poker Bill – Internet Poker Consumer Protection Act of 2013

The Internet Poker Consumer Protection Act of 2013 is one attempt of many to legalize online poker in the state of California.

The bill hasn’t been introduced yet, but the cover letter has been signed by 8 different Indian tribes. The most noteworthy is the Pechanga Band of Luiseno Indians, as they’ve been vocal opponents to legalizing online gambling in the past.

They’re supporters now, though. My guess is that they see the revenue potential that online poker could bring to their tribes. California has also been facing a budget crisis, too. The state could use the estimated $200 million that they would receive in the first year alone from licensing fees and gross taxes.

That sounds great. But… and this is a big but… the bill won’t pass. There are several statutes the majority of lawmakers / supporters of online poker won’t agree to. For example:

  • Legal online poker would be restricted to the state. California would have to opt-out of future federal legislation, too.
  • California could not agree to compacts with other states to (join and) improve player liquidity.
  • Licensed operators would have the same launch date, to prevent anyone from gaining an advantage.

They shot themselves in the foot already, and the bill hasn’t even been introduced yet. But one look at Nevada’s or New Jersey’s setup and you’ll see what I mean. They’re open to working with other states, offering legal gaming on a federal level and they have no rules for keeping the same launch date for operators.

Maybe it’s just me, but you’d think up and coming states would copy and improve on what’s working, not try to reinvent the wheel.

But that’s what this bill is doing. Based on that I predict it fails and becomes the poster child of what not to do, before too long. Read the rest of the (most important) statutes below and I think that you’ll agree with me.

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Important Pechanga Bill Statutes

Below are the statutes we feel will have the most impact on the state, operators and players.

General Statutes

  • Only established card rooms with 5+ years experience can participate.
  • Internet cafes and parlors are prohibited.
  • There is a bad actor’s clause. If a company offered poker post-UIGEA, they would not be eligible for a license.
  • Licenses are good for 10 years with an automatic 10-year renewal if the company remained in good standing.
  • Operators would be limited to one gaming site. What?
  • Brands, business names, data, software, business relationships, etc that were used prior to this Act passing / going live, cannot be used. That may include affiliates, software programs, marketing companies, etc.
  • Licenses will be issued by a commission or state agency.

Operator Statutes

  • License fees will be $5 million (one time) and will be deposited into the General Fund. It will be credited against future fees / taxes on gross revenue. Once the deposit is used up the licensee will need to make quarterly payments to the state.
  • The licensee will have to be the owner of the website, domain name, etc.
  • With the exception of (redundant) servers, bank accounts and accounting records, all aspects of the licensee / operator will need to be located within California state lines. The exception for banks is surprising.
  • The operator, affiliates, subcontractors, employees, etc will be subject to background checks.
  • Operators cannot offer cash or money order for withdrawals. The exception is if they operate a land-based casino – they can offer those forms of withdrawals through that channel.
  • Licensees will need to have software or systems in place to exclude players from playing online if they want to self exclude themselves. Operators that do their best in this regard will not be held liable if players find a way to play anyway.
  • Licensees will need to share the games, rules, instructions and units of betting with the Commission before being allowed to offer them. Games, rules and instructions will need to be available to consumers too.
  • Operators will need to ensure that their software can minimize fraud, cheating, and the ability to exploit the software (to see cards, super user mode, etc).
  • If an operator discovers that a player is cheating, the operator will need to inform the authorities.
  • Operators need to keep track of the taxes a player may owe (or money they generate so forms / notices can be sent out).

Player Statutes

  • Players need to be 21 or older. Fines of $1 to $10,000 (depending on the number of violations up to that point) will be given to those who play, but are underage.
  • Players cannot cheat or use devices that give them an edge. This means no colluding, multi-accounting, chip dumping or bots.
  • Players should have tools and information regarding problem gambling. This includes options for setting daily limits, limits for how many deposits they can make, how much in (aggregated) losses they can have in a specific time period and how long they can play before being forced to quit.

About Pete Kaminski