SB 51 California Bill

SB 51 is one of many attempts to legalize online poker in California. The bill was introduced in December of 2012 by Senator Roderick Wright. It’s also known under the longer title of, the Internet Gambling Consumer Protection and Public-Private Partnership Act of 2013.

The bill starts off with the reasons for being created in the first place. Senator Wright demonstrates his understanding of what online poker is now, and what it could be, should the bill be passed. In other words:

  • Californians gamble online (illegally) already.
  • All of these sites are unregulated, offshore companies. Therefore, they pose a risk to residents.
  • The state is missing out on tax revenue. According to Senator Wright, the state could earn more than $200 million in it’s first year due to licensing fees and gross tax revenue.

These points, combined with the budget crisis in California, has turned this bill into what’s considered an urgent statute. This means that, if passed, the bill will go into effect immediately, as opposed to going into effect in the beginning of the following year. However, the bill will need to first receive a 2/3 vote in both the senate and house (to pass).

At this point in the year (this is being published in October 2013), it’s already too late in the year for this bill to be passed and put into effective, especially considering that it’s been suspended, amended and re-referred. So now it’s a waiting game.

The rest of this page will explain how the bill will affect operators and players, if and when the bill is passed and becomes law.

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How Does SB 51 Affect Operators?

Operators will have to abide by the following guidelines should they decide to offer online gambling in Californiafollowing the passing of SB 51.

  • To receive a license, operators will need to fill out an application and pass a background check, along with their employees and anyone who has a 10% stake (or more) in the company. Affiliates will be subject to background checks, too.
  • Operators will need to pay between $1-$5 million along with their license application. The amount depends on the number of background checks the issuer needs to run, which run about $100 a piece.
  • Funds deposited from operators will be put into the Internet Gambling Licensing Fund. Leftover funds will be returned.
  • Once issued, licenses will be good for 5 years.
  • There is a ‘bad actors’ clause. Any person, subcontractor or company, that accepted bets or worked with a company that did after 12/31/2006 will not be able to receive a license in California. Their brand cannot be used in the state either. Unlike other bad actor clauses, this appears to be definite.
  • Operators, subcontractors, employees, servers, etc. will need to be located in California. The exception includes companies and/or services that provide game security, updates, backups, etc.
  • Players’ funds will need to be held in a separate bank account. All banks must be located in California.
  • Operators (or other companies) cannot aggregate computers, start a club, offer or play games that violate this bill. This eliminates internet cafes or any other way to charge fees or dues for someone to gamble online. Violations are a misdemeanor.
  • Operators will need to have software or other measures in place to protect players from collusion, robotic play and other forms of cheating.
  • Operators will need to submit a monthly report to the state. This would include what the operator owes, as well as player data such as name, wins and losses.
  • Licensed operators can work together (per contractual agreement) to grow player liquidity.
  • Operators will have to pay 10% gross taxes.

That’s the gist of it.

One statute that struck me as odd is 19990.57. This states that licensees can allow registered players to play simultaneously in multiple games or tournaments, so long as measures are in place to prevent them from playing multiple hands or in the same game.

It’s hard to say if this means that multiple accounts are possible (and ok) under the same household or using the same IP address, or if it allows players to play multiple games at the same time, which I find stating redundant. This will have to be re-worded, I think.

How Does SB 51 Affect Poker Players?

Players will have the following guidelines and protection under SB 51.

  • Players will need to pay income tax. 5% will be held on qualified winnings.
  • Players will have to provide their social security number, proof they’re 21 and that they’re physically located within California state lines to play. The exception is if / when California expands into other states (per agreement for player liquidity).
  • Operators will have to tell players how long they’ve been playing, how much they won or lost, and have players confirm every 6 hours that they’ve seen their statistics.
  • Responsible gaming will be a priority. Operators will need to have programs and/or software in place to help players with gambling addiction, which includes text and the ability to set limits for deposits, daily loss and self-exclusion.
  • Players caught cheating will be banned from online poker in California. They could face legal action too, as operators will be obligated to report cheaters to authorities.
  • Operators cannot extend players credit, so that players cannot play with and lose money they don’t have.
  • Players will be allowed to multi-table.
  • Players can transfer funds to/from other players.
  • Players will be informed how their information was used over the last year.
  • Deposits can be made using credit / debit cards and e-wallets. Deposits with cash or money orders will be prohibited.
  • If players lie about being 21 (and the operator has done everything possible to verify the age), the player can face fines ranging from $1,000 to $10,000 per violation.

Sources & Citations For This Article

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