California Poker Bill SB 678

SB 678 is the bill known as the Authorization and Regulation of Internet Poker and Consumer Protection Act of 2013. It was introduced by California Senator Lou Correa on February 22nd, 2013, and is sponsored by a group of tribes led by the Sam Manuel Band of Mission Indians.

Marked as urgent, the objectives of this bill is to:

  • Improve the economy in California.
  • Provide Californians with a safe and secure place to play online poker.
  • Ensure that poker sites are fair and transparent.
  • Protect players, their funds and winnings.
  • Prevent underage gambling.
  • Combat crime.
  • To promote a competitive atmosphere in an intrastate poker arena.
  • Generate millions in additional revenue for the state.

Being as the bill was marked urgent, it would go into effect once it was passed with 2/3 vote and the governor’s signature, instead of going into effect on the 1st of the following year. To prevent the bill from being held up, there is even language included in the bill that would allow it to become law even if a piece of the bill needed to be re-written.

My guess is that legislators want to improve the budget crisis the state finds itself in. Other bills have estimated that legalizing online poker could bring in hundreds of millions in the first year alone.

Unfortunately, no decision was made before the September 13th (2013) due date, so the earliest we’ll see this bill in action is 2014.

In the meantime we thought it would be interesting to break this bill down and provide the cliff notes for what it would mean for operators and players.

View Other State Bills

What Does Poker Bill SB 678 Mean for Operators?

SB 678 would create the following guidelines for site operators.

  • Any card room or authorized Indian tribe can be licensed. Indian tribes are ok for licensing so long as they have operated a poker room for 3+ years, or are operating as an authorized casino under the IGRA / tribal-state compact.
  • The commission, state agencies, etc. would have 120 days to adopt regulations following the passing of the bill.
  • Operators would be allowed to offer online poker within state boundaries. But it would not legalize any other form of online gambling. Online horse racing is already legal in California.
  • It would be illegal to own and operator internet cafes. They want to prevent others from starting clubs or making money from charging customers to use computers to play online poker in a public environment.
  • Licensees would have to pay a $10 million fee when they turn in their application. The funds would go into the Internet Poker Fund. Assuming the application was approved, the fees would go against future taxes from the operator.
  • Operator taxes would be set at 10% of the gross revenue.

There is no limit to the number of licenses that can be issued, or to the number of rooms a licensee can operate. This opens the doors to skins. Skins can operate without licensing, but would not be allowed to handle operating systems or day-to-day tasks. This excludes menial tasks like dealing with how a site looks.

Licenses would be issued by the California Gambling Control Commission.

There is a ‘bad actors’ clause. No one will be issued a license if they took a bet after 12/31/2006. An operator cannot use data / assets (like an email list) of any company that took bets after 10/16/2006. This would only be waived if the operator was able to prove that they took such bets legally under federal / state laws in which they were taken.

The bill does not prohibit working together with other stats or opting out of a federal framework from legal online poker.

Licenses for platforms and service providers would be valid for 10 years. Operator licenses would be valid for 5 years.

Operators will need to provide information and solutions for problem gambling management. This includes the ability to set (daily) loss limits, deposit limits, self-exclusion and cool off period options.

Operators will need to have systems / software in place to ensure that players are paying government and / or state taxes, and that this information is kept safe / private.

The software needs to be tested and audited regularly to ensure that it is random, safe and fair. Lawmakers want to prevent unfair play and cheating whenever possible, which includes non-random shuffles, collusion, advance knowledge of cards dealt, chip dumping, etc.

All employees, equipment, licensees, server, software, subcontractors, etc. need to be located within the state of California. The only exception is servers (and services) used for backup / restore purposes.

The operator’s software needs to perform the following (at the very least):

  • Player registration
  • Player settings
  • Account management
  • Responsible gaming
  • Player authentication
  • Geo-location (to ensure players are within state lines)
  • Safe / Secure connections
  • Age Verification

It is the operator’s responsibility to ensure that the software and player’s information is accurate and up to date.

What Does Bill SB 678 Mean for Poker Players?

There are guidelines for players too.

  • Players will have to be 21 or older to play online in California.
  • Players will not be allowed to deposit using cash, money orders or player-to-player transfers.
  • Withdrawals will be to bank accounts only.
  • Players cannot earn interest on the funds left in their account.
  • A minimum of 5% will be withheld for tax purposes if players win more than $600 from a tournament, and that the winnings is more than 300x the buy-in.

Multi-accounting will be allowed (at the same site and/or skins), so long as the same accounts do not play at the same table. This sounds as if lawmakers want it to be ok for different people under the same roof to have an account, but not at the expense of collusion or chip dumping (both forms of cheating).

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