California Working Towards Online Poker Legalization


The United States is starting to realize how much money they’re missing out on due to online poker being illegal. In fact, the only states in which it is allowed are Delaware, Nevada and New Jersey. However, New York and Pennsylvania are working hard to try and push bills through in 2017 that will get the ball rolling on online poker for their citizens, and the state of California – a state that’s known for pursuing liberal values – is also trying to be the next to legalize.

California Assemblyman Reginald Jones-Sawyer recently put forth the Internet Poker Consumer Protection Act, which is basically the same bill that was extended last year. Essentially, any company that wants to run an online poker site would have to apply for a license. That won’t come cheap, though, as a license for seven years would cost $12.5 million. Those operators would then be taxed at 8.847% if the revenues from the site are equal or less than $150 million every year. The tax would be 10% on $150 million but less than $250 million; 12.5% for over $250 million and under $350 million; and for over $350 million it would be a 15% tax. In other words, it would be a system of brackets.

This bill was tabled last year, but ran into problems in the summer and the state left it alone. The issue stems from gambling competitors – like the horse racing industry and Native American tribes – who would rather not see their potential customers turn to online poker. However, the bill is back in business as it looks like the government is finding ways to appease the sides.

Last year, the horse racing industry was a hurdle but they’ve been brought on board as they’ll now get a piece of the pie vie revenue sharing (roughly $60 million). However, the Native Tribes are still on the fence. The issue seems to be largely that they don’t want places like PokerStars coming into California. PokerStars run about 70% of the market for online poker in the world. If allowed, those tribes in California, as well as other companies, would be missing out on a huge market which has been estimated to be about $400 million in the state.

The tribes generate about $8 billion, which is easily the highest in the country when it comes to native markets. They operate about 60 casinos and 100 places that offer poker overall. These tribes also generate over 63,000 jobs. They’ll be looking for more than $60 million in revenue sharing to get onboard, but until that number is reached, they are going to push back.

We’re not talking about chump change here. When it comes to California, their players were good for about 16% of revenue in online poker in the United States and 4% worldwide. About a million people play poker online for money, but those studies were in 2009 and 2010; it wouldn’t be a stretch to think that there are far more players than that now, which is why the native tribes are trying to keep it all in-house.

However, online gaming is the future. There are a lot of players already playing poker online – whether it’s legal or not – and the government is losing out on tax revenues. While the Native Tribes are trying to hold out, it’s really just about naming the right price. After that happens, they’ll join the movement.