CA Online Poker Bill Update: In-Person Requirements Dropped, Bad Actor Clause Remains

sealofCaliforniaCalifornia Assemblyman Mike Gatto went from anonymous state lawmaker to instant celebrity in the iGaming world when he introduced an online poker bill in December. Gatto’s bill AB 9 bore many similarities to previous efforts in California but it was also unique in that it called for in-person registrations.

In-person registration was an innovative, but widely criticized idea; opening up a veritable Pandora’s box of issues. But Gatto was not married to it or any other policy contained in his bill, and he proved this by amending the bill last week.

In an interview with Marco Valerio in December, Gatto opened the door for amendments and compromise, telling Valerio, “I come at this legislation with an open mind.”

Gatto also made it crystal clear that he would not be unbending on AB 9, and stated the bill was not written by one group or another. In his interview with Valerio, Gatto laid out how he was willing to listen to other ideas and expected changes to his legislation:

“I am under no delusions, nor should anybody else who doesn’t follow the legislative process be under any delusions, that my bill is a final product. This is an opening statement, it’s a discussion point, it’s putting some language across the desk – but procedurally, this will go through a very, very thorough public hearing process.”

With the bill significantly amended roughly a month after it was introduced, Gatto seems to be a man of his word.

In-Person registration now optional

The uniqueness of AB 9 didn’t last very long, as Gatto announced he would be amending AB 9 last week, making in-person registrations optional, not mandatory. In a statement released by Gatto’s office regarding the scrapping of in-person registrations he stated:

“My goal remains creating a sensible framework for a new California industry,” said Gatto.  “That will involve a thoughtful process of consultation with all of the key stakeholders.  I pride myself in listening; I expect this process will continue throughout the year.”

This critical change should make Gatto’s legislation far more palatable to the potential key players in the market, but also keeps the interesting idea of satellite registration locations on the table; a seeming bone thrown to small card rooms and tribes, and possibly racetracks.

Stiffer penalties for illegal operators

Gatto also intimated he might increase the penalties for unlicensed operators. Gatto’s plan is to make operating an unlicensed online poker room a felony, and provide law enforcement with the necessary tools to enforce the regulations.

Bad Actor clauses

However, another major obstacle still remains in the text of AB 9, the vigorous Bad Actor/Tainted Asset clause it possesses.

The Bad Actor debate might not be the key point of contention in California but it is a major sticking point (and an incredibly divisive one as there doesn’t seem to be much middle ground or areas to broker a compromise) that needs to be worked out.

Gatto’s bill does little to seek a compromise on that front, as it basically draws on last year’s legislation, and in some respects goes a step beyond.

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