Proposed Amendments on California Poker Bill Would Make PokerStars Eligible

If the proposed amendments are accepted, PokerStars would be able to offer services to Californian players.

Two years ago we reported that most stakeholders thought that PokerStars is eligible for a licence and that most experts that were present at the 2014 California Conference on Online Gaming. At the beginning of this year, three bills regarding online gambling were discussed in the most populous US state, and the Online Poker Bill was the most controversial one.

It has been announced that new amendments have been proposed, which, if ratified, will make PokerStars eligible for market participation. David Fried, a gaming attorney from the state, submitted the new proposed amendments, but they have not yet been added to the complete text of the bill.

New ‘Bad Actor’ Criterion that Would Ensure PokerStars’ Suitability

The main goal of the proposed amendments is to establish a criterion which will allow authorities to be able to decide which operator is a ‘bad actor’. Bad actor is used as a term that describes all operators that keep on doing business after the UIGE Act has been passed.

In the text of the proposed amendments it is stated that every company that has accepted bets from American players starting from January 1 2012 will be deemed unsuitable. In previous such clauses January 1 2007 was the starting date, since the UIGEA was passed in October the previous year.

The reason why such clause would make PokerStars eligible is the fact that the Department of Justice changed its attitude and know reckons that the Wire Act doesn’t include poker. PokerStars remained active in the market in the period after UIGEA was passed, but withdrew in April 2011, after the so-called Black Friday.

The amendments would even allow operators that remained active even after January 1 2012 to qualify only if they can prove that they were no longer affiliated with the individuals that were responsible for wrongdoings regarding the Black Friday decision.

A $12.5 Million Fee and a Progressive Tax Rate Depending on Revenues Proposed

It is obvious that the amendments have been practically tailor-made in order to suit PokerStars’ ambition to become active on the market once again. It is highly unlikely that the amendements will be accepted by the coalition of tribes that have strictly opposed the inclusion of PokerStars.

In an attempt to appease the rivalling stakeholders, Fried’s amendments include an article which prohibits operators from utilising any information such as databases or list of customers that have been acquired or created before California’s laws on the matter were passed. The use of such information will be prohibited until the beginning of 2019.

The amendments also include provisions on fees and taxes. It has been proposed that the price of an online poker licence will be raised to $12.5 million, and this we wouldn’t be credited against tax payments.

The amount of taxed that should be paid by the operators would depend on the size of the market itself. If the gross revenues are above $350 million, the rate would be 15%. If the revenues are between $250 and $350 million the rate will be 2.5% lower.  With revenues between $150 and $250 million a rate of 10% would be imposed, whereas a rate of 8.847% will be applied if the revenues of all operators don’t exceed $150 million.