Internet Poker in California is Good Public Policy

7/29/2019 Internet Poker in California is Good Public Policy

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Internet Poker in California is Good Public Policy

Internet Poker is a fast-growing, global industry

The U.S. represents the largest percentage of Internet poker players worldwide, and

California is estimated to have more than one million online players.

Within the U.S., states are quickly seeking to benefit from a regulated online gambling

industry. New Jersey, Nevada and Delaware have already passed legislation and will

be accepting online play later this year. More and more states are recognizing the

benefits and proposing their own intrastate laws including, Illinois, Massachusetts and

Iowa. California should fully capture the potential of the Internet poker market, and it must

not limit itself to INTRA-state play. By its nature, Internet poker is a global marketplace

and at a minimum California should seek to engage other states in compacts or

reciprocal agreements. New Jersey and Nevada laws already allow this, and New

Jerseys law lays a foundation for international play.

These types of cross border agreements do not violate federal law. In December 2011,

the U.S. Department of Justice released its opinion that only Internet sports betting was

in violation of the Wire Act[18 USC 1084], thus opening the door for INTER-state

operations for Internet poker and other types of casino games.

California has an obligation to create a safe and regulated market

While the largest Internet poker companies have been forced out of the U.S. market,

there are still thousands of Californians who play on unlicensed, unregulated and

unsafe websites. Unfortunately, consumers are left vulnerable since the federal

government has failed to exercise oversight and control of Internet gaming.

Now is the time for California to step up and protect its own citizens. The states

consumers who play Internet poker will benefit greatly from the protections regulation

can provide. Moreover, licensing and regulation will help guarantee the proper

safeguards for Californias most vulnerable populations through:

o Thorough vetting of potential licensees

o Mandatory implementation of technologies to protect against underage

gambling and to monitor and detect individuals with excessive gaming habits

o High standards to thwart fraud and abuse of customers


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o Regulation to prevent money laundering

o Segregated accounts to protect player deposits

The PPA has over 100,000 members who reside in California, many of whom have sent

letters, placed phone calls and sent tweets to the Governor urging his support of a fair,

regulated environment to play online poker in the state.

In an age where the Internet has become such an integral part of our daily lives, we

must uphold the personal freedoms of California residents to play the game they enjoy

in any format they prefer.

Regulation will provide significant economic benefits for the state

Given the potential size of the California online poker market, the state stands to gain a

significant new revenue stream. This could mean hundreds of millions of dollars in new

revenue annually without raising taxes!

Establishing California as a national (and perhaps global) leader for Internet poker will

also create thousands of high paying, high-tech jobs for the state of California. The

state already has a deep commitment to Internet innovation. Regulated Internet poker

would produce a new avenue for research, investment and California-led innovation for

this burgeoning industry.

Californias population base and history as a strong gaming regulator uniquely positions

the state to lead this innovative new industry and help run the operations for other

states that will want to adopt similar structures moving forward. These INTER-state

agreements will create even more revenue for California.

California regulation must foster competition and be consumer, not business, driven

The recent Internet poker debate in California has been dominated by how business will

benefit from the new marketplace. Profitability and a pro-business environment are

important, however, this can only be achieved in a consumer-friendly market.

Ultimately, the end user (the poker player) will decide the future success or failure of

Internet poker in California and the state must foster a competitive market that

provides the consumer choice and incentives to attract customers.

We support low taxes for operators. Tax on revenue should be based on adjusted gross

revenue, after deducting jackpot payouts, player bonuses and other player incentives.

Fair and equitable tax rates will reduce the pressure for operators to pass on these costs

in the form of fees or rake to the consumer. Reasonable taxes will increaseprofitability, and therefore increase the states taxable base.

We also support a reasonable advanced deposit license fee that will reduce the barrier

to entry and allow more companies to have access to the market. This will help

encourage small, yet innovative start-up companies to invest and compete in the

market.


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Efforts to exclude certain companies under a California Internet poker scheme are anti-

competitive, counterproductive and do not serve the interests of the consumer or the

state who ultimately wants the most revenue from regulation. We urge you to pass

legislation that does not place limitations on which companies licensees may partner

with for provision of technology services, marketing, and branding.

It is right for California to demand that companies invest in the state with employees

and infrastructure. But it will be detrimental to the future growth of the industry if the

state unilaterally disqualifies companies who have deep experience in Internet gaming

from partnering with other California gaming interests.

Internet poker is complimentary to existing California gaming

Regulated Internet poker will compliment, not compete with current gaming interest in

the state.

European casinos have benefited from the introduction of online gambling. For

example, the UK has become a multi-billion dollar online gaming market and the

traditional bricks-and-mortar gaming industry is still showing strong year-on-year

growth.

Tribal governments in particular should be looking at Internet poker as a way to expand

their brand and revenue. According the National Indian Gaming Association a mere one

percent of Indian gaming revenue is derived from bricks and mortar poker. The

Internet can only help grow that number.

Internet poker provides a unique opportunity to attract new customers from across the

state, the country and potentially the world and bring them into the casino. Poker

tourism is booming globally and California can become a global destination for poker

players from the U.S. and around the world.

Companies that have failed to embrace the Internet have not maximized their potential

profits and in some cases have gone out of business entirely. More and more

Americans are turning to the Internet for recreation and gaming is no different.

California Tribes and card rooms need to recognize the opportunity, or fear being left

behind.

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Internet Poker in California is Good Public Policy