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Industry Reacts to California Internet Gambling Bill

June 10, 2010 (CAP News Wire) – California is among the handful of American states moving fast to implement its own online gambling laws and regulations.

The Golden State, like New Jersey and Florida, is not trying to repeal or overcome the recently implemented UIGEA (the Unlawful Internet Gambling Enforcement Act of 2006); rather, it’s attempting to pass online gambling laws that work within the rules of the UIGEA. And that means keeping its online gambling laws strictly within its own borders and making sure that the companies registered to provide Californians with online gambling services are California companies that keep their revenue (and taxes) in the state.

“Playing an Internet game that is not authorized by California would be illegal, according to Wright’s bill,” writes Tony Batt at Gambling Compliance. And that’s why many online poker industry observers are firmly against the bill. predicts that this (or any other state-run online poker network) will violate WTO rules. (Although that hasn’t stopped the UIGEA.)

As bad as driving out international poker rooms would be for the global online poker industry (not to mention poker affiliate marketing), all the same, the current online gaming regulation bill in California’s state congress (introduced by Los Angeles-area senator Rod Wright) is seen by many as a positive because of the financial boost it would provide to the state’s badly limping economy.

“While obstacles confronting the new intrastate Internet poker bill in California are daunting, the state’s soaring budget deficit is making even some critics hesitate before dismissing the bill’s chances of becoming law this year,” writes Batt. 

The Tribes in the state haven’t approved the bill yet, as it’s uncertain whether they’d get their cut of the profits as the legislation is currently written. Last year, the a group of tribes tried to pass online poker laws at a statewide level, as well, but that movement didn’t pick up much support and died a fairly quick death.

The bill is being described as “an auction bill”, meaning that Internet gambling operators that can offer more of a percentage of revenues to the state will be more likely to win reglatuory approval than companies offering a lesser amount. That’s the kind of financial incentive that may make certain lawmakers overcome fears of online gambling approval.

“More than 1.5m Californians gamble on 600 offshore websites, making up about 25 percent of the Internet gambling market in the United States,” Batt also writes. “Wright estimates a licensing fee could bring the state up to $9 million, and the revenue sharing agreement could yield the state as much as $1 billion,” adds Patrick McGreevy at the Los Angeles Times.

Batt also predicts that, if the California bill passes, “it could have a devastating impact on federal Internet gambling legislation pending in Congress,” referring to the efforts of Jim McDermott and Barney Frank to repeal the UIGEA.