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California Folds on Proposal to Legalize Online Poker

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By Jason Beahm on July 02, 2010 7:03 AM

For a moment it looked as though online poker could become legal in California. But SB 1485, the California Online Poker Law Enforcement Compliance and Consumer Protection Act, was dealt a swift surprise defeat.  It is especially surprising considering that it was estimated that the passage of the bill would bring in $500 million annually, one quarter of the state's estimated $2 billion deficit. 

At first glance the bill had a lot to offer the cash strapped state, so why did Senator Rob Wright quickly withdraw the bill? Essentially, the bill was opposed even by most poker players and poker lobbying organizations. That's because the bill would have authorized the Department of Justice to grant three contracts to companies to operate California licensed online poker sites. 

California would accommodate three poker hubs, licensed by the state of California for a five year term to set up and operate online gambling sites. However, anyone in California playing poker at another site, including the most popular sites such as PokerStars and FullTilt Poker would have been guilty of a state crime.  Page two of the bill read "The bill would provide that it would be unlawful for any person to play any gambling game provided over the Internet that is not authorized by the state pursuant to this bill. By creating a new crime, this bill would impose a state-mandated local program."

The largest pro-online poker lobbying group, the Poker Players Alliance spoke out against the bill and applauded it's defeat. "[This bill] will not attract the best qualified and most experienced hub operators... the measure imposes a variety of operational financial barriers and preferences that will discourage or bar non-traditional telecommunications, software, and out-of-state gaming companies from applying as hub operators or subcontractors...Rather than leveraging proven Internet gaming models with recognizable brands and sizable player bases, this bill sets out to 'reinvent the wheel' and assumes that California players will readily migrate to unfamiliar new sites."

So now it is back to the drawing board. Online poker remains a murky legal matter in the United States. Many legal experts believe that online poker is illegal under the federal Wire Act and the Unlawful Internet Gambling Enforcement Act (UIGEA), but other legal experts dispute the illegality of poker. Either way, surveys indicate that over 750,000 Californians and 10 million Americans play online poker already, and it certainly appears that they are not being prosecuted.

This is an issue that is continuing to evolve. Sen. Barney Frank has pushed to pass a law that would legalize online poker nationally. While President Barack Obama has professed to be a fan of the game and a poker player himself, he has not indicated that he is in favor of legalizing it or that it is a matter on his already packed agenda.

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