Latest Deal is Best Bet For California Horse Racing Industry

MakeaDealThe reports of the death of iPoker legislation in California have been greatly exaggerated. Just when it seemed that bill would fall flat on their face this year, AB 431 not only gets a refilling but a deal is now on the table that could bring the standoff between tribes and the horse racing industry to an end.

While we advocated for a reasonable deal to the horse racing industry, we were suspect that they would come through in the matter they did. The latest deal we believe is ideal for the horse racing industry and could clear major obstacles that have prevented iPoker regulation in California from passing for the last few years.

Desperate Times Call For Desperate Measures

The Pechanga floated a revenue sharing proposition last year that we believed was a precursor to finally resolving the deadlock with the racing industry. When they rejected that deal, we believed that if a better deal was offered, they might take it.

Well that deal is on the table. Under a new provision in AB 431, the horse racing industry will receive up to $60 million each year in payments from the regulated iPoker industry in exchange for them not becoming an operator.

What prompted this action after stakeholders drug their heels for years? Daily Fantasy Sports. With a DFS bill already having passed in one house, online poker is largely considered to be on the back burner. Lawmakers had to do something to bring life back into the issue and time was running out. Had they not made the last minute amendment to the bill, AB 431 would have died later this week.

Frankly, we think this is a jackpot scenario for the racing industry as we find it unlikely that they could generate that much revenue annually on their own. Under this provision, the racing industry wouldn’t have to lift a finger to receive a major benefit from the industry.

Last year, we urged the racing industry to crunch the numbers and see whether it would be feasible to operate a site on their own. With this proposal on the table, we again think they should examine the numbers and see whether they could do better. It is unlikely they can find a scenario where they will make more money.

What Does This Mean for California iPoker?

For the first time ever, there’s real reason for optimism provided that the racing industry agrees to the deal. With this roadblock cleared, there’s little left to keep this bill from becoming law. Governor Brown’s threat of a veto will be nullified and the only “issue” remaining is bad actors.

Let’s talk about bad actors for a bit. AB 431 is devoid a bad actor clause. This would have been a point of contention in the past for the tribes but over the last six months that issue is largely dead thanks to New Jersey. With the NJ Division of Gaming Enforcement granting a license to PokerStars, it is said that many tribes believe that they can no longer fight PokerStars’ entry into the state.

Now that doesn’t mean that the tribes and PokerStars won’t negotiate some type of “arrangement” that eases tribal concerns, but there’s little reason to believe that bad actors will be a roadblock any longer.

What’s the Timeline Now?

The timeline for iPoker in California is largely depending on how quickly that the horse racing industry agrees to a deal and how quickly that tribes decide to come to a consensus regarding iPoker and PokerStars.

Tribes could decide to gum up the works yet again but we don’t think that will be the case. There is now real concern that if something isn’t done this year or next, online poker may not have a chance at ever becoming legal in the Golden State.

If the horse racing industry agrees to this deal and tribes will let lawmakers do their job, this bill could potentially get done in 2016. Right now, we are taking a wait and see approach when it comes to stakeholders.

If agreements are in place by the end of March or mid-April, expect a 2016 passing of AB 431. However, if things drag like they have in the past, next year will be the year that iPoker passes. Keep in mind that developments on DFS regulation could also delay iPoker regulation. The next two months will be vital in determining whether California finally regulates online poker or whether we spend another year wondering what went wrong.

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