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June 22, 2021

Alterations are aimed at casting light on the tax rate issues, license fees, and the so-called “bad actor clause”

California online poker bill to undergo further amendments

California online poker bill to undergo further amendments
A series of amendments have been proposed to the current California online poker bill, known as AB 2863.
United States | 06/08/2016

A series of amendments have been proposed to the current California online poker bill, known as AB 2863.

T

hese alterations are aimed at casting light on the tax rate issues, license fees, and the so-called “bad actor clause” according to which any operator that continued to accept online wagers after December 2011 from players, based in the USA, is not eligible to receive a license.

The proposed amendments made poker fans hopeful that platforms such as PokerStars will be presumed “suitable” for entering the California online poker market.

 

One of the most notable revisions is related to the definition of what exactly makes an operator a “bad actor”. The amendment proposes a new unsuitability standard for the operators that served US-based players after December 31, 2011

 

David Fried, California Gaming Attorney was the first to put forward the amendments for the Adam Gray- sponsored piece of legislation. People familiar with the matter expected changes in the initially introduced version of the bill to be proposed.

The expectations are the final version of the bill to be discussed at an Assembly hearing in June, but the date is yet to be announced.

One of the most notable revisions is related to the definition of what exactly makes an operator a “bad actor”. The amendment proposes a new unsuitability standard for the operators that served US-based players after December 31st,2011.

If passed, the newly proposed benchmark would give the green light to platforms such as PokerStars to provide their services within the state. Although PokerStars exited the market in April 2011, it is currently regarded a “bad actor” as it continued providing online gambling services after the UIGEA amendments came into force.

The amendments in AB 2863 bill suggest that even if operators failed to comply with the UIGEA legislation, they can still be allowed to operate as long as they are currently not affiliated with key individuals that violated the law or the violations occurred at a time when the provider had already taken actions towards exiting the US market. The current licensing fee of $10 million might be increased to $12.5 million.

As for the tax rates operators will be required to pay, they will depend on the combined GGR. If the latter exceeds $350 million, the tax rate will be 15% of the GGR. If the revenue is between $250 and $350 million, the tax is lowered to 12.5%. Revenue between $150 and $250 million triggers a 10% rate. If the generated income is less than $150 million, the rate applied is 8.85%.

In order to obtain a license, providers must have been operating for at least five years. The AB 2863 amendment proposes the requirement to be lowered to three years.

The amendment also puts emphasis on the fact that if passed into law, AB 2863 would legalize only online poker activities. No other casino games will be legally played via the Internet.

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