We wrote briefly earlier today about the amendments added on to California AB 2863, a bill which would legalize online poker in the state and how they were preceded by a letter to the bill’s co-author, Assemblyman Adam Gray, from a group of tribes who desperately want a “bad actor” clause included in the final bill. Another interested coalition, composed of members of the horse racing industry, also penned a letter to Assemblyman Gray late last week to express its thoughts on the bill; the letter partially supported Gray’s efforts, but also expressed concerns about how the bill might affect the horse racing stakeholders.
The letter, dated April 21st, 2016, came from the following groups: Thoroughbred Owners of California, Del Mar Thoroughbred Club, California Thoroughbred Breeders Association, The Jockeys Guild, California Authority of Racing Fairs, California Teamsters Public Affairs Council, California Thoroughbred Trainers, Los Alamitos Racing Association, and SEIU California.
The goal of the letter was to give Assemblyman Gray the proper background on in the horse racing industry in California and to explain where the interested parties stand on the bill. They explained that when ADW (Advance-Deposit Wagering) – basically internet horse racing betting – was authorized in 2001, California racing industry revenues took a 40 percent. Since then, though the industry “has completely restructured its business model to embrace the new ADW technologies” and has done very well.
Once of the compromised in AB 2863 is that horse racing operators are excluded from obtaining internet poker licenses, a move that was made to appease the hard line tribes who want as much of the online poker industry as possible to themselves. In exchange, the horse tracks and other racing stakeholders are promised at least $60 million annually from online poker licensees, to be used as prize money and the like.
In the letter, the horse racing groups were adamant that they want that money:
We recognize the $60 million annual payment in AB 2863 is intended to compensate the racing industry for being excluded from eligibility for i-Poker licenses, the loss of the industry’s current Internet gaming exclusivity in the State, and the projected loss of market share for ADW. Given this sizeable impact on our business, we must condition our support for the legislation on a firm commitment to maintain the $60 million minimum payment throughout the legislative process. We are not prepared to negotiate on this baseline number.
They continued:
We note that the current draft of AB 2863 contains blanks for the up-front license fee and tax rate. Because the $60 million fee is to be solely funded from license fees and taxes, we must look closely at what the actual fees and rates are to assess the likelihood that the $60 million will be available. Our continued support for the legislation is predicated on the ultimate reasonableness of those numbers. On a related point, we believe AB 2863 should be amended to confirm that in the event the $60 million minimum were not fully funded in a given year, there would be a carry over into the following year(s) with first dollars from future i-Poker license fees and tax revenues going to cure the deficiency.
They want their fair share and dammit, they are going to get it.
