SB 1366, as introduced, Correa. Internet gambling.
(1) The Gambling Control Act provides for the licensure and regulation of various legalized gambling activities and establishments by the California Gambling Control Commission and the investigation and enforcement of those activities and establishments by the Department of Justice. A willful violation of those provisions is punishable as a misdemeanor, as specified.
This bill would authorize intrastate Internet poker, as specified. The bill would authorize eligible entities to apply for a license to operate an intrastate Internet poker Web site offering the play of authorized games to players within California, as specified. The bill would prohibit the offer or play of any gambling game provided over the Internet that is not an authorized game permitted by the state pursuant to this bill. The bill would prohibit a person, except as provided, from aggregating computers or other access devices in a public setting within this state for the purpose of playing a gambling game on the Internet, or to promote, facilitate, or market that activity. The bill would make any violation of these provisions punishable as a misdemeanor. By creating new crimes, the bill would impose a state-mandated local program.
This bill would require the commission, and any other state agency with a duty pursuant to these provisions, to adopt regulations within 120 days after the effective date of this bill, in consultation with the department to implement these provisions, and to facilitate the operation of intrastate Internet poker Web sites and expedite the state’s receipt of revenues. This bill would authorize the commission to issue initial licenses, as specified, and would establish the procedure for license renewal. The bill would require a license applicant to apply to the commission and pay an application deposit sufficient to cover all costs associated with the issuance of the license, for deposit into the Internet Poker Licensing Fund, as created by the bill, to be continuously appropriated to the department and the commission in the amounts reasonably necessary to investigate and evaluate the suitability of license applicants. The bill would establish separate license procedures for an applicant that is a federally recognized Indian tribe.
This bill would require the payment of a regulatory fee, for deposit into the Internet Poker Fund, as created by the bill, subject to annual appropriation by the Legislature for the actual reasonable costs of license oversight, consumer protection, state regulation, problem gambling programs, and other purposes related to this bill. The bill would require each licensee to pay a one-time license fee of $10,000,000 for deposit in the General Fund. The license fee would be credited against fees imposed on the licensee’s gross gaming proceeds, as specified.
This bill would authorize each licensee, subject to approval by the department, and the department, in consultation with the commission, to establish administrative procedures to resolve registered player complaints.
This bill would require the department, in consultation with the commission, the Treasurer, and the Franchise Tax Board, to issue a report to the Legislature describing the state’s efforts to meet the policy goals articulated in this bill within one year of the effective date of this bill and, annually, thereafter. The bill would also require the Bureau of State Audits, at least 4 years after the issue date of any license by the state, but no later than 5 years after that date, to issue a report to the Legislature detailing the implementation of this bill, as specified.
(2) The bill would state that its provisions are severable.
(3) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
(4) This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2⁄3. Appropriation: yes. Fiscal committee: yes. State-mandated local program: yes.
The people of the State of California do enact as follows:
Chapter 5.2 (commencing with Section 19990.01)
2is added to Division 8 of the Business and Professions Code, to
This chapter shall be known and may be cited as the
11Internet Poker Consumer Protection Act of 2014.
The Legislature hereby finds and declares all of the
14(a) The state and the governments of numerous federally
15recognized California Indian tribes currently maintain and
16implement substantial regulatory and law enforcement efforts to
17protect thousands of Californians who play, among other things,
18real-money poker in, respectively, licensed California cardrooms
19and authorized tribal government casinos, yet the state provides
20no licensing requirements, regulatory structure, or law enforcement
21efforts to protect Californians who play the same games online on
22an illegal and unregulated basis for money. The Legislature finds
23that protection of the interests of both the state and persons within
24its jurisdiction that play real-money games online requires the
25 authorization and establishment of a system for regulating Internet
26poker gambling within California.
27(b) In October 2006, Congress passed the SAFE Port Act (Public
28Law 109-347), to increase the security of United States ports. That
29act included a section entitled the Unlawful Internet Gambling
30Enforcement Act of 2006 (UIGEA), which prohibits the use of
31banking instruments, including credit cards, checks, or fund
32transfers, for interstate Internet gambling, essentially prohibiting
33poker and other gambling games played online by United States
P4 1citizens. UIGEA includes exceptions, however, that permit
2individual states to create a regulatory framework to enable
3intrastate Internet gambling, in which wagers are made exclusively
4within a single state whose laws or regulations comply with all of
6(1) Contain certain safeguards regarding those transactions,
7including both of the following:
8(A) Age and location verification requirements.
9(B) Data security standards designed to prevent access by minors
10and persons located outside of that state.
11(2) Expressly authorize the betting or wagering process.
12(3) Do not violate any federal gaming statutes, including all of
14(A) The Interstate Horseracing Act of 1978.
15(B) The Professional and Amateur Sports Protection Act.
16(C) The Gambling Devices Transportation Act.
17(D) The Indian Gaming Regulatory Act of 1988 (IGRA).
18(c) Despite the absence of enabling legislation in conformity
19with UIGEA, Californians participate in Internet poker and other
20forms of Internet gambling operated by offshore operators that are
21not regulated by California or United States authorities. Neither
22federal nor California laws provide any protections for California
23participants in those sites, nor do the citizens of California directly
24benefit from these activities. This significant rise in Internet gaming
25within California, together with efforts by other states to begin
26authorizing and regulating Internet gambling and recent federal
27claims of illegal activities by certain offshore Internet gambling
28operators, has increased the need for California to enact on an
29urgent basis a statutory framework for authorizing and regulating
30Internet gaming within the state. The Legislature finds that Internet
31poker is a reality that must be addressed by California in order to
32protect consumers from compulsive gambling, underage play and
33exploitation from illegal operators, as well as to meet the needs of
34its citizens and economy. California also wants to limit the scope
35of Internet gambling to the game of poker, with which it has
36extensive regulatory experience.
37(d) By regulating Internet poker, the state will achieve the
39(1) Protect and promote its economy.
P5 1(2) Provide California players with a safe and secure
2environment to play online.
3(3) Ensure fair and transparent Internet gambling.
4(4) Protect player funds and their winnings.
5(5) Protect against underage gambling.
6(6) Combat crime, racketeering, corruption, money laundering,
7and terrorism financing.
8(7) Enable the poker industry in California, which employs
9thousands of Californians, to compete fairly in intrastate Internet
11(8) Generate millions of dollars of additional revenues to meet
12California and tribal governmental needs.
13(e) California, thus, has a state interest in authorizing and
14regulating legitimate Internet poker and in ensuring that those
15activities are consistent with existing public policy regarding the
16playing of poker games within the state. The public interest will
17be best served by requiring that those entities who desire to own
18or operate Internet poker web sites within the state continue to
19comply with the existing standards and rigorous scrutiny that must
20be met in order to qualify to offer poker games within the state.
21(f) The Legislature has determined, from experience gained by
22observing the development of Internet poker throughout the world,
23and in agreement with the federal requirements for authorizing
24Internet gambling under UIGEA, that California’s regulatory
25requirements must include all of the following:
26(1) A system that is implemented and administered in a fair and
27transparent manner that ensures that players can participate in an
28environment that safeguards and secures their personal data in
29accordance with the latest industry data security standards.
30(2) The maintenance of player deposits and winnings in a secure
31system that enables players to access and withdraw their funds at
32any time in accordance with published terms and conditions.
33(3) The subjection of all authorized Internet gaming software
34to rigorous testing by independent testing facilities to ensure that
35the game outcomes are unbiased and unpredictable.
36(4) The exclusion of minors and the protection of vulnerable
37players from compulsive and excessive gambling by installing
38player verification systems and enforcing measures to detect these
39individuals and behavior in order to prevent them from accessing
40and playing on Internet Web sites.
P6 1(5) Ensuring that online gambling activities are free from crime
2or the use of moneys obtained illegally, including the use of
3systems designed to detect, prevent, and report suspicious activities
4and transactions, including, but not limited to, robotic or collusive
5play, money laundering, or the evasion of state income taxes.
6(6) To offer responsible gaming features that limit a player’s
7potential for excessive gambling.
8(g) It is in the interest of the state to recapture, to the maximum
9extent, the hundreds of millions of dollars of public service funding
10that has been repeatedly cut during the state’s budget crisis. It is
11the intent of the Legislature in enacting this chapter to ensure that
12the state realizes a minimum of ____ dollars ($____) of General
13Fund revenue from operator and license fees and payments during
14the 2015-16 fiscal year.
15(h) The Legislature has considered and finds that authorization
16of intrastate Internet poker pursuant to this chapter does not violate
17the California Constitution or interfere with any right or exclusivity
18provision under any compact between the state and any federally
19recognized Indian tribe. Neither the equipment, including the
20computers required to access authorized intrastate Internet poker
21games under this chapter, any component thereof, nor any building
22or room, other than where poker is currently authorized, may be
23used in the operation or play of Internet poker. This chapter also
24prohibits the offering or use of any slot machine or other gaming
25device as defined in any of those compacts, or any other device
26which permits the playing of a gambling game against a computer
27or device in connection with any Internet poker game authorized
28under this chapter. Only nonbanking poker games in which
29authorized live players play against each other in real time is to
30be permitted. The Legislature finds that the application of UIGEA
31in California would not be prohibited by the activities contemplated
32by this chapter and that the chapter does not violate federal law
33by infringing upon tribal sovereignty.
34(i) This chapter does not prohibit any
federally recognized Indian
35tribe within California with a tribal-state gaming compact with the
36state pursuant to IGRA from participating in authorized Internet
37poker games pursuant to these provisions.
It is the intent of the Legislature to create a licensing
39and regulatory framework that will achieve all of the following:
P7 1(a) Ensure that authorized games are offered for play only in a
2manner that is consistent with federal and state law.
3(b) Authorize the California Gambling Control Commission to
4issue licenses, with the recommendation of the Department of
5Justice, to applicants that meet the qualifications and background
6requirements consistent with this chapter, and to authorize those
7agencies to conduct the investigations necessary to carry out those
9(c) Ensure that game play authorized by this chapter is offered
10only to registered players who are physically present within the
11borders of California at the time of play and who are 21 years of
12age or older.
13(d) Include all of the provisions in this chapter as terms of the
14license between the state and each licensee, subject to the
15enforcement provisions delineated in this chapter.
16(e) Grant power to the state agencies authorized in this chapter
17to oversee the operations of each licensee and to enforce the
18provisions of this chapter to ensure that the interests of the state
19and registered players are protected.
20(f) Establish a process that includes the ability to conduct
21background investigations as necessary to determine an applicant’s
22suitability to participate in the gaming industry, and financial ability
23to obtain a license and the required software from the applicant’s
24own resources, in order to prevent a person from using a false
25identity to acquire a license, and requires that each employee of a
26licensee receive all necessary licenses and work permits from the
27state prior to engaging in any activities for which that license or
28permit is required.
29(g) Ensure that the state is able to collect income tax revenues
30from authorized players in California.
31(h) Distribute regulatory fees that have been deposited into the
32Internet Poker Fund, as established in Section 19990.86, which
33shall be administered by the Controller, subject to annual
34appropriation by the Legislature, and which shall not be subject
35to the formulas established by law directing expenditures from the
36General Fund, for the following:
37(1) The actual costs of license oversight, consumer protection,
38state regulation, and problem gambling programs.
39(2) Other purposes related to this chapter as the Legislature may
P8 1(i) Create systems to protect each player’s private information
2and prevent fraud and identity theft.
3(j) Ensure that authorized players are able to have their financial
4transactions processed in a secure, safe, and transparent fashion,
5including the segregation of player deposits from other operator
6funds, the right to terminate accounts and obtain the return of
7deposits, the payment of winnings on a timely basis, and full
8accountability of all bets made, moneys collected, and prizes and
9pots paid out, including the basis therefor under game rules.
10(k) Ensure that all authorized Internet gambling games offered
11by a licensee are fair and honest, including, but not limited to,
12verifiable protections against cheating, collusion, nonrandom card
13shuffles or dealing, and advance knowledge of cards dealt.
14(l) Ensure that all applicable gaming regulatory agencies have
15unrestricted access to the premises and records of each licensee
16that relate to the operation, maintenance, control, money handling,
17or other material aspect of any authorized game and that these
18premises and accounts be in strict compliance with state and tribal
19gaming laws and regulations concerning credit authorization,
20account access, and other security provisions and that all of the
21operator’s computers, servers, and other components of the gaming
22system, and any bank or other repository where player’s or
23operator’s funds in connection with the poker room operation are
24deposited, are physically located within California.
25(m) Require that each licensee provide
players with easily
26accessible customer service.
27(n) Require that each licensee’s Internet Web site contain
28information relating to problem gambling, including a telephone
29number that an individual may call to seek information and
30assistance for a potential gambling addiction, provided that
31operators shall not be required to disrupt game play with that
33(o) Require that each licensee and all of its service providers,
34including tribal governments, meet the requirements applicable to
35it in connection with authorized games.
36(p) Ensure that there are no artificial business constraints on the
37licensee, such as limits on the percentage of revenues that may be
38paid to service providers or limits on the number of intrastate
39Internet poker rooms a licensee may operate or that the state may
P9 1(q) Ensure that all employees of the licensee are located, and
2all gaming activities operated by it are conducted, physically within
3the state and that the activities of licensees relating to gaming
4activities remain within the state’s regulatory jurisdiction, either
5because they are conducted within state boundaries or by entities
6that have agreed to subject themselves to the state’s regulatory and
7enforcement jurisdiction, provided that this chapter does not
8prohibit the use of servers or other equipment located outside
9California where that equipment is maintained solely for backup
11(r) Create an express exemption from disclosure, pursuant to
12the California Public Records Act under subdivision (b) of Section
136253 of the Government Code, that exempts from public disclosure
14proprietary information of a license applicant or a licensee in order
15to permit disclosure of confidential information to state agencies
16while achieving the public policy goals of deploying secure systems
17that protect the interests of the state and players.
18(s) Preserve the authority of the state to opt out of or into any
19federal framework for Internet poker, or to enter into an agreement
20with other states to provide Internet poker, provided these schemes
21or frameworks meet the criteria and address the issues concerning
22the matters set forth herein and are in compliance with applicable
24(t) As a matter of public policy requiring statewide consistency,
25preempt any city, county, or city and county from enacting any
26law or ordinance regulating or taxing Internet poker activities
27covered in this chapter.
For the purposes of this chapter the following words
32have the following meanings:
33(a) “Authorized game” means a game of poker as defined in
34this chapter that has been approved by the commission for play
35on the Internet in an authorized poker room. Authorized games
36may only be operated by licensed poker room operators on an
37authorized poker platform.
38(b) “Authorized player” means a registered player who has
39provided the information and met the qualifications to play an
P10 1(c) “Authorized poker platform” means a software system that
2has been approved by the regulatory agency to manage and operate
3the play and presentation of authorized games, provided that player
4management systems and funds management systems, as defined
5in this chapter, shall be in software modules that are separate from
6the poker platform software and shall not be under the operation
7or control of, or accessible to, an authorized platform operator
8unless the platform operator is also the licensed poker room
9operator for the poker room on which the platform is operated.
10(d) “Authorized poker room” means a virtual cardroom on the
11Internet with one or more virtual card tables in which authorized
12players can play authorized games, provided that this chapter does
13not prohibit an authorized poker room from offering “play-for-free
14” or “play-for-fun ” poker games to authorized players. Authorized
15poker rooms may only operate games on an authorized platform
16and shall handle financial and player management functions
17through authorized software that is separate and distinct from the
18game management system.
19(e) “Authorized poker room skin,” or “skin,” means a portal to
20an authorized poker room which may be provided by a poker room
21licensee to any person or entity, a skin sponsor, that is, itself,
22qualified to hold an authorized poker room license, and shall be
23regulated in accordance with subdivision (o) of Section 19990.20.
24(f) “Background investigation” means a process of reviewing
25and compiling personal and criminal history and financial
26information through inquiries of various law enforcement and
27public sources to establish a person’s qualifications and suitability
28for a license to participate in the gambling industry.
29(g) “Bet” means the placement of money or something of
30monetary value at risk of being lost depending of the outcome of
32(h) “Commission” means the California Gambling Control
33Commission, except that where the described function also involves
34a function to be served by the department, the term “commission”
35shall also mean the department to the extent of those functions.
36(i) “Compact” means a tribal-state gaming compact entered into
37between a federally recognized tribe and the State of California
38pursuant to the IGRA, or procedures issued in lieu thereof by the
39Secretary of Interior that are in effect (“Secretarial Procedures”).
P11 1( j) “Core functions” and “core functioning” mean the
2management, administration, or control of the following:
3(1) Bets or wagers on authorized games.
4(2) The processing, qualifying, or participation of authorized
6(3) Payments to and from authorized players.
7(4) The offering, conduct, presentation, or operation of
9(5) Intellectual property related to authorized games and poker
10rooms, including the trademarks, trade names, service marks, or
11similar intellectual property under which a licensee identifies its
12games to its customers.
13(6) The systems internal to the authorized platform or poker
14rooms that account for, or govern, the payments to or from
15authorized players or the deposit accounts, or in connection with
16the authorized games or other transactions related thereto, including
17the maintenance of accounting records of moneys owed to, or paid
18to or from, players by the operator. “Core functions” and “core
19functioning” do not include the financial services or transactions
20provided by banks, credit card companies, or other financial
21services providers that supply funds or credit to authorized players
22to enable them to participate in authorized games. Those services
23or transactions shall be independent from, and not controlled by,
24the licensed platform or poker room operator and shall be operated
25in accordance with applicable law governing those financial
26services and transactions.
27(k) “Department” means the Department of Justice, except that
28where the described function also involves a function to be served
29by the commission, the term “department” shall also mean the
30commission to the extent of those functions.
31(l) “Deposit account” is a fund maintained by an authorized
32poker room on behalf of authorized players into which the players
33may deposit cash for use for betting in games or for deposit of
34player winnings from games.
35(m) “Employee work permit” means a permit issued to an
36employee of a licensee by the commission after a background
37investigation and finding of suitability.
38(n) “Finding of suitability” means a finding by the regulatory
39agency that a person meets the qualification criteria described in
40Article 4 (commencing with Section 19990.20), and that the person
P12 1would not be disqualified on any of the grounds specified in that
3(o) “Funds management system” means an authorized software
4system that is dedicated to managing player funds in authorized
5games, including, but not limited to, tracking player accounts, bets,
6pot collections and awards, player credits, financial reporting
7requirements, and other financial transactions associated with the
8operation of authorized games. Funds management systems may
9only be operated by a licensed poker room operator and only in
10connection with an authorized poker room under its management
12(p) “Gamble” or “gambling” means the placing of a bet or
13something of value at risk on the chance that the outcome of a
14game or event over which the player does not have total control
15will occur and that will result in the winning of a prize for correctly
16predicting the outcome.
17(q) “Game” means a contest in which players may win or lose
18depending on skill, chance, or a combination thereof, depending
19on the rules of play.
20(r) “Gaming system” means the combination of hardware,
21software, and data networks specifically described in Section
23(s) “Good standing” means that a person has not had a California
24gaming license or determination of suitability suspended or revoked
25by a final decision of an agency that has issued that license or has
26been issued a final order by a court of competent jurisdiction to
27cease conducting gaming activities. A suspension, revocation, or
28order shall be deemed final for purposes of this definition when it
29is no longer subject to challenge or appeal through administrative
30or court processes. The reinstatement of a finding of suitability or
31license following a suspension or revocation shall restore a person’s
32eligibility to be considered suitable or for a license, unless the
33determination of reinstatement itself bars that restoration.
34(t) “Gross revenues” means the total amount of moneys paid
35by players to the operator to participate in authorized games before
36deducting the cost of operating those activities except for fees to
37intermediate and payment processing fees. Gross revenues do not
38include player account deposits, amounts bet, except to the extent
39that those bets are used for generating fees to the operator as
40permitted under this chapter, and only to the extent those bet
P13 1portions are retained by the operator, discounts on goods or
2services, rebates or promotional discounts or stakes provided to
3players, or revenues from nongaming sources, such as from food,
4beverages, souvenirs, advertising, clothing, and other nongaming
6(u) “Initial license” means a license issued under this chapter
7on or before a date set in the regulations adopted by the commission
8pursuant to paragraph (1) of subdivision (a) of Section 19990.70
9for the issuance of the first licenses that will be issued under this
10chapter and that shall be issued simultaneously.
11(v) “Intermediary” means a party that enters into an agreement
12with a licensee to recruit players to the licensee’s authorized poker
14(w) “Internal control system” means the system utilized by the
15authorized operator to ensure that all procedures involving the play
16of the game, the payment, receipt, rewarding, deposit, or other
17handling of moneys, the integrity of the game equipment, the player
18actions to be scrutinized, enforcement of the age and geographic
19restrictions on players, and all other aspects of the game and the
20poker room are being carried out in a way that will comply with
21game rules and laws, uphold the integrity of the game, and prevent
22fraud or cheating from occurring.
23(x) “Internet poker” means an authorized game.
24(y) “Internet Poker Fund” means the fund established pursuant
25to Section 19990.86.
26(z) “Internet Poker Licensing Fund” means the fund established
27pursuant to Section 19990.20.
28(aa) “Internet self-exclusion form” means a form on which an
29authorized player notifies an authorized poker room operator that
30he or she must be excluded from participation in authorized games
31for a stated period of time.
32(ab) “Intrastate” means within the borders of California.
33(ac) “Key employee” means any natural person employed by a
34licensed operator or service provider licensee who is an officer or
35director of the licensee, or who, in the judgment of the commission,
36has the authority to exercise significant influence over decisions
37concerning the operation of the licensee, over the operation of an
38authorized platform or poker room, or over any core function
P14 1(ad) “Land-based gaming entity” means a licensee
that is a card
2club operated pursuant to Chapter 5 (commencing with Section
4(ae) “Licensee” means a licensed operator, a service provider,
5or any other person holding a license under this chapter.
6(af) “Licensed operator” means an authorized poker room
7operator, an authorized poker platform operator, or both.
8(ag) “Operator” means a person that operates an authorized
9platform or poker room.
10(ah) “Owner” means a person that has a financial interest in or
11control of a licensee, service provider, or other entity required to
12be found suitable under this chapter.
13(ai) “Per hand charge” means the amount charged to an
14authorized player to enable him or her to play a hand in an
15authorized game. Notwithstanding any other provision of state
16law, per hand charges may be collected on behalf of all participants
17in an individual game through the collection by the operator of a
18percentage of the pot or each bet made into the pot.
19(aj) “Per hand game” means a game for which the operator
20charges the player for each hand played.
21(ak) “Person” means a natural person, corporation, business
22trust, estate, trust, partnership, limited liability company,
23association, joint venture, government, including a tribal
24government, governmental subdivision, agency, or instrumentality,
25public corporation, or any other legal or commercial entity.
26(al) “Play-for-fun game” means a version of a lawfully played
27gambling game in which there is no requirement to pay to play or
28any possibility of winning any prize or other consideration of value.
29Play-for-fun games are typically offered for training, educational,
30marketing, or amusement purposes only.
31(am) “Play-for-free game” means a version of a lawfully played
32gambling game that may include prizes or pots, without requiring
33a fee or other consideration for the right to play.
34(an) “Player management system” means an authorized software
35system dedicated to managing the activities of players in authorized
36games. Player management systems may only be operated by
37licensed poker room operators, and only in connection with poker
38rooms under their management and control.
39(ao) “Play settings” means the options and default parameters
40made available by an operator to a player in the play of games.
P15 1(ap) “Player account” means a
record kept by a poker room
2operator on the gaming system, storing the player’s personal
3details, in which player gaming deposits and winnings are kept
4separate from an operator’s assets.
5(aq) “Player session” means a temporary connection established
6between a player’s interface and a gaming system for the exchange
7of information, for the duration of the time that an authorized
8player is logged into his or her account.
9(ar) “Poker” means any of several nonbanked card games
10commonly referred to as “poker” that meet all of the following
12(1) Played by two or more individuals who bet and play against
13each other and not against the house on cards dealt to them out of
14a common deck of cards for each round of play, including those
15games played over the Internet using electronically generated and
16displayed virtual cards.
17(2) The object of the game is to hold or draw to a hand
18containing a predetermined number of cards which, when all cards
19to be dealt in the round have been distributed and the betting is
20completed, meets or exceeds the value of the hands held by the
21other players. The pot of bets made is awarded to the player or
22players holding the combination of cards which qualify as the
23winning combination under the rules of play. Values may be
24assigned to cards or combinations of cards in various ways, such
25as in accordance with their face value, the combinations of cards
26held, such as cards of a similar suit or face value, the order of the
27cards that are held, or other values announced before the round.
28(3) The house may deal or operate and officiate the game, and
29may collect a fee for doing so, but is not a participant in the game
30itself. The house has no stake in who wins or loses or the amount
31that is wagered.
32(4) Poker may be played in a variety of ways, including dealing
33all cards to the players so that they may not be seen by others,
34dealing the cards open face to the players, dealing through a
35combination of both, or creating a common set of cards that may
36be used by all players. The particular rules and winning
37combinations are made known to the players before each round is
39(5) All bets are placed in a common pot. At one or more
40predetermined point during the game a player may resign, challenge
P16 1other players to make additional bets into the pot, or demand that
2players reveal their hand so a winner can be determined.
3(6) A poker game that has been approved by the commission
4for play in an authorized live poker club in California under the
5Gambling Control Act shall be eligible for qualification by the
6commission as the basis of an authorized intrastate Internet poker
7gambling game, except that neither pai gow nor any other game
8in which persons other than authorized players to whom the cards
9in the game are dealt, and by whom they are held and played, are
10permitted to be on a game outcome or other game feature, or who
11may otherwise control the play of the hand, shall be authorized,
12offered, or played in connection with an intrastate Internet poker
13game. Subject to this limitation, the rules governing play in an
14authorized poker game under this chapter shall generally be the
15same as if the game were lawfully played in a live poker club.
16(7) Video games, slot machines, and other similar devices that
17individuals play against the house or device and win based on
18valuations or combinations of cards that are similar to those
19valuations or combinations used in live, interactive poker games,
20commonly known as “video poker” and “video lottery,” are not
21“poker” and are not permitted under this chapter.
22(as) Other characteristics defining “poker” under this chapter
23include the following:
24(1) Live players with equal chances of winning competing
25against each other over the Internet in real time and not against
26the house or any device.
27(2) Success over time may be influenced by the skill of the
29(3) The bets of one player may affect the decisions of another
30player in the game, and the decisions of one player may affect the
31success or failure of another.
32(4) The term “poker” includes poker tournaments in which
33players pay a fee to the operator of the tournament under
34tournament rules approved by the applicable gaming regulatory
36(at) “Poker enterprise” means a person or entity meeting the
37definition of a “gambling enterprise” under subdivision (m) of
38Section 19805 that conducts poker, and any other requirements
39under law for operating a land-based gaming entity.
P17 1(au) “Proprietary information” means and includes all
2information that, whether or not patentable or registerable under
3patent, copyright, trademark, or similar statutes, (1) can be
4protected as a trade secret under California law or any other
5applicable state law, federal law, or foreign law, or (2) derives
6independent economic value, actual or potential, from not being
7generally known to the public or to other persons that can obtain
8economic value from its disclosure or use. “Proprietary
9information” includes, but is not limited to, computer programs,
10databases, data, algorithms, formulas, expertise, improvements,
11 discoveries, concepts, inventions, developments, methods, designs,
12analyses, drawings, techniques, strategies, new products, reports,
13unpublished financial statements, budgets, projections, billing
14practices, pricing data, contacts, client and supplier lists, business
15and marketing records, working papers, files, systems, plans and
16data, and all registrations and applications related thereto.
17(av) “Registered player” means a player who has submitted the
18required registration information to an authorized poker room
19operator in order to be eligible to become an authorized player in
20an authorized game in that poker room.
21(aw) “Regulatory agency” means the commission, a tribal
22gaming commission with jurisdiction over the tribal license
23applicant and licensee, or both, and the department, as provided
24in this chapter.
25(ax) “Player’s agreement” means the legal agreement to be
26offered by an authorized poker room operator and accepted by a
27registered player as a condition of becoming an authorized player
28and qualified for play in an authorized game. The player’s
29agreement shall delineate, among other things, permissible and
30impermissible activities in which the player may or may not engage
31on the Internet poker Web site and the consequences of engaging
32in those activities.
33(ay) “Registration information” means the information provided
34by a person to a poker room operator in order to record the person’s
35interest in becoming an authorized player in that poker room.
36(az) “Robotic play” means the use of a machine or software by
37a player or operator to simulate or automate player action at any
38point in a game, or otherwise to act as a substitute for a live player.
39(ba) “Service provider” means a person that, under a service
40provider license, does any of the following:
P18 1(1) Supplies goods or services to an authorized platform operator
2or poker room operator to enable the operator to operate that
3platform or poker room. Service providers may not provide goods
4or services directly to authorized players or authorized games in
5connection with the operation of any authorized platform or poker
6room, but shall only do so through and by a licensed platform or
7poker room operator.
8(2) Provides a gaming product or service to a licensee for use
9in an authorized game, including providing intermediary services.
10(3) The term “service provider” does not include a provider of
11goods or services to a licensed platform or poker room operator,
12or to an authorized player, that are not principally used in
13connection with the operation of an authorized game, including,
14but not limited to, the financial services or transactions provided
15by banks, credit card companies, or other financial service
16providers that supply funds or credit to authorized players to enable
17them to participate in authorized games. Those services or
18transactions shall be independent from, and not controlled by, the
19licensed platform or poker room operator, and shall be operated
20in accordance with applicable law governing those financial
21services and transactions.
22(bb) “State” means the State of California.
23(bc) “Tournament” means a competition in which players play
24a series of games to decide the winner.
25(bd) “Tournament charge” means the amount charged by the
26operator for an authorized player to play in a tournament.
27(be) “Tournament winnings” means the amount of a prize
28awarded to an authorized player in a tournament.
29(bf) “Tribe” means a federally recognized Indian tribal
30government located within California.
31(bg) “Tribal enterprise” means an entity that is wholly owned
32and controlled by one or more tribes and no others, and shall be
33treated as a tribe for the purpose of this chapter.
34(bh) “Tribal regulatory agency” means the person, agency,
35board, committee, commission, or council designated under tribal
36law or the rules of the tribal enterprise to carry out the primary
37gaming regulatory responsibilities for a tribe or tribal enterprise,
38provided that tribal enterprises that are combinations of tribes or
39tribal enterprises shall include within their rules a designation of
40a specific tribal regulatory agency to register with the commission
P19 1and function as the primary tribal regulatory agency with regulatory
2jurisdiction over the combination. That designation may not be
3changed except upon 20 days’ written notice to the commission.
4(bi) “Wagering suspense account” means a segregated account
5that temporarily holds the bets in a game pending the outcome of
To the extent permitted by federal law, the operation
11of gambling games on the Internet shall be authorized as long as
12all players and their betting activities are located within the state
13and the games are not played by minors.
Notwithstanding any other law, a person in
15California shall be 21 years of age or older to participate as a
16registered player in an authorized game.
(a) A person in the state shall not offer the
18opportunity to play an Internet gambling game, and a person shall
19not offer the opportunity to play an authorized game to anyone
20located within this state without holding a valid operator’s license
21issued by the state to offer the play of authorized games.
22(b) It is unlawful for a person to offer or play an Internet
23gambling game that is not authorized by the state.
24(c) Except as stated in this chapter, this chapter does not impose
25a limitation, restriction, or requirement on the offering of
26“play-for-fun” or “play-for-free” games on the Internet.
27(d) It is unlawful
for a person to offer the use of, or aggregate,
28except at a license poker room operator’s lawfully operating live
29site, computers or other devices or equipment in a public setting
30or for consideration for the purpose of enabling others to access,
31play or participate over the Internet, directly or indirectly, in an
32authorized game or any other gambling activity, or to promote or
33market the playing of those games or activities, whether or not
34those games or activities are controlled games or authorized under
36(e) A violation of this chapter is punishable as a misdemeanor.
Any money, other representative of value, or real
38or personal property used in, or derived from, the play of a
39gambling game provided on the Internet that is not authorized by
40the state pursuant to this chapter is subject to seizure by the
P20 1commission or by a peace officer. Upon a finding by a court that
2the money, other representative of value, or real or personal
3property was used in, or derived from, the play of a gambling game
4provided on the Internet that is not authorized by the state pursuant
5to this chapter, that money or property shall be forfeited to the
6Internet Poker Fund established in Section 19990.86. This chapter
7does not apply to play-for-fun or play-for-free games.
Only poker games that are offered for play or played
9in an authorized poker room are authorized games.
(a) There shall be the following three categories of
15(1) Platform operator licenses. Platform operator licenses shall
16be required of a person operating an authorized platform.
17(2) Poker room operator licenses. Poker room operator licenses
18shall be required of a person operating an authorized cardroom.
19(3) Service provider licenses. A service provider license shall
20be required of a person providing goods or services to, or in
21connection with, the operation of an authorized poker platform or
22an authorized poker room.
23(b) Entities eligible
to apply for, receive, and maintain a platform
24operator license or a poker room operator license pursuant to this
25chapter are the following:
26(1) A poker enterprise, as defined in Section 19990.05, that
27holds an owner license to operate a land-based gaming entity issued
28pursuant to subdivision (a) of Section 19851, subject to oversight
29by, and in good standing with, the commission.
30(2) A federally recognized California Indian tribe with a valid
31gaming ordinance or resolution and a valid compact authorizing
32it to offer gaming under the federal Indian Gaming Regulatory Act
33of 1988, or a tribal enterprise controlled by, and subject to, the
34powers and immunities of one or more members, partners, or
35shareholder tribes that have that authorization. A tribal enterprise
36may have as its members, partners, or shareholders any
37combination of federally recognized tribes or tribal enterprises.
38(3) A legal entity whose members, partners, or shareholders or
39any combination of poker enterprises, Indian tribes, and tribal
P21 1entities, each of which is eligible to hold the same kind of license
2as or to be held by the combination.
3(4) In the case of a platform operator license, the applicant, or,
4if a combination, each of its members, partners, or shareholders,
5shall have been lawfully offering and operating live on-premises
6poker gambling games for in-person players within California.
7(c) A service provider license may be issued to any person or
8form of entity, provided the applicant meets the regulatory
9requirements for the license.
10(d) For the purposes of this section, an incorporation or other
11change in legal form of ownership during the three years
12immediately preceding application for licensure that did not alter
13the ownership qualifications of the entity, does not disqualify an
14entity otherwise eligible for licensure.
15(e) Initial licenses for purposes of this section are licenses issued
16pursuant to applications properly and completely filed with the
17appropriate regulatory commission not later than 120 days prior
18to the date on which the first license issued pursuant to this chapter
19shall take effect. Subject to the power of the appropriate regulatory
20commission to deny, revoke, suspend, condition, or limit an
21operating license, as provided in this chapter, a license is eligible
22for renewal at the end of each term. Failure of a licensee to file an
23application for renewal prior to the expiration date of the license
24may be deemed to be an abandonment of the license.
25(f) Platform operator licenses issued under
this chapter shall be
26for a term of up to 10 years, and shall require payment of a license
27fee payment of ____ dollars ($____).
28(g) Poker room operator licenses issued under this chapter shall
29be for a term of 10 years and shall require a license fee payment
30of ____ dollars ($____).
31(h) Service provider licenses issued under this chapter shall be
32for a term of 10 years and shall require a license fee pay of ____
34(i) A license applicant shall submit to the commission, together
35with its application, an application deposit as determined by the
36department, in consultation with the commission, and any tribal
37regulatory agency with jurisdiction over the applicant’s intended
38poker room or platform for the reasonably anticipated costs to
39complete a necessary background investigation and evaluate the
40 suitability of the applicant.
P22 1(j) All moneys collected pursuant to this section shall be
2deposited into the Internet Poker Licensing Fund, which is hereby
3created, to be administered by the department. Notwithstanding
4Section 13340 of the Government Code, all moneys in the fund
5are continuously appropriated to the department and the
6commission, without regard to fiscal years, in the amounts
7necessary for the department and the commission to perform their
8duties under this section.
9(k) An operator and service provider license applicant who
10intends to function as an operator licensee or service provider to
11a tribal poker room or platform, including a tribe or tribal enterprise
12providing those services under this chapter, and any others required
13to be licensed in connection therewith under this chapter, tribal
14license applicants, shall, if required by the tribal gaming agency,
15obtain a license from the tribal regulatory agency exercising
16jurisdiction over that platform or poker room, under the procedures
17set forth in this section. However, if no tribal gaming agency
18process is required, this subdivision does not apply. The parties
19intend that the licensing process provided for pursuant to this
20chapter shall involve joint cooperation among tribal regulatory
21agencies, the commission, and the department. The licensing
22process shall be as follows:
23(1) All tribal license applicants shall pay the required fee to the
24commission and obtain a certified receipt verifying payment.
25(2) The certified receipt of payment shall be presented to the
26tribal regulatory agency prior to that agency beginning the
27background and licensing process.
28(3) Tribal gaming agencies receiving those applications shall
29notify the commission of those applications within five days
30following receipt thereof.
31(4) In reviewing an application for a license, the tribal regulatory
32agency shall determine whether issuance of the license would meet
33the licensing standards set forth in this chapter. A license may not
34be issued unless, based on all information and documents
35submitted, the tribal regulatory agency is satisfied that the applicant
36meets all of the criteria set forth in Sections 19990.22 and
3719990.23, including those which must be met to find that an
38applicant is suitable for licensing.
39(5) Each applicant for a tribal regulatory agency license shall
40submit the completed application along with the required
P23 1information and a tribal regulatory agency application fee, if
2required, to the tribal regulatory agency in accordance with the
3rules and regulations of that agency. At a minimum, the tribal
4regulatory agency shall require submission and consideration of
5all information required under Sections 19990.22 and 19990.23.
6For applicants who are business entities, the licensing provisions
7shall apply to the entity as well as to each of the following:
8(A) Its officers and directors.
9(B) Its principal management employees, including any chief
10executive officer, chief financial officer, chief operating officer,
11and general manager.
12(C) Its owners or partners, if an unincorporated business.
13(D) Its shareholders who own more than 10 percent of the shares
14of the corporation, if a corporation.
15(E) Each person or entity, other than a financial institution that
16the tribal regulatory agency has determined does not require a
17license under the preceding section, that, alone or in combination
18with others, has provided financing in connection with any gaming
19authorized under this chapter, if that person or entity provided
20more than 10 percent of (i) the startup capital, (ii) the operating
21capital over a 12-month period, or (iii) a combination thereof. For
22purposes of this section, where there is any commonality of the
23characteristics identified in subparagraphs (A) to (E), inclusive,
24between any two or more entities, those entities may be deemed
25to be a single entity. Nothing herein precludes the tribe or tribal
26regulatory agency from requiring more stringent licensing
28(6) The tribal regulatory agency shall conduct, or cause to be
29conducted, all necessary background investigations reasonably
30required to determine that the applicant is qualified for a gaming
31license under the standards set forth in Sections 19990.22 and
33(7) In lieu of completing its own background investigation, and
34to the extent that doing so does not conflict with or violate this
35chapter, the tribal regulatory agency may contract with the
36commission and the department for the conduct of background
37investigations, may rely on a state certification of nonobjection
38previously issued under a gaming compact involving another tribe,
39or may rely on a state gaming license previously issued to the
40applicant, to fulfill some or all of the tribal regulatory agency’s
P24 1background investigation obligation. An applicant for a tribal
2license shall be required to provide releases to the commission to
3make available to the tribal agency background information
4regarding the applicant. The commission shall cooperate in
5furnishing to the tribal regulatory agency that information, unless
6doing so would violate any agreement the commission has with a
7source of the information other than the applicant, or would impair
8or impede a criminal investigation, or unless the tribal regulatory
9agency cannot provide sufficient safeguards to ensure the state
10gaming agency that the information will remain confidential or
11that a provision of the information would violate state or federal
13(8) If the tribe adopts an ordinance confirming that Article 6
14(commencing with section 11140) of Chapter 1 of Title 1 of Part
154 of the Penal Code is applicable to members, investigators, and
16staff of the tribal regulatory agency, and those members,
17investigators, and staff thereafter comply with that ordinance, then,
18for purposes of carrying out its obligations under this section, the
19tribal regulatory agency shall be considered to be an entity entitled
20to receive state summary criminal history information within the
21meaning of paragraph (12) of subdivision (b) of Section 11105 of
22the Penal Code. The Department of Justice shall provide services
23to the tribal regulatory agency through the California Law
24Enforcement Telecommunications System (CLETS), subject to a
25determination by the CLETS advisory committee that the tribal
26regulatory agency is qualified for receipt of those services, and on
27those terms and conditions as are deemed reasonable by that
29(9) Upon completion of the necessary background investigation,
30the tribal regulatory agency may issue a license on a conditional
31or unconditional basis. Nothing herein shall create a property or
32other right of an applicant in an opportunity to be licensed, or in
33a license itself, both of which shall be considered to be privileges
34granted to the applicant in the sole discretion of the tribal regulatory
36(10) Any tribal license application under this chapter may be
37denied, and any license issued may be revoked, if the tribal
38regulatory agency determines that the application is incomplete
39or deficient, or if the applicant is determined to be unsuitable or
40otherwise unqualified for a gaming license. Pending consideration
P25 1of revocation, the tribal regulatory agency may suspend a license.
2All rights to notice and hearing shall be governed by the rules of
3the tribal regulatory agency, which shall meet minimum
4requirements to be developed among the tribes, the commission,
5and the department, and as to which the applicant will be notified
6in writing, along with notice of an intent to suspend or revoke the
8(11) Except as provided in subparagraph (B), upon receipt of
9notice that the commission or department, collectively or
10individually, the state regulatory agency, has determined that a
11person would be unsuitable for licensure in a similar application
12filed in connection with a nontribal operation, the tribal regulatory
13agency shall not issue the requested license or, if that notice is
14received after issuance of the license, promptly revoke that license,
15provided that the tribal regulatory agency may, in its discretion,
16reissue a license to the person following entry of a final judgment
17reversing the determination of the commission and department in
18a proceeding in state court conducted pursuant to Section 1085 of
19the Civil Code.
20(12) The tribal regulatory agency may summarily suspend the
21license of any employee if the tribal regulatory agency determines
22that the continued licensing of the person or entity could constitute
23a threat to the public health or safety or may violate this chapter.
24(13) Upon receipt of a completed license application and a
25determination by the tribal regulatory agency that it intends to
26issue the license, the tribal regulatory agency shall transmit to the
27commission a notice of intent to license the applicant, together
28with all of the following:
29(A) A copy of all tribal license application materials and
30information received by the tribal regulatory agency from the
32(B) An original set of fingerprint cards.
33(C) A current photograph.
34(D) Except to the extent waived by the commission, those
35releases of information, waivers, and other completed and executed
36forms as the tribal regulatory agency shall require.
37(14) As a part of any application process required by a tribal
38regulatory agency under this subdivision, the tribal regulatory
39agency shall also require the applicant to file an application with
40the state gaming agency, prior to issuance of any license, for a
P26 1determination of suitability for licensure under this chapter. Upon
2receipt of completed license application information from the tribal
3regulatory agency, the state gaming agency may conduct a
4background investigation pursuant to state law to determine
5whether the applicant would be suitable to be licensed for
6association with a poker room or platform subject to the jurisdiction
7of the gaming agency. If further investigation is required to
8supplement the investigation conducted by the tribal regulatory
9agency, the applicant will be required to pay the statutory
10application fee charged by the state regulatory agency pursuant to
11this chapter, but any deposit requested by the state regulatory
12agency shall take into account the initial deposit already provided
13by the applicant, reports of the background investigation already
14conducted by the tribal regulatory agency, and any other burdens
15on the applicant.
16(15) Failure to pay the application fee may be grounds for denial
17of the application by the state regulatory agency.
18(16) The state regulatory agency and tribal regulatory agency
19shall cooperate in sharing as much background information as
20possible, both to maximize investigative efficiency and
21thoroughness, and to minimize investigative costs. The state
22regulatory agency shall not impose a greater burden or cost upon
23an application originating from a tribal applicant or regulatory
24agency than if the application originated in connection with a
26(17) Upon completion of the necessary background investigation
27or other verification of suitability, the state regulatory agency shall
28issue a notice to the tribal regulatory agency certifying that the
29state has determined that the applicant would be suitable, or that
30the applicant would be unsuitable, for licensure in connection with
31a poker room or platform under this chapter and, if unsuitable,
32stating the reasons therefor. Prior to denying an application for a
33determination of suitability, the state regulatory agency shall notify
34the tribal regulatory agency and afford the tribe an opportunity to
35be heard. If the state regulatory agency denies an application for
36a determination of suitability, that agency shall provide the
37applicant with written notice of all appeal rights available under
P27 1(18) The tribal regulatory agency shall require a licensee to
2apply for renewal of a determination of suitability at the time the
3licensee applies for renewal of a tribal license under this chapter.
4(19) The state regulatory agencies and the tribal gaming agencies
5under gaming compacts then in effect shall cooperate in developing
6standard licensing forms for tribal gaming license applicants, on
7a statewide basis, that reduce or eliminate duplicative or excessive
8paperwork, which forms and procedures shall take into account
9the requirements under this chapter and the expense thereof.
10(l) An application deposit amount from a license applicant that
11remains after completion of a background investigation and the
12finding of suitability shall be refunded to the applicant. If additional
13moneys are needed to complete the investigation of the license
14applicant, the applicant shall pay the funds necessary to complete
16(m) There is no limit on the number of Internet poker rooms an
17authorized poker room licensed operator may operate, or on the
18number of skins that can be offered through an authorized poker
19room, but each room shall require a separate license and license
21(n) All initial licenses issued pursuant to this chapter shall take
22effect on the same date, as determined by the commission, but not
23later than one year after this chapter becomes effective.
24(o) In addition to the licenses required under this chapter, an
25application may be made to become a skin sponsor, under the
27(1) Skins are intended to serve as an alternative means by which
28those who meet gaming suitability requirements may participate
29in intrastate Internet poker on a nonoperational basis by permitting,
30through contractual arrangements with authorized poker room
31operators and compliance with applicable regulations, the
32opportunity to offer players authorized games in an authorized
33poker room, but under the skin sponsor’s brand or other identity
34rather than that of the authorized poker room operator. Skins are
35typically represented on an Internet Web site through graphics and
36words distinguishing it from those employed directly by the
37authorized poker room.
38(2) Other than the approval of designs, logos, graphics, and
39other advertising considerations, skin sponsors shall have no
P28 1operation or control over the skin or authorized poker room, or
2any access to the platform or games played thereon.
3(3) All games played through a skin shall be treated the same
4as other authorized games played in the host poker room and shall
5be offered only to authorized players.
6(4) Players entering games from skins or directly through the
7poker room may be mixed among the tables in the poker room and
8need not be informed as to the source from which other players
9entered the room.
10(5) An unlimited number of skins for an authorized poker room
11may be issued to one or more skin sponsors by the poker room
12licensee. A fee to the commission for a skin sponsorship shall be
13collected and paid to the commission in the amount of ____% of
14the fee to be paid to the licensed poker room operator for operating
15the skin on the sponsor’s behalf, but the fee to the commission
16shall be equal to or greater than ____ dollars ($____) annually.
17(6) Players accessing the authorized poker room through a skin
18shall be authorized and, in all other respects, treated and subject
19to the same rules as any other player in the room.
20(7) Additional rules governing advertisements, identifications,
21and notifications to players regarding skins shall be issued by the
An entity described in subdivision (b) of Section
2419990.20 is eligible for a platform operator license or a poker room
25operator license. There is no limit on the total number of operating
26licenses the state may issue. An eligible entity may jointly apply
27for a license, either as a partnership or some other combination of
28eligible entities, as long as that combination is comprised entirely
29of eligible entities. An eligible entity that is a partnership,
30consortium, or other combination of eligible entities may itself
31have an interest in only a single license.
(a) Factors to be considered in evaluating the
33application for a license shall include, but are not limited to,
34quality, efficiency, reliability, financial viability, durability,
35adaptability, timely performance, integrity, and security.
36(b) (1) A nontribal license applicant shall be a resident of
37California or an entity organized in California, domiciled in
38California, and in good standing with the Secretary of State and
39Franchise Tax Board, and subject to auditing, enforcement of the
40terms of the license, and state taxation.
P29 1(2) The following applies to tribal license applicants:
commission shall consult with California tribal
3governments and regulatory agencies to develop a registration and
4application process that takes into account, and avoids duplication
5of, efforts by the commission and tribal governmental gaming
6agencies to perform background and other suitability tests
7applicable to tribes under their tribal-state compacts.
8(B) A tribal license applicant shall be federally recognized as
9a tribe, perform a substantial portion of its governmental functions
10within the borders of California, and be subject to a tribal-state
12(C) A tribal enterprise license applicant shall include with its
13license application an express and limited waiver of all tribal
14owners’ sovereign immunity solely for the purposes of enforcing
15the terms of a license issued under this chapter and any regulations
16promulgated thereunder, and with regard to a claim, sanction, or
17penalty arising therefrom, and for no other purpose.
18(D) Tribal applicants who have conducted live poker games for
19in-person players on their tribal lands for at least three continuous
20years prior to filing their license application and are in good
21standing shall be presumed to be suitable to hold a gaming license.
22(3) A licensed operator cannot accept goods for services from
23a service provider that has not been licensed as a service provider
24under this chapter.
25(4) All facilities, bank accounts, and accounting records of a
26license applicant related to authorized gaming activity shall be
27located in California.
28(5) Proprietary information supplied by a license applicant to a
29state agency shall be exempt from public disclosure to the extent
30 permitted under Section 6253 of the Government Code.
31(6) In addition to other confidentiality protections afforded to
32license applicants, the state and its regulatory agencies and the
33tribe and their regulatory agencies shall treat the proprietary
34information of a license applicant as confidential to protect the
35license applicant and to protect the security of a prospective
36intrastate Internet poker platform or poker room. This chapter does
37not prohibit the exchange of confidential information among state
38agencies, tribal gaming agencies, or both, considering a license
39application, nor does it prohibit the state or its agencies from
P30 1entering into agreements to share applicant background information
2with other gaming licensing agencies in other jurisdictions.
(a) The commission or, if application for licensing
4in connection with a tribal platform or poker room, the appropriate
5tribal regulatory agency, if required under subdivision (k) of
6Section 19990.20, shall review the suitability and capability of a
7license applicant in conformity with the rules set forth in this
9(b) With respect to nontribal licenses, the commission may
10establish a process to conduct a preliminary determination of
11suitability based on a partial investigation of license applicants
12that are seeking licensure along with a determination of which
13license applicants may be subject to a partial investigation. A
14partial investigation is intended to screen out applicants that do
15not meet the prima facie evidential showing that it meets the
16suitability requirements of this chapter. A partial investigation
17shall include fingerprint-based state and federal criminal history
18checks and clearances, and inquiries into various public databases
19regarding credit history and civil litigation. A partial investigation
20shall also include a review of the applicant’s financial status, which
21shall include the required submission of a report prepared on behalf
22of the applicant by a department-approved forensic accounting,
23audit, or investigative firm, in a format developed by the
24department, and at the applicant’s expense. The report shall include
25the financial information necessary for the department to make a
26preliminary determination of suitability. The department may
27specify additional requirements regarding the contents of the report
28and any other financial information or documentation required to
29be submitted with the application. A full investigation shall be
30conducted of only those persons that pass the partial investigation
31and that will undergo a full investigation pursuant to subdivision
32(c). Those applicants that do not pass the partial investigation may
33appeal the decision to the commission.
34(c) The commission shall conduct a full investigation into the
35suitability of a license applicant that initially applies to the
36commission for a license, and in the case of tribal license
37applicants, if required under subdivision (k) of Section 19990.20,
38following approval of the license by the tribal regulatory agency.
39(d) Notwithstanding any provision of this chapter to the contrary,
40an applicant that is a tribe and that is subject to a tribal-state
P31 1compact, secretarial procedures for class III gaming under IGRA,
2or a gaming ordinance or resolution approved under IGRA that is
3in effect, shall be presumed suitable and shall not be required to
4pay the application fee. However, tribal officials and other agents
5or representatives of the tribe are exempt from the suitability
6determinations pursuant to this section only when, as set forth in
7subparagraph (C) of paragraph (3), the tribe holds the license
8through a separate and independent tribal entity. In all other
9instances the investigation shall include all of the following
11(1) The license applicant.
12(2) All officers, directors, partners, and members of the license
14(3) The owner or owners of the following:
15(A) The license applicant.
16(B) An affiliate of the license applicant.
17(C) A person deemed by the department to have significant
18influence over the license applicant or its service providers or their
19respective operations. Notwithstanding any provision of this section
20to the contrary, in the event the tribal applicant is a separate and
21independent entity of the tribe, such as a tribally and wholly owned
22corporation or limited liability company, with control vested in a
23board or committee that is separate from the tribe’s governing
24body, except for the basic tribal eligibility requirements set forth
25in Section 19990.20, that may be met by the tribe, those tribal
26entities shall meet any other requirements for licensure pursuant
27to this chapter. Only the officers, directors, and key employees of
28those entities, and not the elected officials of the tribal owner, shall
29be required to meet the suitability requirements of this section,
30except when those tribal officials have authority to exercise direct
31control over the operations of the entity.
32(D) A person that directly or indirectly holds a beneficial
33or ownership interest of 10 percent or more of a service provider
34or player recruiter of the licensee. The commission may require a
35person with a smaller interest to be found suitable in the exercise
36of its discretion where it deems appropriate. If the person is not a
37natural person, the department may determine which officers,
38directors, and owners of the person are significantly involved in
39the management or control of the person as it relates to core
40functions so as to require an investigation into suitability.
P32 1(e) A full investigation shall include a review and evaluation of
2the license applicant’s qualifications and experience to provide
3the services anticipated of a licensee, which shall include the
4required submission of a report prepared on each applicant by an
5outside firm contracted and supervised by the department, in a
6format developed by the department, and at the applicant’s expense.
7The report shall include information necessary for the department
8to make a determination of suitability, as specified in regulation,
9consisting of, but not limited to, personal history, prior activities
10and associations, credit history, civil litigation, past and present
11financial affairs and standing, and business activities. The
12department may specify additional requirements regarding the
13contents of the report and other information or documentation
14required to be submitted with the application. If the license
15applicant is using or providing gaming software, the license
16applicant shall also provide compliance certification of its gaming
17software by a department-approved certification entity.
18(f) An institutional investor holding less than 10 percent of the
19equity securities of a service provider’s holding or intermediary
20companies shall be granted a waiver of an investigation of
21suitability or other requirement if all of the following apply:
22(1) The securities are those of a corporation, whether publicly
23traded or privately held.
24(2) Holdings of those securities were purchased for investment
26(3) The institutional investor annually files a certified statement
27with the department to the effect that it has no intention of
28influencing or affecting the affairs of the issuer, the licensee, or
29service provider, as applicable, or its holding or intermediary
31(4) Notwithstanding paragraph (3), the institutional investor
32may vote on matters submitted to the vote of the outstanding
34(5) The certification described in paragraph (3) shall include a
35statement that the institutional investor beneficially owns the equity
36securities of the corporation for investment purposes only, and in
37the ordinary course of business as an institutional investor, and
38not for the purpose of causing, directly or indirectly, the election
39of members of the board of directors, or effecting a change in the
40corporate charter, bylaws, management, policies, or operations of
P33 1the corporation or any of its affiliates. The certification also shall
2indicate any changes to the structure or operations of the
3institutional investor that could affect its classification as an
4institutional investor, as listed in paragraph (7). Additionally, the
5certification shall state that the institutional investor and
6corporation shall maintain gaming compliance policies and
7procedures to implement and ensure compliance with this chapter
8and regulations promulgated thereunder.
9(6) An institutional investor granted a waiver under this
10subdivision that subsequently decides to influence or affect the
11affairs of the issuer shall provide not less than 30 days’ notice of
12that intent and shall file with the department a request for
13determination of suitability before taking an action that may
14influence or affect the affairs of the issuer. However, the
15institutional investor may vote on matters submitted to the vote of
16the outstanding security holders. If an institutional investor changes
17its investment intent, or the department finds reasonable cause to
18believe that the institutional investor may be found unsuitable, the
19institutional investor shall take no action other than divestiture
20with respect to its security holdings until it has complied with any
21requirements established by the department, which may include
22the execution of a trust agreement. The institutional investor and
23its relevant holding, related, or subsidiary companies shall
24immediately notify the department and, if a tribal license is
25involved, the tribal regulatory agency, of any information about,
26or actions of, an institutional investor holding its equity securities
27when that information or action may impact upon the eligibility
28of the institutional investor for a waiver pursuant to paragraph (2).
29(7) If at any time the regulatory agency finds that an institutional
30investor holding a security of a licensee under this chapter has
31failed to comply with the terms of this chapter, or if at any time
32the department finds that, by reason of the extent or nature of its
33holdings, whether of debt or equity securities, an institutional
34investor is in a position to exercise such a substantial impact upon
35the controlling interests of a licensee that investigation and
36determination of suitability of the institutional investor are
37necessary to protect the public interest, the department may take
38any necessary action otherwise authorized under this chapter to
39protect the public interest.
P34 1(8) For purposes
of this subdivision, an “institutional investor”
2includes all of the following:
3(A) A retirement fund administered by a public agency for the
4exclusive benefit of federal, state, or local public employees.
5(B) An investment company registered under the federal
6Investment Company Act of 1940 (15 U.S.C. Sec, 80a-1 et seq.).
7(C) A collective investment trust organized by banks under Part
8Nine of the Rules of the Office of the Comptroller of the Currency.
9(D) A closed-end investment trust.
10(E) A chartered or licensed life insurance company or property
11and casualty insurance company.
12(F) A federally regulated or state-regulated
bank, savings and
13loan, or other federally or state-regulated lending institution.
14(G) An investment adviser registered under the federal
15Investment Advisers Act of 1940 (15 U.S.C. Sec. 80b-1 et seq.).
16(H) Other persons as the department may determine for reasons
17consistent with the public interest.
18(g) The tribe or tribes that own a tribal enterprise, and the
19officers, directors, and employees of that tribe or tribes, are not
20subject to suitability review as a condition of the tribal enterprise
21obtaining a license pursuant to this chapter, provided that the tribal
22enterprise is controlled by an independent board of directors. The
23officers, directors, and employees of the tribal enterprise are not
24hereby exempted from suitability review.
25(h) Except as
otherwise provided by statute or regulation, every
26person, that, by statute or regulation, is required to hold a license
27shall obtain a license prior to engaging in the activity, or occupying
28the position, with respect to which the license is required. An
29applicant for licensing, or for any approval or consent, shall make
30a full and true disclosure of all information to the appropriate
31regulatory agencies as necessary to carry out the policies of the
32state relating to the licensing and control of poker. The burden of
33proving a person’s qualifications to receive a license is on the
35(i) The regulatory agencies may issue a finding of suitability
36for a license applicant to obtain a license only if, based on all of
37the information and documents submitted, the commission is
38satisfied that each of the persons subject to investigation pursuant
39to this section is both of the following:
P35 1(1) A person of good character, honesty, and integrity, or, if an
2entity, in good standing in its jurisdiction of organization and in
3all other jurisdictions in which it is qualified, or should be qualified,
4to do business.
5(2) A person whose prior activities, criminal record, if any,
6reputation, habits, and associations do not pose a threat to the
7public interest of this state, or to the effective regulation and control
8of controlled poker, or create or enhance the dangers of unsuitable,
9unfair, or illegal practices, methods, and activities in the conduct
10of controlled poker or in the carrying on of the business and
11financial arrangements incidental thereto.
12(j) The commission shall issue a finding that a license applicant
13is not suitable to obtain a license if it finds that a person subject
14to investigation pursuant to this section is described by any of the
16(1) Failed to clearly establish eligibility and qualifications in
17accordance with this chapter.
18(2) Failed to timely provide information, documentation, and
19assurances required by this chapter or requested by the department,
20or, with respect to a license applicant, failed to reveal any fact
21material to qualification, or supplied information that is untrue or
22misleading as to a material fact pertaining to the suitability criteria.
23(3) Been convicted of a felony, including a conviction by a
24federal court or a court in another state or foreign jurisdiction for
25a crime that would constitute a felony if committed in California,
26except that a conviction of a felony involving the hunting or fishing
27rights of a tribal member while on his or her reservation shall not
28be included among the class of disqualifying felonies.
29(4) Been convicted of a misdemeanor in a jurisdiction involving
30dishonesty or moral turpitude within the 10-year period
31immediately preceding the submission of the application, unless
32the applicant has been granted relief pursuant to Section 1203.4,
331203.4a, or 1203.45 of the Penal Code. However, the granting of
34relief pursuant to Section 1203.4, 1203.4a, or 1203.45 of the Penal
35Code shall not constitute a limitation on the discretion of the
36department or affect the applicant’s burden.
37(5) Has associated with criminal profiteering activity or
38organized crime, as defined in Section 186.2 of the Penal Code.
39(6) Has contemptuously defied a legislative investigative body,
40or other official investigative body of a state or of the United States
P36 1or a foreign jurisdiction, when that body is engaged in the
2investigation of crimes relating to poker, official corruption related
3to poker activities, or criminal profiteering activity or organized
4crime, as defined in Section 186.2 of the Penal Code.
5(7) Is less than 21 years of age.
6(8) Has knowingly and willfully accepted a bet after December
731, 2006, from a person located in the United States on any form
8of Internet gambling, including, but not limited to, poker, that has
9not been affirmatively authorized by law of the United States or
10of each state in which a person making that bet were located, or
11has been the holder of a direct or indirect financial interest in a
12person or entity that has accepted that bet.
13(9) Has knowingly facilitated or otherwise provided services
14with respect to bets or gambling games using the Internet involving
15 persons located in the United States for a person described in
16paragraph (8), acting with knowledge of the fact that these bets or
17gambling games involved persons located in the United States.
18(k) Actions on license applications will be treated as follows:
19(1) The commission shall reject the license application of an
20applicant found to be ineligible for licensure.
21(2) If denial of the application, or approval of the license with
22restrictions or conditions on the license, is recommended, the
23department shall prepare and file with the commission written
24reasons upon which the recommendation is based. Prior to filing
25its recommendation with the commission, the department shall
26meet with the applicant, or the applicant’s duly authorized
27representative, and inform the applicant generally of the basis for
28a proposed recommendation that the application be denied,
29restricted, or conditioned.
30(3) This section neither requires the department to divulge to
31the applicant confidential information received from a law
32enforcement agency or information received from a person with
33assurances that the information would be maintained confidential,
34nor to divulge any information that might reveal the identity of an
35informant or jeopardize the safety of a person.
36(4) Denial of an application shall be without prejudice to a new
37and different application filed in accordance with any regulations
38adopted by the department with respect to the submission of
P37 1(5) A request to withdraw an application for a license may be
2made by the license applicant at any time prior to final action on
3the application by the department by filing a written request with
4the commission to withdraw the application, absent knowledge of
5a specific reason to suspect that the person or entity may be found
7(6) The commission shall waive the application of the provisions
8of paragraph (8) or (9) of subdivision (j) for an applicant who can
9demonstrate by clear and convincing evidence that its conduct in
10connection with bets and gambling games involving persons
11located in the United States was not unlawful under federal law
12and the laws of each state in which persons making the bets were
13located. In making this determination, the commission may
14consider evidence that the applicant was prosecuted under the laws
15of any state, the United States, or another jurisdiction. However,
16the termination of a prosecution in a manner other than a conviction
17does not constitute evidence that the applicant’s conduct was
18lawful. This section does not waive the need to comply with all
19otherwise applicable license and suitability requirements.
20(l) This section shall not be construed to prohibit a tribal
21regulatory agency from conducting its own analysis of suitability
22for a person or entity applying for licensure in connection with a
23tribal platform or poker room, or from providing the results of its
24suitability analysis to the commission, as provided under
25subdivision (k) of Section 19990.20.
A finding of suitability by a state gaming agency
27within the United States with expertise recognized within the
28gaming industry that is also recognized as meeting this standard
29by the department, shall be grounds for a state provisional finding
30of suitability with respect to a particular person or entity until a
31permanent suitability finding is issued by the department as to that
32person or entity.
In addition to any other data that the department
34shall request from a license applicant as a matter of law, and to
35ensure that a license applicant is legally, technically, and financially
36qualified to become a licensee, the department shall request that
37a license applicant name, describe, or provide all of the following:
38(a) The license applicant’s experience and qualifications to
39provide the services anticipated of a licensee as set forth in Article
405 (commencing with Section 19990.30).
P38 1(b) The names of all of the license applicant’s owners,
2executives, and employees at the time the application is submitted,
3as well as sufficient personally identifiable information on each
4of those persons to conduct background investigations as required
5by the department.
6(c) For those owners, executives, and employees who would be
7required to hold a work permit if the license application were
8granted, the application shall include information regarding their
9qualifications to obtain that permit. That information may be in
10the form of work permit applications to be processed by the
11department along with the license application.
12(d) The fingerprints of the owners, directors, managers,
13executives, and employees of the licensee and its affiliates, using
14live scan technology.
15(e) Documentation and information relating to the license
16applicant and its direct and indirect owners, including, but not
17limited to, all of the following:
18(1) Proof of the license
applicant’s formation in California,
19including, as applicable, articles of incorporation, articles of
20organization, bylaws, operating agreement, partnership agreement,
21or other formation or charter documents. For a tribe or tribal
22enterprise, this requirement shall be satisfied by providing
23documentation regarding the tribe’s federal recognition and its
24operation of a substantial portion of its governmental activities in
26(2) Current and historical audited financial and accounting
27records performed in accordance with Generally Accepted
28Accounting Principles (GAAP) or International Financial Reporting
30(3) Documents describing legal and regulatory proceedings in
31which the license applicant has been or is a party.
32(4) Documents relating to the license applicant’s business history
34(5) Documents relating to the nature and sources of the license
35applicant’s financing, including, but not limited to, operating
36agreements, partnership agreements, stock purchase agreements,
37loan capital agreements, pro forma cap tables, pro forma statements
38of profits and loss, investor rights agreements, voting agreements,
39and shareholder agreements. These materials may be submitted
40subject to a request for confidentiality.
P39 1(6) Documentation that demonstrates that the license applicant
2is financially qualified to perform the obligations of a licensee as
3described in this article. An applicant for licensure as an operator
4shall provide documentation establishing that, if the license is
5granted, the license applicant is qualified to pay the license fee
6required by subdivision (a) of Section 19990.58 from its own
7assets, or its owners’ assets, or through credit extended to the entity
8in an amount not to exceed the entity’s own assets, or its owners’
10(7) An independent financial audit report by a certified public
12(f) A description of the functions, goods, or services that the
13license applicant intends to provide through licensed service
14providers, rather than conducting directly.
15(g) A description of the games and services the license applicant
16proposes to offer to authorized players, in the case of an applicant
17for an operator’s license, or of the goods or services the license
18applicant proposes to offer to licensed operators, in the case of an
19applicant for a service provider’s license.
20(h) In the case of an applicant for an operator’s license, a
21description of the manner in which the licensee’s facilities will
22accomplish the goals of this chapter, including, but not limited to:
23(1) The licensee’s location within the state.
24(2) The licensee’s security systems.
25(3) The license applicant’s proposal for the manner in which it
26will facilitate compliance with all of the standards set forth in this
27chapter and federal law, including, but not limited to, Section
285362(10)(B) of Title 31 of the United States Code.
29(i) In the case of an applicant for a license, the system
30requirements that the license applicant plans to implement to
31achieve the state’s goals under this chapter, including, but not
32limited to, the following:
33(1) Connectivity and level of service.
34(2) The system architecture of the gaming equipment.
35(3) The software architecture of the gaming system.
36(4) The network architecture of the gaming system.
37(5) The security employed for the protection of the gaming
39(6) The security employed for the protection of online players.
40(7) Connectivity with systems belonging to service providers.
P40 1(8) Methods employed to maintain high service availability.
2(9) Change management procedures.
3(10) Information security policies.
4(11) Disaster recovery procedures.
5(12) Policies to ensure transparency and integrity in gaming.
6(13) Financial policies for the protection of player funds.
7(14) Gaming systems, including, but not limited to, hardware
8and software that ensure all of the following:
9(A) The games are legal.
10(B) The games are independent and fair and played by live
12(C) Game and betting rules are available to all registered players.
13(D) All data used for the
conduct of each game are randomly
14generated and unpredictable to the same extent that a properly
15shuffled finite deck of tangible playing cards would be random
17(15) Accounting systems, including, but not limited to, those
18for any of the following:
19(A) Authorized player accounts.
20(B) Per hand charges.
21(C) Transparency and reporting to all state agencies.
22(D) Distribution of funds, pursuant to the license and this
23chapter, to the state and authorized players.
24(E) Ongoing auditing and ongoing internal control and
security systems to protect the intrastate Internet
27poker Web site from internal and external threats.
28(j) The license applicant’s proposal to facilitate the statutory
29duties and responsibilities of the state agencies with jurisdiction
30over aspects of the licensee’s operations, including, but not limited
31to, all of the following:
32(1) The department.
33(2) The commission.
34(3) The Treasurer.
35(4) The Franchise Tax Board.
36(k) In addition to demonstrating that the license applicant is
37legally, technically, and financially qualified to become a licensee,
38an applicant for an operator’s license shall also provide compliance
39 certification of its gaming software by a department-approved
P41 1certification entity to ensure that it complies with the requirements
2of this chapter.
(a) The holder of an owner license issued pursuant
4to subdivision (a) of Section 19851 that is in good standing, is not
5unqualified to operate a land-based poker entity by reason of an
6investment in a license applicant or a licensee.
7(b) An official representative of the government of a federally
8recognized California Indian tribe with a tribal-state gaming
9compact with the state or conducting gaming activities pursuant
10to secretarial procedures, or the tribe itself or its subsidiaries, is
11not unqualified to operate a land-based poker entity by reason of
12an investment in a license applicant or a licensee.
13(c) (1) A license applicant whose application is
denied by the
14state regulatory agency may bring an action to appeal that decision
15to the Superior Court of the County of Sacramento. Damages or
16other monetary awards shall not be permitted.
17(2) The Superior Court of the County of Sacramento shall uphold
18the decision by the state regulatory agency if there is substantial
19evidence to support the department’s decision to deny the license
21(3) If the Superior Court of the County of Sacramento finds for
22the license applicant, it shall return the application to the
23department for action consistent with the decision of the court.
(a) A licensee shall comply with the terms of this
29(b) A licensed operator may cease its operations after providing
30the department with a 90-day advance notice of its intent and a
31statement explaining its reasons for doing so, which may include
32the fact that continuing to operate the intrastate Internet poker Web
33site is commercially infeasible. In response to that notice, the state
34may file an action in the Superior Court of the County of
35Sacramento if it deems that action necessary to protect a state
36interest, including, but not limited to, the interests of authorized
38(c) If a dispute arises between the state and the licensee, the
39department or a licensee may file an action in the superior court
40of a county in which the department has an office for an
P42 1interpretation of the rights and responsibilities of the state and the
2licensee pursuant to this chapter.
(a) Prior to initiating operations and thereafter, a
4licensee shall ensure that each employee has been issued an
5employee work permit by the department, pursuant to standards
6adopted by the department, prior to that person having access to
7the licensee’s facilities. The permit shall be renewed every two
9(b) An employee work permit shall not be issued unless, based
10on all of the information and documents submitted, the department
11is satisfied that the applicant is, at a minimum, all of the following:
12(1) A person of good character, honesty, and integrity.
13(2) A person whose prior activities, criminal
record, if any,
14reputation, habits, and associations do not pose a threat to the
15public interest of this state, or to the effective regulation and control
16of controlled poker, or create or enhance the dangers of unsuitable,
17unfair, or illegal practices, methods, and activities in the conduct
18of controlled poker or in the carrying on of incidental business and
20(3) A person who is in all other respects qualified to hold an
21employee work permit as provided in this chapter.
22(c) An applicant for an employee work permit is disqualified
23for any of the following reasons:
24(1) Failure of the applicant to clearly establish eligibility and
25qualification in accordance with this chapter.
26(2) Failure of the applicant to provide timely
27documentation, and assurances required by this chapter or requested
28by a state official, or failure of the applicant to reveal any fact
29material to the qualification, or the supplying of information that
30is untrue or misleading as to a material fact pertaining to the
32(3) Conviction of a felony, including a conviction by a federal
33court, a court in another state, or a court in another country, for a
34crime that would constitute a felony if committed in California.
35(4) Conviction of the applicant for a misdemeanor involving
36dishonesty or moral turpitude within the 10-year-period
37immediately preceding the submission of the application, unless
38the applicant has been granted relief pursuant to Section 1203.4,
391203.4a, or 1203.45 of the Penal Code. However, the granting of
40relief pursuant to Section 1203.4, 1203.4a, or 1203.45 of the Penal
P43 1Code shall not constitute a limitation on the discretion of the
2department or affect the applicant’s burden under subdivision (b).
3(5) Association of the applicant with criminal profiteering
4activity or organized crime, as defined in Section 186.2 of the
6(6) Contemptuous defiance by the applicant of a legislative
7investigative body, or other official investigative body of a state
8or of the United States, when that body is engaged in the
9investigation of crimes relating to poker, official corruption related
10to poker activities, or criminal profiteering activity or organized
11crime, as defined in Section 186.2 of the Penal Code.
12(7) The applicant is less than 21 years of age.
13(d) A licensee shall apply for an employee work permit on behalf
14of each employee.
15(e) An employee work permit shall not be issued unless the
16applicant meets the qualification standards adopted by the
18(f) The department shall establish a fee to be paid by a licensee
19for the cost of background investigation on employee work permit
20applications submitted on behalf of that licensee’s employees. The
21department and the commission shall establish processes for the
22revocation or suspension of an intrastate Internet poker license or
23employee work permit, and to withdraw an application for an
24intrastate Internet poker license or employee work permit.
25(g) (1) A licensee shall not enter into, without prior approval
26of the department, a contract or agreement with a person who is
27denied a poker license or employee work permit pursuant to
28Chapter 5 (commencing with Section 19800), or whose poker
29license or employee work permit is suspended or revoked by the
30department, or with a business enterprise under the control of that
31person, after the date of receipt of notice of the department’s action.
32(2) A licensee shall not enter into a contract or agreement with
33a person or entity that has knowingly and willfully accepted a bet
34from a person located in the United States on a form of Internet
35gambling, including, but not limited to, poker, after December 31,
362006, that has not been affirmatively authorized by a law of the
37United States or of each state in which the person making that bet
38was located, or has been the holder of a direct or indirect financial
39interest in a person or entity that has accepted a bet. This section
40does not apply to a person or entity that has demonstrated, by clear
P44 1and convincing evidence, pursuant to the process described in
2paragraph (6) of subdivision (i) of Section 19990.23, that its
3conduct in connection with bets and gambling games involving
4persons located in the United States was not unlawful under federal
5law and the laws of each state in which persons making bets were
7(h) A licensee shall not employ, without prior approval of the
8department, a person in a capacity for which he or she is required
9to have an employee work permit, if the person has been denied
10a poker license or an employee work permit pursuant to Chapter
115 (commencing with Section 19800), or if his or her poker license
12or employee work permit has been suspended or revoked after the
13date of receipt of notice of the action by the department. A licensee
14shall not enter into a contract or agreement with a person whose
15application for a poker license or an employee work permit has
16been withdrawn with prejudice, or with a business enterprise under
17the control of that person, for the period of time during which the
18person is prohibited from filing a new application for a poker
19license or an employee work permit.
20(i) If an employee who is required to hold an employee work
21permit pursuant to this chapter is denied an employee work permit,
22or has his or her employee work permit revoked by the department,
23the employee shall be terminated immediately in all capacities.
24Upon notifying the licensee of the department’s action, the
25employee shall have no further involvement in the poker operation.
26Notwithstanding any provisions of this chapter to the contrary:
27(1) If an employee who is required to hold an employee work
28permit pursuant to this chapter has his or her employee work permit
29suspended, the employee shall be suspended in all capacities. Upon
30notifying the licensee of the department’s action, the employee
31shall not be permitted to have involvement in the poker operation
32during the period of suspension.
33(2) A licensee shall not designate another employee to replace
34the employee whose employment was terminated or suspended,
35unless the other employee has an existing work permit.
36(j) A licensee shall not pay to a person whose employment has
37been terminated or suspended pursuant to subdivision (i)
38remuneration for a service performed in a capacity in which the
39person is required to hold an employee work permit, except for
P45 1amounts due for services rendered before the date of receipt of
2notice of the department’s action of suspension or termination.
3(k) Except as provided in subdivision (i), a contract or agreement
4for the provision of services or property to a licensee for the
5conduct of an activity pertaining to the operation of an authorized
6game, which is to be performed by a person required by this
7chapter, or by regulations adopted pursuant to this chapter, to hold
8an employee work permit, shall be terminated upon a suspension
9or revocation of the person’s employee work permit.
10(l) In a case in which a contract or agreement for the provision
11of services or property to a licensee or an affiliate thereof, or for
12the conduct of an activity at an intrastate Internet poker Web site,
13is to be performed by a person required by this chapter or by
14regulations adopted by the department to hold an employee work
15permit, the contract shall be deemed to include a provision for its
16termination without liability on the part of the licensee or affiliate,
17upon a suspension or revocation of the person’s employee work
18permit. In an action brought by the department to terminate a
19contract pursuant to subdivision (k), it is not a defense that the
20agreement does not expressly include the provision described in
21this subdivision, and the lack of express inclusion of the provision
22in the agreement is not a basis for enforcement of the contract by
23a party thereto.
24(m) If a licensee does not comply with the requirements of this
25section, the department may impose a civil fine of not more than
26____ dollars ($____) per occurrence. In the event that a licensee
27negligently, willfully, or wantonly fails to comply with these
28requirements, the department may initiate an enforcement action
29and subject a licensee to a civil fine of ____ dollars ($____) and
30an order to suspend or revoke the licensee’s license.
(a) The licensee is responsible for providing current
32and accurate documentation on a timely basis to all state agencies,
33as provided in this chapter.
34(b) In addition to any other confidentiality protections provided
35to persons licensed by the state, the state and its agencies shall
36treat the proprietary information provided by a licensee as
37confidential to protect the licensee and to protect the security of
38the gaming system.
(a) Changes in ownership of the licensee shall be
2approved by the department prior to the closing of a proposed
4(b) The department shall investigate to ensure that a person
5acquiring an interest in a licensee is suitable and otherwise
6financially, technically, and legally qualified to be a licensee
7consistent with this chapter. If an acquiring person is found to be
8unsuitable to be a licensee or otherwise not financially, technically,
9or legally qualified to be a licensee, the licensee or the acquiring
10person may challenge that determination consistent with
11subdivision (c) of Section 19990.25.
12(c) A change in the elected officers of a tribal government
13licensee shall not be considered to be a change in interest or
14ownership of the licensee.
All facilities, software, and any other property, both
16tangible and intangible, used by the licensee in offering authorized
17games for play on an authorized platform or in an authorized poker
18room shall be owned or licensed by the licensed operator and shall
19be approved by the department.
The gaming system is divided into three parts:
21(a) A player management system that shall include all the
22technology, functions, and internal control system required to
23establish, manage, administer, and control a player’s online gaming
25(b) A funds management system that shall include all the
26technology, functions, and internal control system mechanisms
27required to record and manage real money in the deposit account
28or in rewards and bonus management systems, whether those
29systems are for real or noncashable value.
30(c) A games management system that shall include all the
31technology, functions, and internal control system mechanisms
32required to set up, manage and monitor authorized games, including
33games content and game logic, but does not receive, process, or
34store personal information about players, such as their names,
35addresses, and other contact information, or their funds, except to
36the extent necessary for the system to function, and in accordance
37with any limitations from the cardroom operator and any applicable
39(d) This section does not prohibit a licensed operator from
40licensing software, intellectual property, or other goods, services,
P47 1or information used by the gaming system from a licensed service
3(1) The player management system and the fund management
4system shall belong to, and be the responsibility of, an authorized
5poker room operator. A licensed poker platform operator shall not
6have access to the player management system and fund
7management system, except to the extent expressly authorized in
8writing by the poker room operator and in conformity with
10(2) The game management system shall belong to, and be the
11responsibility of, an authorized poker platform operator. Authorized
12poker room operators shall not have access to the games
13management system, except to the extent expressly authorized in
14writing by the poker room operator and in conformity with
16(e) The player management system shall at a minimum carry
17out the following functions:
18(1) Player registration.
19(2) Player settings.
20(3) Player account management.
21(4) Responsible gaming.
22(5) Player authentication.
23(6) Player authorization.
25(8) Set up a safe and secure connection with the player terminal.
26(9) Age verification.
27(f) The licensed poker room operator is responsible to control
28and manage the player identity, and funds and data related to
29authorized players in that poker room, to ensure the privacy and
30funds security of authorized players. This section does not prohibit
31the licensed operator from licensing software, intellectual property,
32or other goods, services, or information used by the player
33management or funds management system from a licensed service
35(g) The licensed poker platform operator shall ensure that
36players are eligible to play the games operated by the poker room
37licensee and implement appropriate security standards to prevent
38collusion and cheating during games and that all gaming is fair.
39This provision does not prohibit the licensed operator from
40licensing software, intellectual property, or other goods, services,
P48 1or information used by the game management system from a
2licensed service provider.
3(h) An authorized player shall be physically located within the
4State of California at the time of engaging in an authorized game.
5However, an authorized player shall not be hindered from accessing
6his or her player’s account from anywhere outside California as
7long as he or she does not engage in gaming.
8(i) An authorized player shall be 21 years of age or older.
9(1) An Internet game shall not be provided, directly or indirectly,
10to an individual under 21 years of age.
11(2) Each licensed operator shall do all of the following:
12(A) Prior to permitting an individual to play an authorized game,
13the licensed poker room operator shall verify that the individual
14is 21 years of age or older. The licensed operator shall match the
15name, address, and date of birth provided by the individual to
16information contained in a database approved by the department
17as being reliable for those purposes.
18(B) If the licensed poker room operator is unable to verify that
19the individual is 21 years of age or older pursuant to subparagraph
20(A), the licensed operator shall require the individual to submit an
21age-verification kit consisting of a writing signed by the individual
22attesting that he or she is 21 years of age or older and a copy of a
23valid form of government identification. For the purposes of this
24section, a valid form of government identification includes a
25driver’s license, state identification card, passport, official
26naturalization or immigration document, such as an alien
27registration receipt card or an immigrant visa, or United States
28military identification. The licensed operator also shall verify that
29the physical billing address on the check or credit card provided
30by the person matches the address listed in the government
32(C) The licensed poker room operator shall not permit authorized
33players to make payments by money order or cash.
34(3) If a licensed poker room operator complies with the
35requirements of paragraph (2), and a person under 21 years of age
36participates in an authorized game provided by the licensee, the
37licensee is not in violation of this section.
38(4) The department may assess civil penalties against a person
39that violates this section, according to the following schedule:
P49 1(A) Not less than one thousand dollars ($1,000) and not more
2than two thousand dollars ($2,000) for the first violation.
3(B) Not less than two thousand five hundred dollars ($2,500)
4and not more than three thousand five hundred dollars ($3,500)
5for the second violation.
6(C) Not less than four thousand dollars ($4,000) and not more
7than five thousand dollars ($5,000) for the third violation.
8(D) Not less than five thousand five hundred dollars ($5,500)
9and not more than six thousand five hundred dollars ($6,500) for
10the fourth violation.
11(E) Ten thousand dollars ($10,000) for a fifth or any subsequent
13(j) The department shall, by regulation, provide a process for a
14licensed operator to exclude from play a person who has filled out
15a California Internet poker self-exclusion form.
16(1) The department shall develop a self-exclusion form within
17six months of the operative date of this chapter.
18(2) The department shall deliver the form to each licensed poker
20(3) A licensed poker room operator shall, prior to any play,
21prominently display a link to the department’s Responsible
22Gambling Internet Web page and display the self-exclusion form
23when either of the following occurs:
24(A) A person registers to be a player.
25(B) An authorized player accesses the authorized poker room.
26(4) A licensed operator shall retain the Internet self-exclusion
27form to identify persons who want to be excluded from play.
28(5) A licensed poker room operator that has made commercially
29reasonable efforts to comply with this subdivision shall not be held
30liable in any way if a person who has filled out an Internet
31self-exclusion form plays despite that person’s request to be
A licensed poker platform operator shall only offer
34authorized games and process bets in accordance with the
35applicable game and betting rules established by the licensed
36operator and approved by the department pursuant to Sections
3719990.14 and 19990.37, provided that neither this chapter nor
38those rules prohibit a licensed operator from offering play-for-fun
39or play-for-free poker games on an Internet poker Web site.
(a) To propose an authorized game for play, a
2licensed operator shall provide the department with both of the
4(1) Game rules and betting rules it proposes to offer to registered
6(2) Documentation relating to development and testing of the
8(b) The department shall approve the game rules and betting
9rules before a licensee may offer the game to authorized players.
(a) A licensed operator shall ensure that games are
11fair by utilizing a gaming system approved by the commission.
12The commission may promulgate regulations specifying
13requirements for the gaming system.
14(b) The licensed poker room operator and applicable service
15providers shall, prior to commencing the operation of the gaming
16system, certify through an independent gaming certification entity
17approved by the commission the reliability, accuracy, and integrity
18of the system and its parts, as well as its ability to be effectively
19tested, in accordance with certification regulations to be issued by
20the commission. All components of the gaming system shall
21comply with all requirements of this chapter.
22(c) The hardware used by a licensed poker room operator to
23offer authorized games shall not be the subject of any voluntary
24liens, encumbrances, hypothecations, or other third party interests,
25unless those interests are disclosed to and approved by the
26department. This subdivision does not prohibit the licensed operator
27from licensing software, intellectual property, or other goods,
28services, or information used by the player management, funds
29management, or games management system from a licensed service
31(d) The gaming system shall display for each game the following
33(1) The name of the game.
34(2) Any restrictions on play.
35(3) The rules of the game.
36(4) All instructions on how to play.
37(5) The unit and total bets permitted.
38(6) The player’s current account balance, which shall be updated
39in real time.
P51 1(7) Any other information that a licensee determines is necessary
2for the authorized players to have in real time to compete fairly in
4(e) Data used to create game results shall be unpredictable so
5that it is infeasible to predict the next occurrence in a game, given
6complete knowledge of the algorithm or hardware generating the
7sequence and all previously generated numbers.
8(f) A licensed poker room operator shall deploy controls and
9technology to minimize fraud or cheating through collusion,
10including external exchange of information between different
11players, robotic play, or any other means.
12(1) If a licensee poker room operator becomes aware that fraud
13or cheating is taking place or has taken place, it shall take steps to
14stop those activities immediately and inform the department of all
16(2) The department shall not impose liquidated damages against
17a licensee to prevent fraud or cheating if the licensee can
18demonstrate that it acted responsibly to prevent those activities as
19soon as the licensee became aware of them.
20(g) In a per hand game, if the gaming server or software does
21not allow a game to be completed, the game shall be void and all
22funds relating to the incomplete game shall be returned to the
23registered player’s account.
24(h) In a tournament, if the gaming server or software does not
25allow the tournament to be completed, all prize money shall be
26distributed among players in accordance with the procedure
27published by the licensee prior to the commencement of the
(a) A licensed operator shall register players and
30establish player accounts prior to play.
31(b) The player registration process must include submitting the
32following minimum information:
33(1) Full legal name.
34(2) Mailing address.
35(3) Telephone number.
36(4) Social security number or taxpayer identification number.
37(5) Identification or certification to prove that the individual is
38at least 21 years of age.
39(6) Valid email address.
P52 1(7) A secure password to be used with the player’s account,
2unless the online service permits for an alternative method of
3authentication of the player approved by the department.
4(8) That he or she has read and agreed to the terms and
5conditions of the service, including a reference where those terms
6and conditions could be found.
7(c) A licensed poker room operator shall employ an
8authentication process before accepting a player, unless the
9authentication process was previously carried out by a licensed
11(d) An individual under 21 years of age shall not be registered
12as an authorized player, and funds deposited or money won by an
13individual under 21 years of age shall be forfeited to the
14commission. The commission may take further action towards the
15licensed operator who registered an individual under 21 years of
16age or permitted that individual to play a game.
17(e) Only a licensed poker room operator may hold a deposit
19(f) A player may have multiple gaming accounts with any given
20licensed poker room operator for any room and skin in which the
21player participates, but shall not be permitted to play more than
22one position at the same table at the same time.
23(g) A licensed poker room operator shall not permit an individual
24to participate in a game conducted by the licensed poker platform
25operator unless that individual has been verified and holds a deposit
26account with the licensed poker room operator.
27(h) Authorized players may only be permitted to play while
28physically located in the State of California. The intermediate
29routing of electronic data in connection with interactive gaming
30shall not determine the location or locations in which a bet is
31initiated, received, or otherwise made.
32(i) The licensed poker room operator shall keep a list of all
33players active at all times in the gaming system.
34(j) If a licensed poker room operator becomes aware that an
35individual has provided false information in respect of a registration
36or authorization process, the licensed poker room operator shall
37not register that individual and if he or she has already been
38registered, the licensed poker room operator shall immediately
39cancel his or her registration as a player with the licensed operator.
P53 1(k) Subject to
those rules that the commission may establish,
2this section does not prevent a licensed poker room operator from
3entering into a marketing agreement with a third party to recruit
4individuals to become registered players, provided that the licensed
5operator remains responsible for ensuring that the registration
6process described in this section has been completed prior to
7permitting game play.
(a) A licensed poker room operator shall provide a
9means for authorized players to deposit funds into the deposit
10account and transfer funds out of that account, either for return to
11the player or for use in game play.
12(b) An authorized player shall identify the source of funds to
13be used to put money into the account established once the
14registration process is complete. The player shall identify the
15specific account to be used for any given game prior to play and
16in accordance with the poker room rules.
17(c) At the time that a player establishes an online gaming
18account, he or she shall designate the bank account or credit card
19into which funds associated with his or her play are to be
20withdrawn or deposited, in accordance with the poker room rules.
21(d) A licensed operator shall not permit a player to increase the
22amount of money available in the account designated for use in a
23game after a hand in that game has started.
24(e) A licensed poker room operator shall maintain records on
25the balance of funds in each of the player’s deposit accounts.
26(f) A licensed operator shall not permit a player to place a bet
27unless the player has sufficient funds in the designated account to
28cover the amount of all bets required for that hand.
29(g) A licensed operator shall not provide credit to a player or
30act as agent for a credit provider to facilitate the provision of funds.
31(h) Players shall not be paid interest by licensees on the funds
32in the deposit accounts.
(a) A licensed poker room operator shall hold all
34player funds in a deposit account and shall segregate the deposit
35account from all of its other assets.
36(b) A licensed poker room operator shall not commingle funds
37in the deposit account with any other funds held by the licensee,
38including, but not limited to, operating funds. Both the accounts
39of the licensed operator and its segregated authorized player
40accounts shall be held in financial institutions located in the state.
P54 1(c) Funds held in an authorized player’s account shall only be
2used for the following purposes:
3(1) To pay per hand or tournament charges
owed by an
4authorized player to the licensed operator for authorized game
6(2) To transfer funds from one authorized player’s account to
7the account of another registered player to reconcile the result of
8a loss in the play of an authorized game.
9(3) To transfer funds from an authorized player’s account to an
10account to be held by a licensed poker operator pending the
11outcome of an authorized game. The poker platform operator shall
12establish a suspense wagering account to temporarily hold those
13funds pending the outcome of a game.
14(4) To remit tax proceeds due and owing from a registered player
15to the Franchise Tax Board.
16(5) To transfer funds from an authorized player’s account with
17the licensed poker room operator to an account specified by an
18 authorized player upon that player’s request.
During the registration process, a licensed poker
20room operator shall clearly and conspicuously explain to the person
21who is registering the privacy policies of the intrastate Internet
22poker room, and the person shall assent to the following policies:
23(a) Personally identifiable information shall not be shared with
24a nongovernmental third party except as provided in subdivision
25(k) of Section 19990.47.
26(b) All personally identifiable information about registered
27players shall be shared with state or federal agencies, including,
28but not limited to, the department, the commission, the Franchise
29Tax Board, and the Department of Child Support Services as
30necessary to assist them in fulfilling their obligations.
31(c) Personally identifiable information may be shared with
32government agencies only as provided in subdivision (b) or subject
33to court order as provided in subdivision (j) of Section 19990.47.
A licensed operator may require that an authorized
36Registered Player’s Agreement.
A licensed operator may suspend or revoke the
38account of an authorized player for any of the following reasons:
P55 1(a) A person or authorized player provided false information to
2the licensed operator, including, but not limited to, information
3provided in the registration process.
4(b) The authorized player has not updated registration
5information as required to keep it current.
6(c) The authorized player has violated the authorized poker
8(d) The person has already been registered and authorized.
9(e) The licensed poker room operator is directed by a state
10agency to suspend or revoke the registered player’s account.
(a) Upon registration, and each time a registered
12player logs into an authorized poker room, the licensed operator
13shall permit a registered player to adjust his or her play settings
15(1) Set a limit on the deposits that can be made per day.
16(2) Set a limit on the aggregate losses in a registered player’s
17account within a specified period of time.
18(b) During play, in order to assist a registered player to decide
19if to suspend play, the registered player’s screen shall do all of the
21(1) Once an hour, indicate how long the player has
22and the current value and change in value of the registered player’s
23account total since the last time he or she logged in.
24(2) At least once every six hours, require the registered player
25to confirm that the player has read the messages required in
26paragraph (1), and give an option to the player to end the session
27or return to the game.
A licensed poker room operator shall establish a
29toll-free telephone customer service hotline that shall be available
30to registered players 24 hours per day, 365 days a year. The
31licensed operator shall give notice to the department when using
32personnel who are out of state in supporting its customer service
(a) A licensed poker room operator shall protect
35the privacy of registered players and their personally identifiable
37(b) A licensed operator shall comply with all state and federal
38privacy and data protection laws.
39(c) At the time of registration with a licensed poker room
40operator as a registered player, and at least once a year thereafter,
P56 1a licensee shall provide notice in the form of a separate, written
2statement, delivered via United States Postal Service or electronic
3mail, to the registered player that clearly and conspicuously informs
4the registered player of all of the following:
nature of personally identifiable information collected
6or to be collected with respect to the registered player and the
7nature of the use of that information.
8(2) The nature, frequency, and purpose of any disclosure that
9may be made of personally identifiable information, including an
10identification of the types of persons to whom the disclosure may
12(3) The period during which personally identifiable information
13will be maintained by the licensee.
14(4) The times and place at which the registered player may have
15access to personally identifiable information in accordance with
17(5) The limitations provided by this section with respect to the
18collection and disclosure of personally identifiable information by
19a licensee and the right of the registered player under subdivision
20(j) or (k) to enforce those limitations.
21(d) A licensed poker room operator may collect personally
22identifiable information in order to do either of the following:
23(1) Obtain information necessary to operate the intrastate
24Internet poker Web site and offer authorized games to authorized
25players pursuant to this chapter.
26(2) Detect unauthorized play, activities contrary to a licensed
28activities contrary to state or federal law.
29(3) A licensed operator shall not collect any other personally
30identifiable information concerning any registered player without
31the prior written or electronic consent of the registered player
32concerned and shall not permit its licensed service providers to do
34(e) Except as provided in subdivision (f), a licensed operator
35shall not disclose personally identifiable information concerning
36any registered player without the prior written or electronic consent
37of the registered player concerned and shall take actions necessary
38to prevent unauthorized access to that information by a person
39other than the registered player or licensee.
P57 1(f) A licensed operator may disclose personally identifiable
2information if the disclosure is any of the following:
3(1) Necessary to render, or conduct a legitimate business activity
4related to, the provision of authorized games to the registered
5player by the licensed operator.
6(2) Subject to subdivision (k), made pursuant to a court order
7 authorizing the disclosure, if the registered player is notified of
8the order by the person to whom the order is directed.
9(3) A disclosure of the names and addresses of registered players
10to any third party, if both of the following apply:
11(A) The licensed poker room operator has provided the
12registered player the opportunity to prohibit or limit the disclosure.
13(B) The disclosure does not reveal, directly or indirectly, the
14nature of any transaction made by the registered player over the
15intrastate Internet poker Web site.
16(4) To the department to fulfill its obligations under this chapter
17or a state agency as authorized in this chapter.
18(5) To persons found suitable under this chapter
if the registered
19player is notified and consents to the information being shared.
20(g) A registered player shall be provided access to all personally
21identifiable information regarding that registered player that is
22collected and maintained by a licensed operator. The information
23shall be made available to the registered player at reasonable times
24and at a place designated by the licensed operator. A registered
25player shall be provided a reasonable opportunity to correct any
26error in the information.
27(h) A licensed poker room operator may destroy personally
28identifiable information if the information is no longer necessary
29for the purpose for which it was collected, and there are no pending
30requests or orders for access to the information under subdivision
A licensed operator shall establish a book of accounts
33and regularly audit all of its financial records and reports, which
34shall, at a minimum, include all of the following:
35(a) Monthly auditable and aggregate financial statements of
37(b) Monthly calculation of all amounts payable to the state.
38(c) The identity of registered players.
39(d) The balance on each registered player’s account at the start
40of a session of play, the amount won or lost by each registered
P58 1player during a game, and the balance on the registered player’s
3(e) The bets placed on each game, time stamped by the games
5(f) The result of each game, time stamped by the games
7(g) The amount, if any, as determined by the authorized player,
8withheld from winnings for federal or state income tax purposes.
(a) A licensed operator shall make all financial
10records established and maintained pursuant to Section 19990.48,
11including, but not limited to, all books, records, documents,
12financial information, and financial reports, available as required
13by the department or other state agencies so that those agencies
14can fulfill their responsibilities under this chapter. The licensed
15operator may provide records in electronic form to satisfy the
16requirements of this section. A state agency may request specific
17printed hard copies of records for good cause.
18(b) The licensed operator’s data shall be retained in a manner
19so that it may be accessed by the state agencies.
20(c) Notwithstanding subdivision (b), data covered by
21subdivisions (d), (e), and (f) of Section 19990.48 shall be accessible
22to the state agencies for 120 days, and, thereafter, archived and
23retained for no less than one year.
(a) A licensed operator shall implement technical
25systems that materially aid the department in the protection of
26authorized players. Software shall meet, at a minimum,
27international industry standards as verified by a
28department-approved certification entity.
29(b) A licensed operator shall define and document its
30methodology for developing software and applications and describe
31the manner in which software protects authorized players from
32fraud and other risks in the play of authorized games and in the
33management of authorized player accounts.
34(c) A poker room operator shall meet minimum game server
35connectivity requirements and shall involve the licensed platform
36operator to ensure that authorized players are protected from losses
37due to connectivity problems.
38(d) An authorized poker room operator shall ensure that all
39transactions involving registered players’ funds shall be recoverable
40by the system in the event of a failure or malfunction.
P59 1(e) All information required for reviewing a game interrupted
2due to loss of connectivity shall be recoverable by the licensed
3poker platform operator.
4(f) The licensed operator shall document and implement
5preventative and detective controls addressing money laundering
6and fraud risks. If money laundering or corruption is detected by
7the authorized platform operator, that platform operator shall
8immediately inform the authorized poker room operators with
9whom the authorized players are associated.
(a) An authorized poker room operator may charge
11authorized players to play authorized games.
12(b) Per hand charges are permitted.
13(1) A per hand charge shall be designated and conspicuously
14posted on the intrastate Internet poker Web site.
15(2) An authorized poker room operator may vary the per hand
16charges to registered players based on betting limits or other
18(c) Tournament charges shall be permitted.
19(1) A tournament charge shall be designated and conspicuously
20posted on the intrastate Internet poker Web site.
21(2) A licensed operator may vary tournament charges based on
22tournament prizes or other factors.
23(d) A licensed operator shall provide notice to the department
24of the charges to registered players prior to initiating play.
A licensed operator may enter into an agreement
26with a third party to sponsor or underwrite prizes for a tournament.
An authorized poker room may enter into an
28agreement to sell advertisement space on an Internet Web site that
(a) A licensee may enter into an agreement with
31a third party for marketing, or any other purpose consistent with
32this chapter, including, but not limited to, displaying the name of
33a marketing partner on a screen viewed by a registered player.
34(b) (1) A licensee shall not utilize any brand or business name,
35trade or service mark, software, technology, operational system,
36or customer information for a core function that was used in
37connection with the knowing and willful acceptance of any bet
38from persons located in the United States on any form of Internet
39gambling, including, but not limited to, poker, after December 31,
402006, that has not been affirmatively authorized by law of the
P60 1United States or of each state in which persons making a bet were
3(2) The commission shall permit a licensee or the person or
4entity with whom the licensee proposes to enter into an agreement
5subject to this subdivision to seek a waiver of this paragraph. That
6waiver shall be granted only if it is demonstrated by clear and
7convincing evidence that the asset proposed to be used was not
8used in a manner that was unlawful under federal law and the laws
9of each state in which persons making bets were located.
A licensed operator may enable a chat function
11between registered players if it has in place effective controls
A licensed operator may post Internet Web links on
14the Internet Web sites it controls to permit registered players to
15access remote Internet Web sites.
A licensed operator may enter into contractual
17agreements with one or more licensed operators for the purpose
18of ensuring adequate player liquidity.
A licensed platform operator may allow an
20authorized player to participate simultaneously in multiple games
21or tournaments, if the licensed operator has demonstrated to the
22department that it has technical controls that prohibit a registered
23player from playing multiple hands simultaneously in the same
(a) Before the collection of a registered player fee,
26bet, or deposit on any authorized game in the licensed operator’s
27authorized poker room, the operator shall remit to the Treasurer
28for deposit in the General Fund a one-time license fee in the amount
29of ten million dollars ($10,000,000). This amount shall be credited
30against fees imposed pursuant to subdivision (b) on the licensed
31poker room operator’s gross revenues for the first years of
32operation. Upon depletion of the license fee, the department shall
33notify the licensee to commence monthly payments to the state in
34accordance with subdivision (b).
35(b) A licensed poker room operator shall remit to the Treasurer
36on a monthly basis for deposit in the General Fund, a duty of 10
37percent on its gross gaming revenues for the prior month.
38(1) Each monthly payment shall be due on the 10th day of the
P61 1(2) A licensed operator shall make all electronic and written
2financial records available to the Treasurer, the commission, and
3the department on an electronic basis.
4(c) Each licensed operator shall pay a regulatory fee, to be
5deposited in the Internet Poker Fund, in an amount to be determined
6by the department for the actual reasonable costs of license
7oversight, consumer protection, state regulation, problem poker
8programs, and other purposes related to this chapter.
9(d) This section does not prohibit a licensed operator from
10contracting with one or more licensed operators, or service
11providers, to allocate among themselves the total fees and deposits
12to be paid under this section, provided that nothing in this
13subdivision affects the amount due to the department from those
(a) The licensed poker room operator shall facilitate
16the collection of personal income taxes from registered players by
17the Franchise Tax Board.
18(b) The licensed poker room operator shall withhold 5 percent
19of tournament winnings for state income tax if the winnings less
20the tournament charge are more than six hundred dollars ($600)
21and are at least 300 times the tournament charge.
22(1) The licensed poker room operator shall transfer that withheld
23income to the Franchise Tax Board.
24(2) Winnings and losses of the authorized player from other
25tournaments sponsored by the licensed poker room operator during
26the year are not taken into account in arriving at the
27six-hundred-dollar ($600) amount. Required withholding is
28determined on a tournament-by-tournament basis.
29(c) Within six months of the effective date of this chapter, the
30Franchise Tax Board shall publish a form to be used annually by
31a licensed operator to report information concerning income tax
32revenues from registered players. The Franchise Tax Board shall
33provide a date by which the form is required to be filed. The form
34shall include, but shall not be limited to, the following information:
35(1) The registered player’s first name and surname.
36(2) The registered player’s social security number.
37(3) The total amount the authorized player deposited in his or
38her account during the year.
39(4) The authorized player’s total winnings, if any, during the
P62 1(5) The authorized player’s total losses, if any, during the year.
2(6) The total amount withheld by the licensed poker room
3operator, if any, during the year for purposes of federal or state
5(7) Whether the registered player opened or closed his or her
6account during the year.
7(d) The licensed poker room operator shall electronically file a
8copy of the form with the Franchise Tax Board for each registered
9player who held an account with the licensed operator for all, or
10any portion of, the taxable year. The licensed operator shall
11electronically provide each registered player with a copy of the
A security interest in a licensee, other than a security
14interest in financed or leased equipment, shall not be enforced
15except in conformity with regulations adopted by the commission.
16If a licensee contracts to acquire or transfer any assets or property
17in circumstances where the transferor or transferee must be licensed
18or found suitable, then the transaction shall not have a closing date
19prior to the approval or licensing of the other party, except as
20provided in regulations of the commission.
(a) A licensee shall act expeditiously to cure any
22violation of this chapter, or any regulation adopted pursuant to this
23chapter, in the offer or administration of authorized games that
24interferes with its obligations to the state or registered players
25under this chapter.
26(b) If a licensee becomes aware of any violation, it shall notify
27the department immediately and work with the department to
28develop a plan to rectify the violation.
29(c) If the department becomes aware of any violation, or if it
30becomes aware of any activities that might lead to a violation, the
31department shall provide notice of that violation to the licensee
32and a reasonable opportunity to cure the violation.
33(d) All state agencies with responsibilities under this chapter
34shall report any actual or suspected violation of this chapter, or
35any regulation adopted pursuant to this chapter, or activities that
36may lead to that violation, to the department immediately so that
37the department can assess whether it needs to commence an
38investigation or enforcement action.
39(e) A licensee shall be afforded a reasonable time period to cure
40any reported violation. The department may assess penalties for
P63 1any violation of this chapter, or any regulation adopted pursuant
2to this chapter.
3(f) The department shall have the subpoena power in an
4investigation of any violation of this chapter, or any regulation
5adopted pursuant to this chapter.
6(g) The department may
revoke or suspend any license or work
7permit under this chapter upon reaching a finding that the licensee
8or employee is in violation of any provision of this chapter, or any
9regulation adopted pursuant to this chapter.
10(h) A licensee may appeal any decision of the department
11pursuant to this section to the superior court. The superior court
12shall hear any appeal de novo.
The department shall protect the rights and assets
14of registered players on an intrastate Internet poker Web site if the
15licensed operator’s license pursuant to this chapter is revoked or
16the licensed operator becomes bankrupt.
(a) A licensee shall at all times indemnify, defend,
18and hold harmless the state and its agencies from and against any
19claims, damages, liabilities, costs, and expenses, including, but
20not limited to, reasonable attorney’s fees and expenses arising out
21of any third-party claim made against the state or any of its
22agencies relating to actions of the licensee and this chapter.
23However, the state shall not enter into a settlement agreement
24related to any of those claims, damages, liabilities, costs, or
25expenses without the prior written approval of the licensee.
26(b) The state and its agencies shall promptly notify a licensee
27of any claim or litigation to which the indemnity set forth in
28subdivision (a) applies.
29(c) At the option of a licensee, it may assume the defense of
30any claim or litigation. If a licensee assumes the defense of any
31claim or litigation, the licensee’s obligation with respect thereto
32shall be limited to the payment of any settlement approved by the
33licensee, or any judgment in connection with that claim or
(a) (1) Within 120 days after the effective date of
39this chapter, the commission, and any other state agency with a
40duty pursuant to this chapter, shall, in order to comply with time
P64 1deadlines, in consultation with the department, adopt regulations
2to implement this chapter, and to facilitate the operation of
3intrastate Internet poker Web sites and expedite the state’s receipt
4of revenues in compliance with this chapter. The initial adoption,
5amendment, or repeal of a regulation authorized by this section is
6deemed to address an emergency, for purposes of Sections 11346.1
7and 11349.6 of the Government Code, and the commission and
8those other state agencies are hereby exempted for that purpose
9from the requirements of subdivision (b) of Section 11346.1 of
10the Government Code. After the initial adoption, amendment, or
11repeal of an emergency regulation pursuant to this section, the
12commission and those other state agencies shall not request
13approval from the Office of Administrative Law to readopt the
14regulation as an emergency regulation pursuant to Section 11346.1
15of the Government Code, but shall promulgate permanent
16regulations in accordance with all applicable law. The commission
17shall circulate its proposed permanent regulations to all tribes and
18land-based gaming entities eligible for licensure pursuant to this
19chapter along with information regarding how comments can be
20submitted prior to adopting permanent regulations.
21(2) The regulations adopted by the commission shall address
22underage poker and problem poker.
23(3) The regulations of the commission also shall provide for
24temporary or provisional approvals, licenses, or certificates for
25heirs, executors, receivers, trustees, conservators, key employees,
26and other persons where an approval, license, or certificate is
28(b) (1) Each state agency with a duty pursuant to this chapter
29shall identify a contact person at that agency and describe the
30responsibility of the contact with respect to the state agency’s duty.
31(2) Any notice provided by a licensee to a state agency pursuant
32to this chapter shall be addressed to the contact identified by the
33state agency pursuant to paragraph (1).
34(3) Unless otherwise provided by this chapter, notice by a
35licensee to the state shall be deemed effectively given upon
36personal delivery, three days after deposit in the United States mail
37by certified or registered mail, return receipt requested, one
38business day after its deposit with any return receipt express
39courier, prepaid, or one business day after electronically confirmed
40transmission by facsimile.
The department may outsource its regulatory
2functions under this chapter if optimal to provide efficient,
3effective, and robust regulation with access to worldwide expertise
4tested and proven in the poker industry. This may include, but is
5not limited to, state, tribal, and international regulatory agencies.
6The department may also enter into agreements to share
7information with other regulatory and law enforcement agencies
8to assist in conducting background checks and suitability reviews.
9To expedite the implementation of Internet poker, contracts
10pursuant to this section shall not be subject to otherwise applicable
11provisions of the Government Code or the Public Contract Code
12and, for those purposes, the department shall not be considered a
13state agency or public entity.
Subject to the approval of the department, and
18consistent with uniform standards established by the department
19by regulation, each licensee shall establish administrative
20procedures to resolve registered player complaints.
If a registered player has a complaint against a
22licensee, the exclusive remedy shall be to register the complaint
23with the department, unless an action is brought pursuant to
24subdivision (j) of Section 19990.47.
(a) The department, in consultation with the
26commission, shall establish regulations with respect to registered
28(b) Under the regulations, the department shall do all of the
30(1) Investigate registered player complaints to determine if a
31licensee has failed to meet its obligations to a registered player.
32(2) Attempt to resolve complaints by registered players if a
33licensee fails to meet an obligation to a registered player.
34(3) Initiate enforcement actions to require specific performance
35of any obligation that a licensee has to a registered player and
36payment by the licensee of restitution to a registered player for
37actual losses and interest thereon.
A licensee may appeal an action by the department
39pursuant to this article to the superior court, which shall review
40the appeal de novo.
(a) The Treasurer shall transfer all amounts received
4from a licensee pursuant to subdivision (c) of Section 19990.58
5to the Controller for deposit into the Internet Poker Fund, which
6is hereby created in the State Treasury, to be administered by the
7Controller, subject to annual appropriation by the Legislature.
8(b) The state agencies shall submit revenue needs to fulfill their
9obligations under this chapter for the upcoming fiscal year to the
10Senate Committee on Budget and Fiscal Review and the Assembly
11Committee on Budget, as well as the Senate and Assembly
12Committees on Governmental Organization and the Department
13of Finance on or before March 31 of the preceding fiscal year. A
14justification of those costs shall be provided with each submission
15of revenue needs.
16(c) The State Department of Public Health, Office of Problem
17Gambling, shall submit revenue needs for programs to alleviate
18problem poker that results from the offering of authorized games
19for the upcoming fiscal year to the Senate Committee on Budget
20and Fiscal Review and the Assembly Committee on Budget, as
21well as the Senate and Assembly Committees on Governmental
22Organization, the Senate and Assembly Committees on Human
23Services, and the Department of Finance on or before March 31
24of the preceding fiscal year. A justification of those costs shall be
25provided with each submission of revenue needs.
26(d) All remaining proceeds not allocated to subdivisions (b) and
27(c) shall remain in the Internet Poker Fund subject to appropriation
28by the Legislature.
A city, county, or city and county shall not regulate,
33tax, or enter into a contract with respect to any matter related to
34this chapter. This section does not prohibit or limit the investigation
35and prosecution of any violation of this chapter.
Notwithstanding Section 10231.5 of the Government
40Code, within one year of the effective date of this chapter and,
P67 1annually thereafter, the department, in consultation with the
2commission, the Treasurer, and the Franchise Tax Board, shall
3issue a report to the Legislature describing the state’s efforts to
4meet the policy goals articulated in this chapter. The report shall
5be submitted in compliance with Section 9795 of the Government
(a) At least four years after the issue date of any
8license pursuant to this chapter, but no later than five years after
9that date, the Bureau of State Audits shall issue a report to the
10Legislature detailing the implementation of this chapter. The State
11Auditor may advise the Legislature on any recommendations
12regarding the terms of licensure, including the consideration paid
13to the state, the economic and operational impacts upon the licensee
14and the state, and any other issues that may be relevant to the state’s
15decision whether to impose modifications on existing licensees’
16fees or terms of licensure. The report may also advise the
17Legislature as to any proposed changes to Article 5 (commencing
18with Section 19990.30) of this chapter.
19(b) A report submitted pursuant to subdivision (a) shall be
20submitted in compliance with Section 9795 of the Government
22(c) Pursuant to Section 10231.5 of the Government Code, this
23section is repealed on January 1, 2020.
The provisions of this act are severable. If any
25provision of this act or its application is held invalid, that invalidity
26shall not affect other provisions or applications that can be given
27effect without the invalid provision or application.
The Legislature finds and declares that Section 1 of
29this act, which adds Chapter 5.2 (commencing with Section
3019990.01) to Division 8 of the Business and Professions Code,
31imposes a limitation on the public’s right of access to the meetings
32of public bodies or the writings of public officials and agencies
33within the meaning of Section 3 of Article I of the California
34Constitution. Pursuant to that constitutional provision, the
35Legislature makes the following findings to demonstrate the interest
36protected by this limitation and the need for protecting that interest:
37The limitations on the people’s rights of access set forth in this
38chapter are necessary to protect the privacy and integrity of
39information submitted by the registered players as well as the
40 proprietary information of the license applicants and licensees.
No reimbursement is required by this act pursuant to
2Section 6 of Article XIII B of the California Constitution because
3the only costs that may be incurred by a local agency or school
4district will be incurred because this act creates a new crime or
5infraction, eliminates a crime or infraction, or changes the penalty
6for a crime or infraction, within the meaning of Section 17556 of
7the Government Code, or changes the definition of a crime within
8the meaning of Section 6 of Article XIII B of the California
This act is an urgency statute necessary for the
11immediate preservation of the public peace, health, or safety within
12the meaning of Article IV of the Constitution and shall go into
13immediate effect. The facts constituting the necessity are:
14In order to protect the interests of Californians who play Internet
15poker games and to ensure that people play fair games, that the
16state realizes the revenues, and that suitable persons operate
17intrastate Internet poker games, it is necessary that this act take