Illinois and California May Legalize Online Poker in the Near Future

853125_26326491Two new developments have taken shape over the past few days in the online poker and Internet gambling sphere: Illinois legislators released a proposed draft of its Internet gambling and online poker bill and California put forth its third attempt to legalize Internet poker.

Illinois’ Online Poker and Internet Gambling Bill

As we stated in an earlier post, Illinois Governor Pat Quinn is not keen on the idea of legalizing online poker and other Internet gambling games within the State, stating that “I think that [Internet poker and online gambling are] problematic. It’s a brand new idea and there hasn’t been much review on that at all.”

However, despite the Governor’s apprehension and his attempt to halt the progress of online poker and other Internet gambling within his State by vetoing each successive bill that has been proposed, new online gaming bills continue to make their way to the Illinois legislature.  The latest manifestation is truly expansive and would create an entirely new division within the Illinois Lottery, exclusively tasked with regulating a wide range of Internet gambling games, not just online poker.

Similar to the previous versions of Illinois online poker and Internet gambling bills that we have described in detail, the proposed bill will allow for licenses that will have renewable five-year terms and require $250,000 application fees.  Additionally, if granted a license, the licensee will be required to pay the State of Illinois an additional $20 million as a licensing fee, which would be considered an upfront payment to be deducted from future taxes.  As far as taxes go, the first $200 million of annual gross revenue received by Internet poker and gambling operators will be taxed at 7.5% for the initial five-year license term, and at a rate of 15% for subsequent years.  Games played against the house, such as blackjack, will be assessed a tax of 10% for the initial five-year term, and a tax of 20% in subsequent years.

California’s Internet Poker Bill

As we have detailed on this blog, California is currently discussing the legalization of sports betting and has attempted to legalize Internet poker several times over the past few years.  The most recent version, the Internet Poker Consumer Protection Act of 2013 (“IPCPA”), was proposed by eight California Indian tribes last Wednesday.

Unlike previous incarnations of California online poker bills, the IPCPA would limit licenses only to tribal entities or business that have operated a card room within the State for at least five years, that are in good standing.  The bill contains a “bad actor” clause, which prohibits any entity from obtaining an Internet poker license if it offered any sort of online wagering to California residents prior to the proposed law’s enactment.  While there are many unique features to the IPCPA, the most interesting aspects are that the bill expressly bars Internet poker compacts with other states and pre-emptively declines to opt into a federal Internet poker law, should one be passed in the future.  The bill, if enacted, sets a date of January 1st, 2015 for Internet poker to go live within the State.

If you are interested in learning more about this topic or pursuing an Internet poker or gambling venture in Illinois or California, please e-mail us at or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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David Klein

David Klein is one of the most recognized attorneys in the technology, Internet marketing, sweepstakes, and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

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