A critical sticking point in private negotiations over authorizing internet poker in California became public Thursday when a tribal chairman announced his intention to bring in an international online gaming firm as a subcontractor to conduct operations in California – but only if the state approves the new legislation.
Robert Martin, the chairman of the casino-owning Morongo Band of Mission Indians, said his tribe had reached an agreement to with PokerStars, the Europe-based online gambling site, and three major California card clubs – Hawaiian Gardens Casino, the Commerce Club and the Bicycle Casino – to offer online poker. PokerStars, the world’s largest purveyor of online poker, has some 50 million registered players around the world.
Estimates vary, but California’s online poker is worth hundreds of millions of dollars annually, far more than three other states that have online poker – Nevada, New Jersey and Delaware.
“We’re pleased to announce our agreement with these established and proven organizations that represent millions of California poker players,” Martin said in a written statement. “We’re confident that, together, we can offer a safe, secure, high-quality online poker experience that brings financial benefits to California while providing the highest level of accountability, choice, service and protection for consumers.”
Representatives of various casino-owning tribes have been negotiating for weeks over establishing online poker in California.
Several people familiar with the talks said the most heated discussions have involved Morongo’s proposal to bring in PokerStars to operate in the state. Other tribes are opposed, saying PokerStars may violate “bad actor” provisions in the proposed legislation intended to make sure the games, and players, are protected.
“Bringing them in is a ‘poison pill’ that kills any deal,” said one person familiar with the discussions.
A group of tribal leaders and a number of industry consultants testified Wednesday before the Assembly Governmental Organization Committee on the proposed gaming legislative package, AB 2291 by Assemblyman Reginald Jones-Sawyer, D-Inglewood, and SB 1366, Sen. Lou Correa, D-Santa Ana.
In 2011, the founders of PokerStars were among those named in a federal indictment on bank fraud, money laundering and other allegations. The case, ultimately resolved, resulted in some $731 million in payments. PokerStars paid back both U.S. and international players who had gaming accounts on a separate site. The company also purchased Full Tilt Poker, a site targted in the federal government’s legal action.
“There was no admission of wrongdoing, and there was the explicit right to apply for licensing in the future in the U.S. market. And that’s what we’re doing now,” said PokerStars spokesman Eric Hollreiser.
Martin suggested in testimony Wednesday that writing legislation to block one company was unfair, noting that regulators can make sure that any gaming company in California meets high standards.
“That is just a smokescreen designed to block a single competitor from entering the California market to give a competitive advantage to others,” he said. “Those that aren’t suitable should be sent packing … but to ban a single vendor is unwise and imprudent.”
Attempts to create online poker in California have foundered at least twice in the past two years.
Ed’s Note: Corrects spelling of Hollreiser, 10th graf.