The battle over whether California Indian tribes can provide Internet poker is coming back to the Capitol, with many in the gambling industry looking towards a hearing next month. Meanwhile, the tribe behind an effort last year to create a state-sanctioned poker site have apparently renewed their efforts to push a bill.
The issue arose last August when one of California’s biggest casino gaming tribes, the Morongo Band of Mission Indians, formed a group called the California Tribal Intrastate Internet Poker Consortium LLC. Working with a pair of large Los Angeles-area card clubs, the Commerce Casino and the Bicycle Club, Morongo sought to put together a group of other Indian tribes to pursue an exclusive deal to offer online poker in California.
That deal fell apart when the group could not find and author for the late-session measure. However, the Morongo Tribe is continuing their efforts, according to spokesman Patrick Dorinson.
“We’re still reaching out to different tribes,” Dorinson said. “We’re trying to take into account everyone’s issue.”
Another influential group, the California Tribal Business Alliance (Cal-TBA), rallied critic to that proposal, and continues to offer some of the loudest opposition. The group’s executive director, Allison Harvey, has argued that it could violate the exclusivity clauses in gaming compacts with casino tribes and potentially throw the legal basis for gaming in California into chaos, a contention Morongo representatives rejected. This could place in danger the $1 million a day the state receives as the proceeds from gaming compacts with numerous California casino tribes, Harvey said.
Harvey said the Morongo’s tribe has engaged in numerous meetings. This included a meeting of the California Nations Indian Gaming Association (CNIGA) that took place earlier this month during the annual Western Indian Gaming Conference in Palm Springs.
“We assume some others may well surface, just because they opened the door when they brought this up last summer,” Harvey said.
The Senate Governmental Organization Committee will take up the question of Internet poker when it meets on Feb. 9. No new legislation has been introduced. However, the proposal does seem to have some people talking about the potential revenue streams to the state from online poker. About 1.4 million Californians are already playing poker on the Internet via offshore websites, said Sacramento-based gaming attorney Martin Owens, citing a 2008 Pricewaterhouse Coopers study.
“You’ve got something like a billion dollars leaving the state every year that does nobody any good except the offshore operators,” Owens said. “Internet gambling is here to stay. The only rational thing to do is organize it, license it, supervise it—and by all means, get the benefits.”
While invitations have gone out to numerous speakers, a lineup for the hearing has not been finalized. However, speakers will reportedly focus on a number of issues, including compatibility with tribal compacts and with federal gaming laws. The federal Unlawful Internet Gambling Enforcement Act of 2006 (UIEGA) bans the use of credit cards and fund transfers for Internet gambling, though there is an exception for “intrastate” Internet gaming—a clause that would appear to allow for online gambling within a state, as long as the location and identity of players could be verified.
Meanwhile, a bill to legalize online gambling within the US appears to be headed for a hearing next month in the powerful House Financial Services Committee. The legislation was introduced last year by the Committee’s chair, Rep. Barney Frank, D-Massachusetts. HR 2267 would legalize Internet gaming in the U.S., including state-based Internet gaming. It would set out guidelines for players depositing money into gaming accounts—a key factor for groups worried about gambling addiction—as well as rules for licensing and taxing gaming websites.
Vin Narayanan follows gaming as the managing editor of the Massachusetts-based trade publication Casino City. He said the Consortium put together by Morongo fell apart last fall after the effort stalled out, and that according to his reporting, the proposal is not gathering a great deal of support.
“The other tribes don’t want it at all,” Narayanan said. “As far as they’re concerned, it violates the state compact they have. They’re worried that if people are gambling online, they won’t make it out to the tribal casinos.”
Nararyan did point to two countries that have instituted legal, state-sanctioned online poker, Sweden and Italy. But Harvey said there were problems with both systems. In Sweden, she said, a “state monopoly” online poker system managed to bring in only about a third of the people who were already playing online poker. Italy took a more hard-line approach, trying to block people from accessing offshore sites from within the country, something she said would be hard sell in California.
“Wall it off and you’ll have a poker player revolt on your hands,” Harvey said.
On the other hand, she said, it would be hard for a California site to compete on price, especially if the proceeds are taxed. Meanwhile, she said, it could be hard for a California-only system to build up enough players. The site wants enough of a pool of big spenders to keep the cash flow going, while the best players want lots of newer players around to keep the “shark to fish” ratio low enough that they can make money.
But Narayan said that in his view, California is one the few places that could built up a user base big enough to create a viable system to compete with offshore websites.
“California is one of the few states big enough that there’s no player liquidity problems,” Narayanan said. “California is the perfect test case for this.”