Online poker fight opens with a pair

On Wednesday, Assemblyman Jerry Hill woke up to the news that he was carrying online poker legislation on behalf of the group Poker Voters of America.

Except he’s not.

The confusion arose from a story out of a British gaming publication, eGaming Review, which said Hill was going to submit a bill. The story went on to quote Poker Voters’ president Melanie Brenner as saying they were seeking an “alternative sponsor” in the Senate “who will be more of a champion of it.” A bill sponsor speaking so dismissively of an author is almost unheard of in Sacramento, especially when that bill is not yet in print.

The confusion came from the British reporter’s lack of understanding of the admittedly complex legislative system in California, according to Patrick Dorinson, who was named executive director of Poker Voters on Tuesday.

“This is just a misunderstanding,” Dorinson said. “As Winston Churchill said, the only thing separating the British and American people is a common language.”

Well, that and familiarity with Capitol procedure. The seeds of the confusion were sown about three weeks ago when Hill, a South San Francisco Democrat, met with former Assemblyman Lloyd Levine. Levine helped set off the current round of legislative activity around Internet poker, when he proposed a bill in 2007. He’s now president of Filament Strategies, a political consulting firm; Levine is not a registered lobbyist.

Hill, meanwhile, is a member of the powerful Assembly Governmental Organization Committee. The so-called G.O. Committees in each house are the main forum for reviewing gaming bills, and Hill has carried horse racing legislation in the past.

Levine brought Hill a 32-page draft proposal, written in legislative language. But Hill had his staff submit this language to the Legislative Counsel, to have them review it and rewrite it into a format closer to what the Legislature would actually look at. Hill added that he didn’t do this on behalf of Poker Voters, but instead just wanted to make sure there was no confusion around the intentions of the language.

“They [Hill’s staff] didn’t have enough information or research to present anything to me, so they went to Leg Counsel to get clear language,” Hill said. “We didn’t submit it for them. We submitted it for me. In order to evaluate an idea, you have to have language to look at.”

Levine confirmed the he has been consulting with Poker Voters, and said the eGaming story was “completely inaccurate.”

“It’s a British publication, and they’re not familiar with the Sacramento political process,” Levine said.

Leg Counsel has yet to return the new language, Hill added. But the Poker Voters does lay out several clear guidelines. It proposes to designate multiple “hub operators,” who would be authorized to offer Internet poker to California citizens. Each hub operator would need to be either “a holder of a current state gambling license to own or operate a land-based gambling entity” or “a federally recognized Indian tribe operating a gambling establishment pursuant to a tribal-state gaming compact.”

The language goes on to state various requirements around confirming players’ identities, making sure proceeds are properly delivered to winners and taxed. It also lays out various fines and penalties for operators who don’t live up to these requirements.

Dorinson said he hoped the proposal would help bring the proponents of competing proposals to the negotiating table.

“We’ve now been at this for a couple of years now,” he said. “It’s long past time for all the parties to come together.”

The Hill/Poker Voters kerfuffle is just the latest in a long line of strange turns the online poker concept has taken in recent years. When U.S. Senate Majority Leader Harry Reid, D-Nevada, recently withdrew his bill that would have created a nationwide framework for Internet gambling, it kicked the action back to the states, and California has been one of the more active venues in recent years.

The major effort has been led by the Morongo Band of Mission Indians, one of the state’s most powerful casino gaming tribes. In 2009, they began putting together an alliance that became the California Online Poker Association (COPA). Dorinson, incidentally, was formerly the main spokesman for COPA.  

There are currently two bills in print that would legalize Internet poker in California: SB 40 by Sen. Lou Correa, D-Santa Ana, and SB 45 by Sen. Rod Wright, D-Los Angeles.

The two bills vary significantly. COPA announced support for Correa’s bill on Jan. 6. It is limited to poker, and while it does not offer an exclusive license to any particular group, it does appear to favor the role of tribes.

It also suggests that revenue from online poker would be exempt from state income taxes: “It is in the interest of the state and its citizens to increase sources of nontax, non-state revenue for tribal governments to enhance their ability to provide services to their communities.”

The state Franchise Tax Board currently excludes casino “per capita” payments to tribal members if the person is a member of the tribe operating the casino and living on the same reservation where the casino is located.

Wright’s SB 45 does not mention whether tribes would be taxed or not. It does state the need to ensure that “the state is not deprived of income tax revenues to which it would otherwise be entitled,” though this language focuses on collecting income taxes on the proceeds of winning players.

On Dec. 17, the California Tribal Business Alliance, a rival to COPA, sent an opposition letter to Correa. His bill, they said, appeared to offer a monopoly to a single entity while marginalizing most tribes. The group is currently neutral on the Wright bill, but plans to meet with the senator soon. The alliance’s executive officer, Chris Lindstrom, confirmed that they would oppose efforts to tax tribal revenue from online poker.

Levine said their bill proposal is substantially similar to Wright’s bill, but with two key differences: Wright’s bill allows for the possibility of games besides poker, while the Poker Voters language is poker-only. He also said their language would only allow hub operators with prior experience with gaming – “A track, a tribe or a card room,” as he put it.

“You still need to have gaming experience to bid on a hub,” Levine said. “Senator Wright would envision a system in which Google or Microsoft could apply to be a hub operator.”

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