Online poker fight pits tribes against tribes

During a hearing on his bill to authorize Internet poker in California, Sen. Rod Wright described how the crusty professionals on the professional poker circuit were being replaced by a new breed of player.

“The old stars of poker are now getting their butts kicked by the math whizzes at MIT,” Wright, D-Los Angeles, said Tuesday.

The Morongo Band of Mission Indians may know how they feel. The group may be the granddaddy of California casino tribes, but in recent months they’ve seen their effort to push online gambling in California swamped in a $250,000 lobbying effort mounted  by groups representing online poker players and technology providers.

Working with some southern California card clubs, the Morongo Band tried to float an online poker proposal a year ago. That effort went nowhere, partially because several of the existing California casino tribes thought the way the proposed bill was drafted could invalidate their gaming compacts with the state. Morongo’s proposal would have given an exclusive contract to the consortium it created.

Speaking to reporters outside this week’s hearing, a spokesman for the Morongo effort was careful to point out that the tribe opposed provisions of Wright’s bill, but not the idea itself.
“We have a bill in front of us,” said Patrick Dorinson, a spokesman for the California Tribal Intrastate Internet Poker Consortium, LLC. “We have people that want to work together. Let’s work together.”

That bill is Wright’s SB 1485. Wright also chairs the committee where the bill was heard, though it wasn’t voted on. Wright got a chuckle out of the room when he said “I don’t even know how to play poker.”

Wright’s bill would authorize the state “to enter into contracts with up to three hub operators.” Called the Gambling Control Act of 2010, the bill has support from several businesses hoping to get in on the act, including the San Jose card room Bay 101 and online gaming developers like CyberArts and Vista Global Media.

Morongo is currently listed among the official opposition, putting it in the strange bedfellows company of the California Coalition Against Gambling Expansion (CCAGE) and a rival organization in the Indian gaming world, the California Tribal Business Alliance (CalTBA).

These other groups, though, are opposed to any intrastate endorsement of online poker.

“We’re going to fight this,” said David Quintana, political director of CalTBA. “In the rounds that I did [of legislative offices] in the last day or two, I didn’t find anyone that was supportive.

The hearing was briefly brought to a near standstill — with political consultants jumping up to go out into the hallway to return phone calls — when CCAGE president Rev. James Butler sought to engage Wright in a debate over the morality of state-endorsed gambling.”

“We have to allow people as adults to do the things that they want to do and hope they’re responsible about it,” Wright replied.

According to studies, between one and two million Californians are already playing online poker — though many of them aren’t playing for money. Melanie Brenner, executive director of Poker Voters, said that many of these would play for money if a legal system to do so appeared. She said that she was confident that all the players should be able to get to a consensus — though not one that would put any particular tribe or consortium in charge.

“What I expect to see over the next couple of weeks is all of the interested parties getting together in a room, hammering out a compromise that works for everyone, and going back to the chairman,” Brenner said.

Poker Voters has paid $146,000 to Gallardo Consulting to lobby on the bill since the middle of last year. While her group is not officially opposed to the legislation, they are seeking to have language removed from SB 1485 that would make it a misdemeanor to play on a non-approved web site. One of the companies in favor of the bill, CyberArts, is a contributor to her group.

The offshore online poker business is currently dominated by two companies, Poker Stars and Full Tilt Poker. Neither has an official position on the bill, but Full Tilt did send an outside attorney to the hearing, Cyrus Sanai.

“It is not a good idea to hand a monopoly to anyone,” Sanai told the committee, referring to the Morongo proposal.

According to a just-published study by LECG, a research firm, legalized online poker in California could bring in between $2.4 billion and $6.1 billion in revenues for the state between 2012 to 2020, though some dispute these numbers.

The idea of state-endorsed Internet poker has been kicking around Sacramento since at least 2007.

Lloyd Levine, who unsuccessfully carried an online poker bill in 2008 when he was in the Assembly, was at the hearing as a consultant for Poker Voters of America. Poker Voters kept the idea moving forward then they held an information hearing with about 45 participants at the Sheraton near the Capitol near the end of 2008.  

For an idea that has been out there as long as it has, state-controlled online poker faces some pressing deadlines. There is federal legislation moving forward that could change everything — assuming California does not already have gaming in place. Rep. Barney Frank, D-Mass., has been pushing H.R. 2267, which would authorize Internet gambling to be licensed by the federal Department of Treasury. This idea is popular with some.

“We prefer a federal regulatory model, but we can live with a California only system if the bill is written correctly,” said Parke Terry, lobbyist for the Poker Players Alliance.

Existing state operations would be grandfathered in under a federal bill. Wright laid out a scenario where California may work with neighboring states to create a shared system.

“I think it is important that we advance something before the federal government occupies the field,” Wright said.