Online poker proposal taking hits

A bid to offer state-sanctioned online poker in California took a hit Tuesday morning when the leader of the California Senate shot down the idea of passing a bill in the closing month of the legislative session. Meanwhile, opponents of the idea say there is a growing movement against any action this year, and a poll commissioned by one major gaming tribe found that voters were hostile to the idea.

The effort is led by the Morongo Band of Mission Indians, which operates one of the largest tribal casinos in California, and several card clubs. They have been circulating a five-page draft bill that would create a centralized, online poker website they would offer to online customers within California’s borders. The consortium would have an exclusive right to offer online poker, but all California Indian tribes and card clubs would be eligible to be members. The draft also states a so-far unspecified percentage of fees would be paid to the state.

The consortium did get some good news late Wednesday when a majority of members of the California Indian Nations Gaming Association (CNIGA) voted for a resolution "To support the concept in principle of a joint venture enterprise between California tribes and licensed card rooms to offer online intrastate internet poker and to proceed with further analysis." CNIGA includes 36 tribes, including Morongo and several other gaming tribes.

The California Tribal Business Alliance (CTBA), which represents several casino tribes, sent an opposition letter to legislators last week. On Tuesday, Marshall McKay, chairman of the Rumsey Indian Rancheria, also sent an opposition letter to members of the legislature. Rumsey operates a large casino about an hour from Sacramento, and is not a member of CTBA.

On Wednesday morning, Mark Macarro, the chairman of the Pechanga Band of Luiseño Indians, sent out a letter to leaders of other tribes stating “Pechanga has had a standing oppose position to online poker since proposals first surfaced late last year out of concerns for the far-reaching legal, political and policy consequences of an expansion of this magnitude.” Not a CTBA member, Pechanga operates a 2,000 slot machine casino in Temecula.

Macarro also attached the results of a survey his tribe commissioned through EMC Research. According to the poll of 802 randomly selected California voters conducted August 9-13, 61 percent opposed legalizing online poker in California. This included 44 percent who were “strongly opposed.” Only 36 percent were in favor.

“I guarantee this bill is going nowhere in the next four weeks,” said CTBA lobbyist David Quintana. He added, “The opposition has broadened.”

On Tuesday morning, Senate Pro Tem Darrell Steinberg, D-Sacramento, was holding a press availability when a reporter asked about the proposal.

“I don’t think it should be taken up in the last four weeks,” Steinberg replied. “I think it is a legitimate idea for consideration. I only have one question when I hear a proposal like that: how much money for the state General Fund? It’s all I want to know. You know, is it two, three hundred million dollars? If it is, I’d consider it. But I think it’s going to take more than four weeks to analyze that kind of proposal and the potential economic benefits.”

In a conference call with other tribes last Thursday, Morongo lobbyist Josh Pane indicated that Steinberg had been receptive to the idea in a recent meeting. The group held a second conference call with tribes on Friday afternoon as they sought to drum up support for the proposal.

Patrick Dorinson, an outside spokesman for the Morongo tribe, said the group was still meeting with legislators but did not yet have a bill sponsor. Reached last week, he defended the proposal by noting that Californians are already spending millions annually on online poker via websites headquartered in other countries.

“Because of technology, you can identify your players” Dorinson said. “Right now, there are a lot of Californians playing Internet poker, but without consumer protection.”

The five-page bill draft estimates that Americans spend $4 billion annually on “off-shore, non-United States Internet gambling Web sites,” and that more than one million Californians already play Internet poker. It goes on to note that while the federal Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA) bans the use of credit cards and fund transfers for Internet gambling, there is an exception for “intrastate” Internet gaming.

Keith Sharp, a spokesman for the Hawaiian Gardens Casino, said the proposal was born last fall when they approached the Morongo tribe with the idea. He said several other large Los Angeles area card clubs are also involved, including the Commerce Casino, the Bicycle Club, and the Hollywood Park Casino.

“There was a general consensus among the large clubs that it was important at this point in our existence to build some bridges to some of the larger tribes,” Sharp said.

Sharp disputed the idea that the proposal basically created a monopoly. Instead, he said, it opens up the market to all of those who are best able to provide it—card clubs and Indian tribes. While many of the specifics were yet to be worked out, he said, the Consortium is prepared to create a secure system that will limit games to Californians over 21, and also build in limits on how much people can wager in a given session or month.

“We’re regulated, we’re licensed, we’re back-grounded,” Sharp said. He added, “We’re the ones who know how to do it, and do it better. It makes sense in our minds to have the experts lead.”

But Los Angeles-based gaming attorney Sanford Millar said the plan goes against standard approaches used in the dozen or so jurisdictions that license-online-gambling worldwide, a roster that includes Malta, Italy and Antigua.

“None of them have provided for a single license per jurisdiction,” Millar said. He added, “There is no justification that anyone can put forth to grant a monopoly to these guys and this time just because they say they want it.”

In meetings with legislators and other groups, consortium members have reportedly been citing pending federal legislation as part of the reason to push through a bill with less than a month remaining in the 2009 legislative session. A pair of bills, one each in the House and Senate, have been submitted which would legal and tax framework for online poker and some other types of gambling.
Some are skeptical that the potential of federal regulation is behind this end of session move. “Congress works at a little slower pace than state government does,” said John Pappas, executive director of the Washington, D.C.-based Poker Players Alliance (PPA).

California is home to about 20 percent of the country’s online poker playing population, said Pappas, as well as about a tenth of his group’s million-plus members. Pappas said that his group supports state and federal regulation to allow online poker, but opposes the Morongo consortium proposal due to the exclusivity it would entail. Even though players aren’t competing against the house the way they are with slot machines—instead, they take a percentage of the total money played, called the “rake”—Pappas said, more competition still means a better experience for players.

“There would be no incentive for there to be a competitive rake,” he said. “Many sites offer bonuses, free rolls and opportunities for people to play for nearly nothing. I don’t know if there would
be any incentive for that to be provided under a monopoly setting.”

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