The California legislature ended its 2015 session without passing an iPoker deal, as it has done for the past seven years. The session officially ended on September 11.
It became obvious to veteran Sacramento political observers that a bill was not going to pass when hearings originally scheduled for July were pulled and not rescheduled for August.
The year started with four bills, but confidence that any of them would pass was soon abated. Assemblyman Mike Gatto, who introduced the first bill, became discouraged by the hardening of positions of the various stakeholders. By February, after meeting with representatives of the various coalitions, he said he thought there was only a 35 percent chance of passing something.
The only bill that had any chance to move forward was a so-called shell bill by Assemblyman Adam Gray, and the only reason it had any potential to move was that it didn’t have any details. The Assembly Governmental Organization Committee passed Gray’s bill, the first time an iPoker bill has gotten that far. But that’s as far as it got.
Gray has said that he will reintroduce AB 431 in January.
All movement for iPoker happened in the Assembly. No state senator showed any interest in pushing the issue.
Nevertheless, many supporters of legalizing online poker felt that they came closer in 2015 than ever before. But many also felt that they need to adopt a different strategy if they are to ever overcome the elements that are standing in the way of adoption of a successful bill.
If they do not, then the current stalemate between tribal gaming interests that want iPoker, but don’t want the participation of PokerStars, or the racetracks, and those who support PokerStars and want to give racetracks a place at the table, will continue.
Many political observers have concluded that a key element missing from the process is a sense of urgency and political pressure that only a grassroots movement can provide. Several key lawmakers have said that one reason they have not pushed harder for an iPoker bill is that their constituents don’t really care about the issue.
The way around that, they say, is the formation of an advocacy group whose main goal is to pass a bill, but is not aligned with any of the several approaches to passing such a bill. Such a group would focus on the concerns of poker players themselves, rather than the concerns of the providers of the service.
Since 2016 is an election year such a group could magnify its power.
Chris Grove in the Online Poker Report last week suggested that several issues need to be addressed in order for an iPoker bill to be passed.
One is the complaint of the California Department of Justice and California Gambling Control Commission that they don’t have enough resources to do what they are already statutorily charged with regulating, and that adding online poker will only make that problem worse.
An online poker bill should provide additional funding for those agencies, he wrote.
Because the participation of PokerStars is such a “lightning rod” to opposition, wrote Grove, that company should not be the effort’s public face. This is especially true because PokerStars and its parent company Amaya aren’t even based in the Golden State. In addition, PokerStars has not done especially well in lobbying other states. Grove advocates moving PokerStars to the background and moving its partners: the San Manuel tribe and the Commerce card club, to the front.
The other issue that has proven impossible to deal with so far is the insistence by the state’s racetracks and their powerful labor supporters that they be included in any deal. This is strongly opposed by one of the powerful coalitions favoring online poker.
Grove suggests that a way be found to placate the racetracks, by offering them a piece of the pie big enough so that they will willingly accept a non-operator role. So far, the racetracks have insisted they have as much right to participate in online gambling as the tribes, or the card clubs. They point out that they already accept wagers online, something that card clubs and tribal casinos do not.
Grove concluded, “The unwillingness of the tracks to bend on this issue is causing online poker to stall. If it’s meant to be a path to online casino, tracks are holding up the thing they’re hoping to achieve.”
The coalitions have not remained monolithic. There has been some shifting of positions. Earlier this year three tribes that had originally opposed the participation of horseracing and insisted on the bad actor clause aimed at PokerStars changed sides on both issues.
These tribes, Rincon, Pala and the United Auburn Indian Community, united with San Manuel, Morongo, Amaya/PokerStars, Caesars, and the card clubs Commerce, Hawaiian Gardens, and The Bicycle to form a coalition opposed to the ten tribe alliance led by Pechanga and Agua Caliente, who want to keep out-of-state operators out, and racetracks sidelined.
Pechanga Chairman Mark Macarro has said he’s willing to share revenues with the racetracks, and to allow them to be affiliates, but has stood firm that they not be allowed operator licenses. The racetracks have refused to budge from their insistence that they be allowed to bid for licenses.
It has been estimated that California has the potential to tap an online poker market of $380 million a year. This compares to the $7.3 billion tribal gaming market in the Golden State.
So while the online market is not inconsiderable, it is small enough comparatively that the major players may feel they can afford to play a waiting game to get a deal that is most advantageous to them. Several of them also feel that there is only so much market to go around and that only a few operators could operate at a profit.
In a separate but related development Assembly Adam Gray, chairman of the Assembly’s Gaming Committee, on the final day of the session reintroduced an old bill that would legalize and regulate sports betting if the federal government repeals the legislation forbidding it: the Professional and Amateur Sports Protection Act of 1992 (PAPSA).
According to a passage from the California Interactive Sports Wagering Consumer Protection Act: “This bill would provide that its provisions would become operative only if the federal Professional and Amateur Sports Protection Act is amended or repealed to allow sports wagering in California and a state constitutional amendment to authorize sports wagering has been approved by the voters.”
California is not the only state interested in persuading the federal government to legalize the practice. New Jersey is currently in federal court fighting the ban.
Gray’s bill would allow entities that already offer gaming to offer sports betting. They include Card rooms, racetracks and tribal casinos. Bets would be allowable in person, but also by phone, computer or other electronic communication.
Some states, such as Nevada, are allowed to offer sports betting. It has been estimated that $95 billion will be bet on football games this fall. Almost all of those bets will be illegal.
