For the first time ever an iPoker bill has passed the gantlet of a key committee vote in the California Assembly.
Last week the Assembly Governmental Organization Committee voted unanimously to move Assemblyman Adam Gray’s bill forward. Gray is chairman of the committee.
Details of the bill remain to be hashed out in future committee votes and hearings.
The vote doesn’t mean the bill has passed, merely that it can be discussed on the floor of the chamber. But in previous sessions unsuccessful votes meant that similar bills were left to languish without discussion.
The San Manuel Band of Mission Indians, a tribe that has been pushing for the legalization of iPoker for years, reacted with enthusiasm. “Now it puts a vehicle in play for legislators, and for stakeholders to have discussions in earnest about what ought to be in this bill to authorize intrastate Internet poker in California,” said tribal spokesman Jacob Coin.
San Manuel and the Morongo Band of Mission Indians are in a coalition with card rooms and the Amaya Gaming Group, owners of PokerStars.
There is still plenty of disagreement about the bill however. The Pechanga Band and its ally the Agua Caliente Band insist on a “bad actor” clause that would specifically target PokerStars, which has been accused by the Justice Department of violating federal law by allowing Americans to play its real money games on its offshore websites in 2011. Pechanga tribal Chairman Mark Macarro said last week his tribe’s position remains unchanged. “We believe it is necessary to protect consumers and the high suitability standards of the gaming industry from companies that do not and have not respected the law.”
Another deal killer is the insistence by some tribes that racetracks may not be included in the mix of possible operators of internet poker.
Last week Pechanga Band of Luiseno Indians Chairman Mark Macarro declared, “California voters have always had the final say on gaming expansion, and they have already rejected expansion of gaming for horse racing.” In 2004 voters rejected a proposal that would have allowed racetracks to operate slot machines. Macarro also insists on the “bad actor” clause.
He claims that allowing racetracks to participate would amount to expanding the scope of limited gaming in the Golden State. “The future of our people, the future of our tribes, depend on that policy, that law,” he said.
Supporters of PokerStars point out that Amaya Gaming Group purchased PokerStars last year, so it is not the same company the Justice Department sued. Morongo calls PokerStars, “the pre-eminent online poker entity in the world.”
Morongo Chairman Robert Martin has joined several other tribal leaders in calling for compromise. There has to be compromise or it won’t get done,” Martin said recently. His tribe fears that without the added clout of the racetracks that the bill won’t be passed since a two-thirds vote of both houses is required due to the financial nature of the bills.
Macarro counters that as long as the racetracks are excluded the tribes should be able to work out a compromise. Governor Jerry Brown has previously stated that he won’t sign a bill without the inclusion of the tracks.
Despite his assertion that the tribes are close to a deal, Macarro reacted quickly when it was suggested that he might drop the “bad actor” requirement. “Unequivocally, Pechanga has never suggested an alliance with PokerStars in order to get a bill done,” he said.
The Rincon Band, Pala Band and United Auburn Indian Community split from the Pechanga group several months ago when they decided they could live with racetrack involvement. They have also urged compromise on the “bad actor” clause.
The racetrack industry remains united in wanting a place at the table. Robyn Black, whose lobbying company represents many racetrack related interests, declared last week, “What we do want is an equal opportunity going forward,” adding, “Racing is very united,” Black said. “We may fight over other issues in the world of racing, but when it comes to Internet poker our unions, our tracks, our trainers, our jockeys, our pari-mutuel folks … are all united.”
The bills being looked at tax profits at 5 percent and 8.5 percent, which supporters of high taxation compare to New Jersey’s rate of 15 percent. Each bill would also impose large license fees, $10 million for one bill and $5 million for the other.
Some smaller tribes find this intimidating. The Press Enterprise quoted Mary Resvaloso, chairman of the Torres Martinez Desert Cahuilla Indians: “We don’t have the funding available to enter this.” She added, “If we had funding, we most likely would entertain the idea.”
Critics of the current gaming regulatory structure, called “bifurcated,” which divides responsibility between the California Gambling Control Commission and the Bureau of Gambling Control, may also use the bills as an excuse to reopen debate on that structure.
The bill faces other committee votes. On May 20 the Governmental Organization committees of the Senate and Assembly will meet jointly. The meeting will be informational only, but one controversial proposal, the participation by racetracks, is expected to be discussed.
On June 24 the joint committee will meet for a hearing entitled: “The Legality of Internet Poker–How Prepared is California to Regulate It?”
On July 8 the Assembly’s GO committee will meet in what some political observers feel could be the most important hearing as a final form of the bill might emerge.
Alex Dreyfus, chief executive officer of Global Poker Index told Online Poker Report last week that he was “thrilled by the real opportunity to see for the first time in 6 years a very strong signal.” He added, “I don’t want to be over optimistic, but I have never seen so much momentum from all the parties. It is not anymore an if, but a when online poker will come to California.”
Tuari Bigknife, attorney general for the Viejas Band of Kumeyaay Indians, told Online Poker he is somewhat optimistic. “Are all tribes going to agree on this issue? I think that’s really going to be a challenge.“ He added, “It’s a tough issue. But we got really close last year. And folks are serious about getting a bill done.”
The possibility of legal online poker is just one of many challenges facing gaming tribes. They are of two minds about this new source of revenue because some feel that it threatens their existing brick and mortar operations.
They also feel threatened by online sale of lottery tickets, which some states have legalized.
They also worry about how to insinuate gaming into the habits of a generation of young people whose noses are almost surgically attached to the screens of their Smartphones and platforms.
California’s gaming tribes have some reason for concern since tribal gaming revenues grew only 0.5 percent in 2013, the most recent year where that data is recorded. Competition among the many gaming tribes in the Golden State is seen as one compelling reason for the near flat line growth.
Another threat is the possibility that someday the state’s voters will allow more commercial gaming. That is why most gaming tribes are diversifying their economic development.
Daniel Tucker, chairman of the California Nations Indian Gaming Association, told the Press Enterprise, “If they legalize gaming off-reservation, we want to be ready for that. Five or six generations after I’m gone, we want to continue to prosper.”
Tribes, especially those in Southern California, were around when bingo halls first opened about four decades ago. Their legality was not universally recognized. Only with the 1987 U.S. Supreme Court decision was the right of tribes to offer gaming solidified in the law. This was quickly followed by the Indian Gaming Regulatory Act, which called for states and tribes to negotiate gaming compacts and allowed Class II (i.e. bingo type games) gaming without a compact.
Operating Class III games does require a compact. Some tribal state gaming compacts in California will remain in force until 2020, but already the state and tribes are talking renewal. Topics of discussion are likely to include how much of their casino profits tribes share with the state and the number of machines allowed.
A spokesman for California Governor Brown commented last week, “We do not discuss negotiations. We are certainly aware of concerns regarding the expiration of the 1999 Tribal State Gaming compacts.”
Several tribes would like to negotiate new compacts with Brown, rather than take their chances with his successor. Brown is generally seen as a pro-tribe governor, especially compared to his predecessor, Arnold Schwarzenegger, who was known for playing hardball with gaming tribes.
Even so, some tribes see wisdom in negotiating as a group, rather than individually, in order to get the best terms.
