Internet Poker: Good Bet for California Tribes?

California tribes are at odds with Internet poker; as to who else should be dealt in on the online action.
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California has a full house when it comes to legalized poker. According to the state’s Legislative Analyst’s Office, there are 89 cardrooms in 32 counties in California, and of the 110 federally recognized tribes in the state, 58 of them run 60 casinos — many of which have poker rooms.

Even so, there is still a big pot of money left on the table with Internet poker, a game currently not legal in California. (Only New Jersey, Nevada and Delaware have legalized Internet poker.). Efforts to legalize Internet poker have been ongoing in the state legislature for more than seven years. To the outsider looking in, it’s not an easy issue to follow, as there are many players with a stake in this game, including 14 California tribes.

While these tribes would all like a piece of the estimated $300 million in potential annual revenue from Internet poker, they are at odds as to who else should be dealt in on the online action — namely horse racing tracks, and an online gambling site that operated illegally in the past — which has stalled attempts to move legislation forward.

The 14 California tribes are divided along three camps:

Morongo Band of Mission Indians and San Manuel Band of Mission Indians: They are strong proponents of Internet poker, said Morongo Tribal Chairman Robert Martin: “We recognized early on that the Internet is the future of gaming and tribes must adapt to remain the gaming industry leaders in our markets.”

The two tribes have formed a coalition with three large Southern California card clubs (the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino) and PokerStars, the world’s largest online poker website indicted by the Department of Justice in 2011 for ignoring a federal ban on Internet gambling. The case was settled with no admission of guilt and PokerStars paid the $731 million fine. PokerStars has since been acquired by Amaya Inc., a Canadian gambling company.

As for the whether horse racing tracks should be able to engage in Internet poker, “Morongo is keeping an open mind and ultimately the question of tracks will be one for the legislature to decide,” said Michael Fisher, Morongo tribal spokesman.

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Agua Caliente Band of Cahuilla Indians, Barona Band of Mission Indians, Habematolel Pomo of Upper Lake, Lytton Band of Pomo Indians, Pechanga Band of Luiseno Indians, Sycuan Band of the Kumeyaay Nation, Table Mountain Rancheria, Viejas Band of Kumeyaay Indians and the Yocha Dehe Wintun Nation: This coalition is not against Internet poker, but as Leland Kinter, Yocha Dehe’s tribal chairman, explains, “We’re opposed to there not being enough of a framework to regulate Internet poker at a state level.”

In a letter to Chairman Jimmy Gomez of the Appropriations Committee opposing AB 431 (explained below), Kinter expressed concern over the rush to get this “spot” bill passed and moved to the Assembly. “Legislation of this magnitude, on a subject of this import[ance], deserves careful consideration by members of the committee, with meaningful participation from the public and interested stakeholders.”

This nine-tribe coalition is also against horse tracks offering Internet poker because they have no prior experience in it; and they want to exclude PokerStars from the deal, as it would reward “bad actors” that profited from tainted assets and would give them a distinct advantage over tribes because have already built up a database of customers illegally, they claim.

Pala Band of Mission Indians, The United Auburn Indian Community and Rincon Band of Luiseno Indians: The tribes split from the Pechanga coalition this February, and appear to be aligning somewhat with the Morongo position. Steve Stallings, a Rincon tribal council member, said his group separated from Pechanga because they felt the Pechanga faction was trying to block the legislation, and was unwilling to compromise. “We are committed to moving the legislation forward and it seemed liked the coalition was not prepared to do that,” said Stallings, who said the Pechanga position against rushing through a spot bill was disingenuous since they have been working on it for seven years. “How can seven years be too quickly?” he asked.

Stallings also said that his group does not have a problem with PokerStars being included in the deal, as they were purchased by another company; and while they are not supportive of the horse tracks, “if that’s the only way the legislation gets passed, then we don’t have a problem with it.” Bottom line, Stallings said, “Our philosophy is, if you don’t embrace technology and the Internet in any industry that you’re in, you are going to be left behind.”

Even with dissension among the California tribes over how to structure Internet poker, the issue made some headway at the end of May with the unanimous passage of AB 431, a bill that provides for the licensing and regulation of Internet poker websites in California. Some tribes that had registered opposition to this shell bill, such as Pechanga and Agua Caliente, switched their positions from “opposed” to “neutral” before the vote.

Many proponents declared it a big victory. Rincon Band of Luiseño Indians Chairman Bo Mazzetti said, “Today is a historic day as a California legislative committee approves a bill that will lead to legalizing Internet poker in California,” he declared in a released statement. “After five years of debates, some of the heavy lifting of crafting legislation has been done. Now, it is time for the stakeholders to come together, end the politics and solve the final issues.”

Lee Acebedo, the executive director of California Nations Indian Gaming Association (CNIGA), is keeping a “poker face” about AB 431. “It’s just a shell, there’s nothing of substance right now. All it did was assure that the bill did not die,” said Acebedo, whose primary concern is the protection of the exclusivity of tribal government gaming in the state. “Here in California, we have a constitutional guarantee that tax-free gaming is an exclusive right of California tribes,” he said. “It’s possible that online poker going to other venues, such as race tracks, could be viewed as an expansion of gaming, and we want to keep an eye on that.”

So what’s the next step in this long drama? According to Acebedo, the second of three hearings is scheduled next week between the Senate and the California State Assembly Committee on Governmental Organization. “It’s informational only. They are still doing their fact-checking,” he said.

Stallings, of the Rincon tribe, believes adoption of an Internet poker bill is very close, and is hopeful that it will go to the floor of the legislature for a vote in mid-July.