Tag: california

California Considers Intrastate Poker, But Tribes Are Mixed

Not long ago legislation was contemplated in California that would legalize on-line poker by creating an intrastate site.  Legislation that would make this concept reality was introduced recently by State Senator Roderick Wright, of Los Angeles suburb Ingelwood.  What makes California a particularly interesting test ground is that it is the most populated state in the country, for years has had legalized brick-and-mortar poker, and is facing a critical, and growing, budget deficit. 
 
The current bill has received mixed reviews, however, both in terms of concept and execution.  Conceptually, even the California Indian tribes, many of which have brick-and-mortar casinos, are split.  One faction of Indian tribes opposes the bill because it would violate the tribes’ exclusive right to control gambling in California (i.e., losing money) and out of fear that legalization would introduce children to gambling.  Other tribes, such as the Morongo, support the bill because it will bring revenue to the state.  (Each tribe’s annual license is approximately $365 million.)  Regarding execution, experts, such as esteemed Professor Joseph Kelly, though he generally favors of many aspects of the bill, take issue with the provision of the bill that would make it a crime to play on a non-intrastate site. 
 
My take is somewhat different, and perhaps controversial (especially to California-based poker players).  Online poker should be legal and regulated.  So, yes, generally, I favor legalization of online poker.  BUT, I am against a piecemeal approach that would harm the federal effort to legalize poker across ALL states.  California represents approximately 25% of the online player pool.  Creation of a California intrastate site — and criminalizing play on other sites — would chop a leg out of the effort to legalize poker nationally.  And this comes from someone that lives in another “major” state who would personally benefit from an intrastate site.  Poker players should keep their eyes on the larger picture, and not settle for Pyrrhic wins that merely appease. 

California Becoming Increasingly Keen On Intrastate Online Poker

Like many other US states are starting to do, California is looking at the idea of legalizing online poker, instead of waiting for the Federal government to catch up.  California is particularly interested in the tax revenues that will be created by having intrastate Internet poker.  The Tribal Alliance, however, claims that legalizing Internet poker in California will not have a positive effect on the state’s balance sheets.  They may feel legalization of Internet poker may reduce their profits.  On Tuesday 9 February, Internet poker will be discussed at the Senate Committee on Governmental Organization hearing.  Poker Law Bulletin will keep a close eye on the latest news from California.

A Small-Ball Approach to Legalizing Poker

Poker players love to disagree. But one topic on which we all agree is that poker, even when the house profits, should be legal. Yet, even in this area of agreement, there appears to be an important difference in how, or more accurately, where, we attempt to accomplish that goal.

Much of the effort to legalize poker is focused at the federal level. This includes the recent legislation introduced by Senator Robert Menendez (D-NJ), Congressman Barney Frank (D-MA), and others, and the efforts taken and support given by the Poker Players Alliance (PPA). The weight toward a federal-directed approach likely is warranted given the imminent threat of the UIGEA, the broad-reaching effect federal laws have on states, and the volume of money at stake with online poker. But a focus on federal action should not be at the expense of state action. More needs to be done on a state-by-state basis to legalize poker, particularly the live variant. After all, legalizing poker in each state would not only be a boon to the daily lives of poker players but would symbiotically aid the movement to legalize poker federally.

Similar to what is being done at the federal level, lobbies could be established – with or without PPA aid or affiliation – to petition states to amend their laws. Mass letter-writing campaigns could be undertaken to voice support to state representatives. Advertisements depicting the financial benefits of poker revenue (and even perhaps the hypocrisy of differentiating between lotteries and horse racing on the one hand and poker on the other) could be launched. These tactics actually might prove more successful on the state level than they have at the federal level given the acute revenue shortages many states are experiencing and that fewer people (and, at least theoretically, a less diverse group of people) need to be convinced of their merit.

Some states, to varying degrees, permit poker even when the house profits. California, Washington, and Florida are examples. However, little exists akin to the coordinated federal attack launched by the PPA. There is hope that at least certain states may be willing to listen to such a campaign.

A ballot question has been filed in Massachusetts that would legalize Internet poker in that state with winnings being taxed. Its inclusion on the ballot awaits approval by the state Attorney General and then needs 66,000 signatures. Providing hope that it may succeed, Massachusetts Governor Deval Patrick, Senate President Therese Murray, and House Speaker Robert DeLeo each support in varying degrees some version of expanded gambling, potentially including poker.

Pennsylvania also may be fertile ground. The Pennsylvania legislature is considering legalizing table games. Governor Ed Rendell already publicly supports legalizing video poker with the revenue being used for college education or other state needs.

Other states considering legalization of table games, including poker, are New Hampshire and Rhode Island. Even Kentucky, despite its unsuccessful attempt to shutter Internet poker sites, is considering expanding electronic gaming at its racetracks. New York also has intimated an interest in permitting electronic table games.

Legalization of state poker may have tangential benefits as well. For example, the federal prosecution of Douglas Rennick by the U.S. Attorney for the Southern District of New York for money laundering, bank fraud, and illegal gambling offenses is based, in part, on New York penal law. The U.S. Attorney’s case does not even reference the UIGEA. If New York penal law is altered as a result of lobbying efforts, the legal basis on which the Federal Government pursues certain actions could be invalidated, though granted it would not likely affect actions already commenced. And, if multiple states legalize poker, it may have a persuasive affect on the U.S. Congress’ stance on the UIGEA and poker-related laws. It could not hurt.

Resources being used currently to legalize poker on the federal level should not be shifted to a state level use. Rather, the pie of resources needs to be expanded, with those new resources (time, money, expertise, etc…) directed at state governments in a coordinated approach. People should become involved at a grassroots level to organize within their states to provide a coordinated and unified lobby. Perhaps existing lobbies and organizations, or even social networking sites such as Facebook, could be of assistance. It will take time, and may not succeed, but the importance of uniting to legalize the individual game we love is something on which all poker players can agree.

Who Takes the Pot

Online wagering in Europe is facing a tough spot due to the opposition of many countries and its recalcitrant governments.

Although some countries, like Norway, justify the decision to ban online betting as a measure to protect citizens from themselves, this is not the key justification in Europe, as most EU countries still allow gambling through national monopolies.

So far, out of the 27 EU members, seven consider online gambling illegal, 13 allow the activity (under state regulation), and the remaining seven keep it restricted to its own monopolies or licensed companies.

Whether revenue earns protection is the cornerstone question in Europe.  For instance, there are nations like the Netherlands, where gambling winnings are taxed at 29%, while in others like Gibraltar (one of the favorite destinations for gaming companies) winnings are taxed at only 1%, and in Malta it is capped to €466,000 a year.  Some countries even guarantee further advantages in order to attract companies linked to online gambling.

So, if many EU members are concerned about their own revenue and just protect state monopolies (like Germany, where online gambling seems to be banned unless the service is under state control), while other countries hold the best options for the gaming industry, this could generate unfair competition.

On the other hand, the monopoly protection may represent a breach of the free-trade treaty by the countries that decide for their own interests, instead of protecting community guidelines.

Leighton Vaughan Williams, of the Betting Research Unit at Nottingham Business School, once stated, “The policy of many of the EU member states towards online gambling seems to be motivated more by protection of the public purse than by protection of the public,” which makes sense because the member states are not like company shareholders, and revenue or profit are not all that matters.

Though the EU is apparently facing a different problem than the USA, an interesting question recently arose in California that proves monopoly is also something to consider for Americans.

A Riverside County Tribe, called Morongo Band of Cahuilla Mission Indians, is presently concentrating its efforts for the legal regulation of online poker for Californians.  However, the move was not welcome by some San Diego county tribes, like the Viejas Band of Mission Indians, under the argument that such regulation could ruin their own business.

Cheryl Schmidt, director of the gambling group, “Stand Up for California”, declared her opinion about the Morongo proposal:

“It just seems like Morongo is willing to sacrifice the monopoly it has, so that they can be the operating entity of Internet gambling in the state to the detriment of all the other tribes.”

Indeed, monopolies can be a barrier not only in Europe but also in the USA. The pot is getting bigger and bigger and the question is not who has the best hand anymore but who will be able to take it, even with no showdown.