Alliances Key To California Online Gambling Bill


Posted by on Wednesday, April 11th, 2012

With California’s proposed online gambling bill requiring a $30 million license fee for site operators, it’s expected that only a handful of licenses will be issued to Internet gambling operators. Golden State gambling regulators currently oversee approximately 150 entities comprised of tribal casinos, cardrooms and horse racing tracks that offer gambling in the state. With all of those gaming interests wanting a piece of the revenue pie expected from online poker and gambling legislation, it’s crucial that alliances are built among the current gaming interests to make everybody happy.

However, that’s much easier said than done. The divisiveness over who should get a license is creating tension among all parties involved. Cardrooms and Indian tribes feel that the horse racing industry should be left out since their offered product has nothing to do with poker. Horse racing authorities counter that logic by arguing that they are the only industry currently offering online wagering and that they deserve a boost in revenue that online gambling would provide to be able to compete with race tracks in other states that offer slot machines and other modes of gambling to patrons.

“The question is whether they can work out the politics over who should get licenses,” I. Nelson Rose, a professor at Whittier Law School and noted gambling expert, recently told the San Francisco Chronicle. “Nothing makes as much money as a legal gambling monopoly. And if you can’t have a monopoly, you want an oligopoly.”

On the bright side, dozens of California cardrooms and tribal casinos have teamed up by establishing the California Online Poker Association (COPA) and launching Calshark.com, a free-play poker site available to Golden State residents. The intent was to build a site and brand in advance of legislation to be prepared to offer real-money play when regulations eventually are in place. The players who have already registered would have active accounts and be familiar with the site’s online play. All that would be required would be to shift from imaginary or play chips to actual betting of real money.

The prospect of state-regulated cardrooms and Indian casinos teaming up would have shocked many people in years past. As most California residents can tell you, tribes and cardrooms have waged battles for many years over the Garden State’s prolific gambling business. The cardrooms have deeply resented the fact that tribal gaming casinos were allowed to offer slot machines and roulette, guaranteed moneymakers that California cardrooms were excluded from offering due to existing state regulations.
But forced to form allegiances with each other so as not to be left out of the online gambling legislation revenue pie, the previously bitter enemies are joined together, hoping to enter the coming age of legalized online poker and gambling in tandem.

“What’s the past is the past,” said Pierre Wuu, COPA’s director. “The tribes and cardrooms in the California Online Poker Association are all on the same page. And we’re not looking back.”

It is also believed that the state’s race tracks and horse owners are considering a partnership that will put all of their interests into the formation of one website. However, at least one race track official, Josh Rubinstein, the senior vice president of development for the Del Mar Thoroughbred Club in San Diego County, is hoping that the horse men can agree on something very soon.

“There’s going to be two important factors for success–marketing and being first,” Rubinstein said. “It’s like horse racing. If you don’t break from the gate when the bell rings, it’s going to be very difficult.”

SB1463, the active bill currently before state lawmakers introduced by Sen. Roderick Wright (D-Inglewood) and state Senate President Pro Tem Darrell Steinberg (D-Sacramento), calls for online poker to be offered intrastate for the first two years, followed by online casino games to be phased in after that. That has Indian tribes concerned that some of the revenue generated by their land-based casinos would be lost to online customers.

“For the tribes I represent, this is a nonstarter,” said David Quintana, a lobbyist for the California Tribal Business Alliance. “You have a high likelihood it will have an impact on our brick-and-mortar facilities.”

Yet another concern for existing gambling operators in the state is the possible licensing of San Francisco-based Zynga. Boasting 35 million users a month who free-play poker via social media giant Facebook and additional online platforms, Zynga is reportedly in talks with Wynn Resorts to iron out details about a collaboration that would transform the site’s play-money format to real-money online poker in U.S. jurisdictions that have enacted regulations. With its huge customer base and experience in social media and the behavior patterns of online game players, Zynga could be a dominating force in the eventuality of interstate and global online gambling schemes. Industry rumors that Zynga officials have made inquiries to Sacramento lawmakers about the proposed legislation have been making the rounds of late.

Let’s also not forget the anti-gambling proponents who have put in their two cents on the online gambling issue in California. James Butler, a director of the California Coalition Against Gambling Expansion, is concerned about gambling addiction among online players who will have greater access to developing gambling problems via the Internet.

“At least with a casino you have to go there, and you have to wear a shirt and shoes,” Butler said. “Here, you crawl out of bed wearing your slippers and robe and you’re playing.”

A 2006 state attorney general report estimated that gambling addiction costs California $1 billion a year in lost work time, theft, and other related expenses. Butler is amazed that lawmakers anticipate an increase in gambling addiction with the online measure, but continue to forge ahead with their proposal.

“Rather than try to mitigate the problems,” Butler said, “why don’t we just try not to cause the problems?”

Any legislation will be hard-pressed to completely satisfy all the interests involved. To further complicate matters, outside entities are also hoping to move in and join the online gambling action in the state. The California Tribal Business Alliance has made it clear that the current wording of the proposed legislation that does not exclude the awarding of licenses to outsiders who currently don’t conduct gambling business in the state is highly offensive and an insult to California tribal gaming interests.

It is apparent that online poker and gambling legislation in America’s most populous state will not be without its problems. There are plenty of concerns among the existing licensed gambling providers in California, as well as others who are involved in the issue. But on the eve of the one-year anniversary of Black Friday that ultimately shutdown online poker to California residents as well as the rest of the U.S. population, it continues to be the online players who suffer the most while proposed legislation is being debated and bandied about.


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