California’s Financial Woes Could Rescue Internet Poker Bill
03 Jun, 2010
The bill, introduced last Friday by Democratic State Sen. Roderick Wright who represents the Los Angeles suburb of Inglewood, already appears to have split California’s tribes.
“If people want to bring Las Vegas into every child’s bedroom in California, then this is their bill,” said David Quintana, political director of California Tribal Business Alliance, which represents six of California’s tribes including the powerful United Auburn Indian Community and the Viejas Band of Kumeyaay Indians.
“It’s as uncooked as sashimi,” Quintana said. “It expands gambling and it’s completely unacceptable.”
More ominously, Quintana charges Wright’s bill would violate California’s Indian gaming compacts by denying exclusive gambling rights for tribes.
In exchange for exclusivity, tribes pay the state about $365m each year. Facing a budget shortfall of about $20bn, California can ill afford to surrender the annual payments from tribes.
On the other hand, the Morongo tribe, which has led the drive toward intrastate Internet gambling in California, said the bill would protect online poker players and provide “desperately needed revenue for the state.”
In a joint statement with California’s four largest card club casinos, the Morongo tribe said, “We will be reviewing the bill carefully and offering our expertise on gaming issues with an eye toward getting comprehensive legislation passed this year.”
Among other things, Wright’s bill would authorize the California Department of Justice to award contracts for three Internet gambling hubs that would offer lawful games like poker for five years.
Tribes and other applicants who are granted a contract would have the right to negotiate for a second term.
The hubs would operate within the state’s borders. Playing an Internet game that is not authorized by California would be illegal, according to Wright’s bill.
At least 20 percent of gross revenues from the three hubs would go to the state of California.
Sanford Millar, a gaming attorney in Los Angeles, described Wright’s legislation as “an auction bill.”
In other words, an Internet gambling operator who offers to set aside 25 percent of a hub’s gross revenues for the state may be more likely to win a contract than an operator offering 20 percent.
“Higher offers will be given more weight,” Millar said.
California could receive up to $9m for a licensing fee for hub operators and the state’s share of gross revenues for hubs could approach $1bn, according to Wright.
Millar said the bill’s definition of “gross revenues” and other key terms is ambiguous and must be clarified. Despite his misgivings, Millar said the bill has “a very good chance” of passing the California Senate by August or September because of the state’s financial predicament.
Joseph M. Kelly, a business law professor at Buffalo State College in New York who has helped draft Internet gambling regulations for Antigua and Barbuda, praised the bill for including requirements of “suitability, solvency and social responsibility” for hub operators.
But Kelly faulted Wright’s bill for authorizing the California Department of Justice to arrest not only illegal Internet gambling operators but gamblers who patronize illegal offshore wagering sites.
“Criminalizing unlicensed poker players is a highly unenforceable measure. It just doesn’t make sense to make it a crime,” Kelly said.
Jacob Appelsmith, who is the director of the California Bureau of Gambling Control, said law enforcement officials “are less interested in the players than the providers.”
But echoing his testimony in February before the Senate Committee on Governmental Organization, which Wright chairs, Appelsmith said California should follow the example of Washington state and crack down on illegal Internet gambling.
Last week, the Washington state Supreme Court heard arguments in a case involving a state law that makes it a felony to play poker online.
“California should do something – whether that includes banning Internet gambling or enforcing Internet gambling regulations. The state should not stand on the sidelines any longer,” Appelsmith said.
More than 1.5m Californians gamble on 600 offshore websites, making up about 25 percent of the Internet gambling market in the United States.
If California passes Wright’s bill this year, it could have a devastating impact on federal Internet gambling legislation pending in Congress.
Rep. Jim McDermott, D-Wash., claims his bill to tax Internet gambling would raise $42bn over the next 10 years. Lobbyists who support McDermott’s bill say the figure could be as high as $72bn.
But even McDermott acknowledges that those revenue figures assume all 50 states would agree to federal regulation of Internet gambling. If California approves Wright’s bill, McDermott’s revenue figures would plummet.
Millar, the Los Angeles gaming lawyer, downplays that scenario and says Wright’s bill would allow California to agree to federal and state regulation of Internet gambling.
“The bill anticipates there will be federal regulation of Internet gaming,” Millar said.
Wright’s bill also allows California to enter into Internet gambling agreements with other states to increase revenue.
“There are only six or seven states large enough to regulate Internet gambling on their own,” Millar said.
Those states would include California, Florida, New York, Pennsylvania, Texas, Illinois and possibly Ohio. ”The rest would have to form a partnership,” he said.
“If people want to bring Las Vegas into every child’s bedroom in California, then this is their bill,” said David Quintana, political director of California Tribal Business Alliance, which represents six of California’s tribes including the powerful United Auburn Indian Community and the Viejas Band of Kumeyaay Indians.
“It’s as uncooked as sashimi,” Quintana said. “It expands gambling and it’s completely unacceptable.”
More ominously, Quintana charges Wright’s bill would violate California’s Indian gaming compacts by denying exclusive gambling rights for tribes.
In exchange for exclusivity, tribes pay the state about $365m each year. Facing a budget shortfall of about $20bn, California can ill afford to surrender the annual payments from tribes.
On the other hand, the Morongo tribe, which has led the drive toward intrastate Internet gambling in California, said the bill would protect online poker players and provide “desperately needed revenue for the state.”
In a joint statement with California’s four largest card club casinos, the Morongo tribe said, “We will be reviewing the bill carefully and offering our expertise on gaming issues with an eye toward getting comprehensive legislation passed this year.”
Among other things, Wright’s bill would authorize the California Department of Justice to award contracts for three Internet gambling hubs that would offer lawful games like poker for five years.
Tribes and other applicants who are granted a contract would have the right to negotiate for a second term.
The hubs would operate within the state’s borders. Playing an Internet game that is not authorized by California would be illegal, according to Wright’s bill.
At least 20 percent of gross revenues from the three hubs would go to the state of California.
Sanford Millar, a gaming attorney in Los Angeles, described Wright’s legislation as “an auction bill.”
In other words, an Internet gambling operator who offers to set aside 25 percent of a hub’s gross revenues for the state may be more likely to win a contract than an operator offering 20 percent.
“Higher offers will be given more weight,” Millar said.
California could receive up to $9m for a licensing fee for hub operators and the state’s share of gross revenues for hubs could approach $1bn, according to Wright.
Millar said the bill’s definition of “gross revenues” and other key terms is ambiguous and must be clarified. Despite his misgivings, Millar said the bill has “a very good chance” of passing the California Senate by August or September because of the state’s financial predicament.
Joseph M. Kelly, a business law professor at Buffalo State College in New York who has helped draft Internet gambling regulations for Antigua and Barbuda, praised the bill for including requirements of “suitability, solvency and social responsibility” for hub operators.
But Kelly faulted Wright’s bill for authorizing the California Department of Justice to arrest not only illegal Internet gambling operators but gamblers who patronize illegal offshore wagering sites.
“Criminalizing unlicensed poker players is a highly unenforceable measure. It just doesn’t make sense to make it a crime,” Kelly said.
Jacob Appelsmith, who is the director of the California Bureau of Gambling Control, said law enforcement officials “are less interested in the players than the providers.”
But echoing his testimony in February before the Senate Committee on Governmental Organization, which Wright chairs, Appelsmith said California should follow the example of Washington state and crack down on illegal Internet gambling.
Last week, the Washington state Supreme Court heard arguments in a case involving a state law that makes it a felony to play poker online.
“California should do something – whether that includes banning Internet gambling or enforcing Internet gambling regulations. The state should not stand on the sidelines any longer,” Appelsmith said.
More than 1.5m Californians gamble on 600 offshore websites, making up about 25 percent of the Internet gambling market in the United States.
If California passes Wright’s bill this year, it could have a devastating impact on federal Internet gambling legislation pending in Congress.
Rep. Jim McDermott, D-Wash., claims his bill to tax Internet gambling would raise $42bn over the next 10 years. Lobbyists who support McDermott’s bill say the figure could be as high as $72bn.
But even McDermott acknowledges that those revenue figures assume all 50 states would agree to federal regulation of Internet gambling. If California approves Wright’s bill, McDermott’s revenue figures would plummet.
Millar, the Los Angeles gaming lawyer, downplays that scenario and says Wright’s bill would allow California to agree to federal and state regulation of Internet gambling.
“The bill anticipates there will be federal regulation of Internet gaming,” Millar said.
Wright’s bill also allows California to enter into Internet gambling agreements with other states to increase revenue.
“There are only six or seven states large enough to regulate Internet gambling on their own,” Millar said.
Those states would include California, Florida, New York, Pennsylvania, Texas, Illinois and possibly Ohio. ”The rest would have to form a partnership,” he said.