A California Senate informational hearing yesterday examined the thorny issue of internet poker and its regulation, finding that while up to one million Californians already play the game online, there is no consensus on its regulation and strong opposition to change.

Citing a refusal to be shaken down by Governor Arnold Schwarzenegger to pay for new casino deals, some Indian tribes are challenging a state-imposed limit on the number of slot machine licences allowed in California. Their challenge could overturn the longstanding machine limit in the state.

A study by a former state finance director warns that legalisation of internet poker in California could deprive state budget coffers of $365m annually because the games would violate gambling exclusivity agreements with tribal casinos.

A court battle in California to overturn the state’s slot machine limits has ended in victory for the tribes who opposed the administration’s restrictive reading of their 1999 compacts.

A prominent California legislator is set to deliver a new intrastate online poker bill by the end of the month, and he has defied tribal interests to sue if they believe their sovereignty is infringed by the measure.

As the legislative session resumes later today in California, a move by one of California’s leading casino gambling tribes and poker clubs to legalise internet poker in the state is rekindling the intense tribe-versus-tribe politics that drove costly ballot fights in recent years.

California Governor Arnold Schwarzenegger has stepped into the tribal gaming controversy by backing the Agua Caliente tribe’s lawsuit that seeks to block a public vote on its renegotiated gambling compacts with the state.

Eleven California tribes have been awarded licences for 3,548 new slot machines in a major victory for tribes that complained they were unjustly barred from expanding under casino deals the state agreed to in 1999, but many more licenses went unclaimed.

With his state in the throes of a deepening budget crisis, Governor Arnold Schwarzenegger openly boasted last year that new casino deals with Indian tribes could help restore California’s fiscal health. But the governor’s political gambit – and his gambling wager – is so far a losing bet against expectations.

California is set for a major increase in casino gambling as four of the state's tribes won the right to add up to 17,000 new slot machines to their machine estates this week. The resounding approvals will cement California’s position as the second largest gaming state in the US after Nevada.