California, the wealthiest and most populous state in the United States and the great hope of Internet gambling advocates, is again staring down a massive budget deficit—$16 billion by Gov. Jerry Brown’s latest estimate—but odds are it won’t be enough to get a contentious internet poker bill through the Legislature this year.

As of this writing (18 May 2012), with less than two weeks to go, according to statute, for bills to pass their house of origin, an Internet poker bill introduced in the Senate back in February by Los Angeles County Democrat Roderick Wright hadn’t been reported out of the senator’s own Governmental Oversight Committee. 

Meanwhile, a June 15 deadline looms for the Legislature to apply some sort of patch to the state’s fiscal troubles so that a budget can be passed that Brown will sign. That patch inevitably will require tax increases to avoid a worst-case scenario of deep cuts to public education and law enforcement. 
This is where Wright’s “Internet Gambling Consumer Protection and Public-Private Partnership Act of 2012” (SB1463) comes in. The bill promises the state treasury an immediate infusion of $200 million from a one-time $30 million licensing fee charged to each operator for the right to offer Internet poker to California residents. Operators, which also must be California-based, would be reimbursed in the form of a credit against a tax on their monthly take, which the bill assesses at 10 percent of gross gaming revenue. Licenses are open to the entirety of the state’s gambling establishment—card clubs, race tracks and federally recognized Indian tribes— and would be good for 10 years initially. 
Only poker would be permitted for the first few years, but that could expand to other games depending on the outcome of a state review at that time.
Foreign operators could qualify for licenses or they could not. Pointedly, the bill excludes from consideration any company or entity that took bets from California residents after the 2006 passage of the federal Unlawful Internet Gambling Enforcement Act. It is less clear on the qualifications of entities that have faced prosecution for actual or alleged violations of federal or state laws pertaining to Internet gambling. 
SB1463 is almost identical to the Internet gambling bills Wright has been trying to get through the Legislature for the last two years. The fiscal case for turning California’s 2 million or more internet gamblers into a public resource has been compelling on each occasion. This latest effort is backed by the California Online Poker Association, a lobbying group which gets better organized every year and whose members currently include 30 of the state’s 150 card clubs and 29 of the 66 tribes with state gaming compacts, including the wealthy and politically connected Morongo and San Manuel tribes of Southern California. 
The powerful 33-tribe California Nations Indian Gaming Association has given the bill qualified support. As an added measure of weight, Senate President Darrell Steinberg has signed on as a co-sponsor.
But the problems are legion. In every state where it’s been proposed, with the exception of Nevada, online gambling continues to prove a tough sell. This is true even in New Jersey, home to Atlantic City’s ailing $3 billion casino industry, where a recent poll shows a majority of voters oppose it, and Republican Gov. Chris Christie, originally a supporter, is believed now to see it as a threat to his national political ambitions.
This is no less true in California, whose great wealth and myriad conflicting economic and political interests, place those difficulties in a class by themselves. The thorniest are those surrounding the state’s complicated relationship with its Indian casino industry, the largest in the country, valued in the neighborhood of $10 billion in annual revenues.
By the bill’s definition, tribes applying for licensing would have to waive their political sovereignty under federal law and subject themselves to the jurisdiction of state gaming authorities for the purposes of licensing and taxation, something the tribes have never been willing to do. 
In fact, SB1463 could well violate the federal Indian Gaming Regulatory Act, which has governed state-tribal relations on gambling matters for the last 25 years. It’s an issue certain to wind up in federal court.
It’s almost inevitable as well that should SB1463 pass the courts will be called upon to decide whether it also violates the tribes’ exclusive right to provide machine gambling, which is guaranteed them under their compact with the state. Among the questions this raises is whether a home computer or a bank of computers located in a card club or racetrack constitute “gaming devices” under the terms of the compact. 
The bill recognizes the complexity of this particular issue by attempting to push it down the road. It reads, in part: “It is the intent of the Legislature to encourage the Governor, immediately following enactment, to enter into meet and confer negotiations with interested tribal governments that have tribal-state gaming compacts with the state to resolve the questions related to exclusivity of tribal gaming.
This isn’t likely to fly, though. In fact, it’s already being challenged by some tribes.
Wright, meanwhile, is battling voter fraud and perjury charges in Los Angeles County in connection with allegations that he falsely registered a home address when he ran for re-election in 2008.
Finally, there is the issue of time, with legislative business now devoured by deal-making and arm-twisting over the budget and the Senate and Assembly heading toward summer recess on July 6. They return August 6 and have until the end of August to pass legislation. The current session ends September 1. September 30 is the last day for Brown to sign bills to become law in the current session.
Not surprisingly, Brown has yet to make known his position on SB1463.