California’s politically powerful casino tribes have dropped their opposition to Internet gambling, raising the possibility that the country’s wealthiest and most populous state could be dealing real-money poker online by next year.
Experts say the stars are aligning for several reasons: three states are now up and running with internet gambling, neighbouring Nevada among them; more are expected to follow in the months ahead; and the talk in Washington of a federal ban is louder in the current Congress than at any time since the 2006 passage of the Unlawful Internet Gambling and Enforcement Act all but shut down the U.S. market.
“California is moving forward primarily because the vested interest groups, American Indian tribes and card rooms, have dropped their guns and hatchets and are willing to cooperate to get the job done,” says Kevin Flood, a California-based consultant to the gambling and social gaming sectors.
For the tribes, considered by many to be the most potent lobby in state government behind the public employees’ unions, experts say it’s about recognizing the inevitability of legalization.
For the card rooms the motivation is a little easier to parse: It’s about a formidable new revenue stream and a unique opportunity to cross market their land-based venues while driving newer and larger streams of traffic both ways.
The potential is estimated at upwards of $263 million in revenue in the first year, growing to more than $380 million by Year 10.
“California coming online would dwarf any success that those other markets had,” says attorney Jeff Ifrah, a D.C.-based attorney specializing in gaming law.
One faction led by the San Manuel tribe, owners of a lucrative casino outside Los Angeles in San Bernardino County, has lined up behind Senate Bill 1366, sponsored by Santa Ana Democrat Lou Correa, a long-time champion of legalization. SB1366 envisions interstate compacts and allows the state the option to join any federal regulatory framework that might evolve. It’s tough on the “bad actor” issue, prohibiting the licensing of any operator who took U.S. bets after 31 Dec. 2006. It does, however, provide a sliver of wiggle room if an operator can demonstrate that their U.S.-facing business was not unlawful under federal law and the laws of the states.
Assembly Bill 2291, sponsored by Los Angeles Democrat Reginald Sawyer-Jones, limits its “bad actor” stance to subcontractors that took bets from California residents only. This more state-centric approach extends to any national regulatory scheme, which would be off-limits, as would interstate compacts. It also limits tribes to bets placed on Indian land.
Both bills were introduced as “urgency” measures. This guarantees their consideration in the current session, but it requires two-thirds majorities in both the Assembly and Senate for passage. Either one would take effect, with Gov. Jerry Brown’s signature, on 1 January 2015.
The card room lobby has indicated they’re ready to get behind either one, according to an attorney representing some of the major venues, Commerce, The Bicycle Club and Hawaiian Gardens among them. So making it happen will depend on bringing the two Indian factions together in time. That process appears to be well under way.
The racing industry, no mean power in its own right, intends to come along. “We’re very aware of what’s going on, and we have a strategy for how to make sure our voice is heard in California,” said Josh Rubinstein, senior vice president for development at San Diego’s Del Mar Thoroughbred Club. “All we’re looking for is a level playing field.”
Richard Schuetz, a veteran of the commercial casino industry and an online advocate who as commissioner of the California Gambling Control Commission is tasked with bringing it all together, says he’s optimistic. “I’ve tried to explain that the stakes are huge,” he said at last month’s gathering in Sacramento. “I’m a Californian, and I believe between us and our tribal partners, we can get this right.”