Two rival measures were set in motion on Feb. 21, attempting to legalize Internet poker in the state of California. This sets up the stage for a whirlwind of lobbying and political jostling for control of a market that could potentially be worth hundreds of millions each year.
The bill would grant legal status to online poker sites paving the way for gamblers across the country to take part in the games from anywhere that they can be online. There have been previous attempts to compromise between the various tribes and lawmakers, but no final document has been agreed upon, both because of conflicting interests and the sheer complexity of the legislation.
“We have a complex mechanism here,” says Sen. Lou Correa, a Democrat from Santa Ana, who has been named as the new chairman of the influential Senate Governmental Organization Committee, which issues legislation related to gambling, alcohol and horse racing among others. “I’m hopeful that after some hard work, we’ll reach a solution.”
With big bucks involved - estimates for the legalization of online poker in California show that it could generate $263 million in revenue in the first year and around $384 million within ten years - there is pressure on the Senate committee to come up with some progress in moving the bill forward, granting legal status to the activity of 750,000 to 1 million poker players from California and subjecting the industry to taxes and fees. These players also include people that registered in other states that allow poker over the Internet, like New Jersey and Nevada, as well as unregulated games throughout the country.
The tribes have split into two groups over which bill they support. The bill from Senator Correa has the support of the Dry Creek Rancheria Band of Pomo Indians, operating the River Rock Casino in Alexander Valley, the Rincon Band of Luiseno Indians, the Federated Indians of Graton Rancheria, operating Graton Resort and Casino, the San Manuel Band of Serrano Mission Indians and other tribes. The opposing bill which was submitted by Assemblyman Reginald Jones-Sawyer, Democrat from Los Angeles, is supported by the Yoach Dehe Wintun Nation, the Pechanga Band of Luiseno Indians and the Agua Caliente Band of Cahuila Indians.
The two bills both legalize Internet poker, but there are substantial differences in licensing, security rules, eligibility requirements and launching costs that create the rift between the tribes. The Correa bill requires each operator to make a $10 million payment after their license is approved and depending on the level of the license - additional fees. The Jones-Sawyer bill has a lower threshold of $5 million as an initial payment and no subsequent fees.
The rules for licensing and eligibility will play the key role in this round of negotiations as well as the number of sites for each poker operator. The Correa bill doesn’t suggest a limit, the Jones-Sawyer one proposes a set number.
Both sides are aware that they are at an early stage of what will be a long process in which concessions will have to be made by both sides. In a written statement three of the tribal leaders that support the Jones-Sawyer bill, Marshall Mckay of Yocha Dehe, Jeff Grubbe from Agua Caliente and Mark Macarro, said “Most of you are aware that the exact wording of any introduced bill is very rarely what ends up in the final bill that comes to a vote. We expect that it will evolve as the dialogue goes on.”
A large part of the groundwork has already been done, as the negotiations last year covered many angles of the legislation. “Last year’s efforts in the Senate created the most extensive record on this matter and it is unrivaled,” said Jacob Coin, the spokesman of the San Manuel tribe who are backing the Correa bill. “We are confident that the different matters of importance have been thoroughly researched, debated and discussed. This latest round is based on the efforts all parties put in 2013.”
Other tribe representatives declined to comment - Graton Rancheria officials referred inquiries to the Stations Casinos, their casino manager in Las Vegas, who also had nothing to state. Dry Creek leaders also had no comment on the current form of the legislation.
For the past five years the Senate has been the main forum for legislation of the online gambling industry, mainly because of Senator Rod Wright, a Democrat from Inglewood, who was the chairman of the Senate Governmental Organizaiton Committee and a specialist profiled in gambling legislation.
But this year things are different for him, as he was indicted and convicted of no less than eight counts of felony for voter fraud and perjury regarding his stated residence when he was running for office over the last years.
He is still in the Senate awaiting his sentencing on May 16th, looking at a possible sentence of eight years and four months, but as standard procedure in such cases, he was removed from the position of chairman of the committee with Correa taking the position.