Internet poker bill dies amid bickering between competing gambling interests

Reporting from SACRAMENTO —  After 10 bills over eight years failed to legalize Internet poker in California, the latest plan also died Wednesday in the Legislature amid continued squabbling by competing factions of the gambling industry.

A bill that would have allowed Californians to legally play poker online lacked support from two-thirds of the state Assembly members and was not brought up for a vote on the last day of the legislative session.

With a market topping $1 billion in California alone, it is no surprise that competing gambling interests have failed to agree on who should get a piece of the pie, according to I. Nelson Rose, a law professor and gaming expert at Whittier Law School.

“For the operators, it’s high stakes,” Rose said. “If you are a local operator, you want to have the monopoly and you want to keep out real big money and experienced operators like Caesars or Amaya.”

Rose had long predicted Internet poker legislation would not pass this year because it is an election year and those seeking reelection in the Legislature are uncertain of how voters would react.

The bill by Assemblyman Adam Gray (D-Merced) would have allowed seven-year state Internet poker licenses to be granted to card rooms and the 60 Native American tribes that operate casinos, if they are judged “suitable” to participate after background checks by the state Department of Justice.

An upfront fee of $12.5 million per website has been discussed, but the fee and percentage had not yet been finalized.

The bill divided the powerful Native American tribes that operate casinos and contributed hundreds of thousands of dollars to political campaigns in California.

Gray’s proposal was supported by a coalition of seven tribes that operate casinos, including the Agua Caliente Band of Cahuilla Indians, Pechanga Band of Luiseño Indians and the Barona Band of Mission Indians.

That coalition supported the bill because it was changed in the last month to include a provision that would have kept big, international poker companies including Amaya on the sidelines for at least the first five years.

A five-year penalty box was included in the bill for “bad actors” that had offered Internet poker to U.S. residents while it was illegal to do so, including PokerStars, the firm bought by Amaya.

“This was the most viable path to legalizing Internet poker in the last eight years,” said Mark Macarro, tribal chairman for Pechanga. “The bill protects consumers and ensures bad actors do not profit from illicit activities.”

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However, the penalty provision drew opposition this month from another coalition of tribes and card clubs that had been supporting the bill until the changes were made.

That competing coalition includes the Morongo Band of Mission Indians, the San Manuel Band of Mission Indians, Commerce Casino, Hawaiian Gardens Casino and Bicycle Casino.

They had planned to partner with PokerStars and parent firm Amaya on an Internet poker website in California, and said the bill unfairly kept the company out.

“AB 2863 met the same fate of past measures because opponents once again attempted to unconstitutionally limit competition by effectively barring one operator in perpetuity from the California marketplace,” said Morongo Tribal Chairman Robert Martin, who added that his tribe will continue to work on legislation next year.

Macarro questioned the motives of the competing coalition.

“It’s clear that the opposition’s goal is not consumer protection, but protection of foreign offshore companies that profited from illegal activities,” he said.

Gray declined comment Wednesday on the failure of his bill, but wrote a letter last week to his home district’s Modesto Bee in defense of action.

“We can continue to endure the status quo, where Internet gambling goes unregulated, untaxed and where no consumer protections exist, or we can try to bring some sense of order to the entire gambling industry in the state,” he wrote.

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