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California Legislature Takes Up Internet Poker

California Legislature Takes Up Internet Poker

The California Assembly’s Governmental Organization Committee held a five-hour hearing on whether to legalize internet poker, with one potential online provider, United Auburn Indian Community Chairman Gene Whitehouse, declaring that “regulators know the tribes and the tribes know poker.”

Speakers included representatives of some of the largest Indian gaming tribes, card rooms, organized labor, Nevada casinos, and many former legislators representing those interests.

One of those interests, PokerStars, the world’s leading online poker room, announced a consortium with the Morongo Band of Mission Indians and some Southern California card clubs just in case online poker becomes legal.

Another was Robert Smith, treasurer of the California Tribal Business Alliance (CTBA) and chairman of the Pala Tribe, which operates one of the largest casinos in the state.

Pechanga Chairman Mark Macarro said most tribes support his tribe’s efforts because they would like to “design the business rather than get run over by it.”

Anita Lee, a fiscal and policy analyst, described how online gaming is conducted in three other states that have legalized it. Former Nevada Gaming Control Board Chairman Mark Lipparelli said online gaming has been “nearly scandal-free” in his state, and that online gaming doesn’t lend itself to money laundering.

Not everyone at the hearings was in favor of internet poker. Gaming mogul Sheldon Adelson, who has mounted a nationwide campaign against online gaming, sent a representative to argue his position.

Bo Mazzetti, chairman of the Rincon tribe in San Diego County, warned of “bad actors,” i.e. online providers that have previously violated federal law on online gaming. He undoubtedly had in mind PokerStars, which ran afoul of the U.S. Justice Department on “Black Friday,” April 15, 2011, when two of its former executives were indicted. While PokerStars settled the claims with no admission of guilt, it paid over $750 million to the DOJ.

And the announcement that PokerStars had partnered with the Morongo tribe, along with the state’s three largest card clubs—the Commerce Club, the Hawaiian Gardens Casino and the Bicycle Casino—was met with disparagement, although the participants believe it will be good for California.

“We’re confident that, together, we can offer a safe, secure, high-quality online poker experience that brings financial benefits to California while providing the highest level of accountability, choice, service and protection for consumers,” said Morongo Chairman Robert Martin.

Martin is against the “bad actor” language, saying it was aimed at particular vendor because it only applies to activities after 2006. He suggested vetting a company’s entire history before letting it apply for a license.

“Efforts by a select few interests to rewrite longstanding and effective policy in order to gain a competitive market advantage or to lock out specific companies is not in the best interests of consumers or the state and will be vigorously opposed by our coalition, online poker players and many others,” Martin said.

Key lawmakers predict that there will be a deal on internet poker passed by the end of August, when the legislature finishes its work for the session.

There are currently two active bills, one in the Assembly and the other in the Senate. The CTBA supports the Assembly bill. According to Smith, “CTBA is in favor of iPoker but this new platform must be delivered methodically and with a clear understanding of the market we’re entering.”

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