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California Poker Hearings

2/11/10 - Californian Sen. Roderick Wright's informal Senate Government Organization Committee enquiry into the intrastate legalisation of online poker continued Tuesday with a trenchant observation by the Senator as further testimony was heard: “At this time of day, I’m going to guess 30 000 to 40 000 people are playing in California,” he said. “It’s not as though we’re sitting here making a decision whether or not people are going to play Internet poker. That ship’s sailed.”
 
Earlier, the panel heard from the consulting firm Global Betting and Gaming which estimated the number of active accounts held by state residents dropped from 7.8 million in 2006 to 5.7 million in 2007, but has since soared back to 8.4 million this year and is on its way to more than 10 million by 2012.
 
This potential reservoir of revenues for the state is going to offshore companies.
 
Californians who play on those sites may or may not be breaking the law, the director of the state’s Bureau of Gambling Control testified, “There is some debate whether it’s currently illegal to sit down and play at your computer under state law,” said Jacob Appelsmith.
 
That leaves the state with two choices, Appelsmith said: Either make it clearly illegal and try to seize players’ accounts, or establish a legal, intrastate system that would protect players and allow the state to license and tax operators.
 
“We believe the status quo is unacceptable,” he said.
 
Federal law expressly allows states to establish online poker sites that could accept accounts only from their own residents. Gaming interests eager for business and lawmakers eager for new sources of state revenue are exploring whether California should pursue that option.
 
Lesley Lohse, chairwoman of the California Tribal Business Alliance, said establishment of state-sanctioned Internet poker would be “in direct violation of compacts and agreements with the tribes.”
 
George Foreman, an attorney for the Morongo tribe, argued that because poker is not a banked game, but rather one in which players compete against each other, it is not subject to the compacts’ prohibition on allowing anyone other than tribes to operate gaming devices.
 
“Tribes have no exclusivity with respect to poker,” he said.
 
Senator Wright said his committee will explore ideas that might allow the state to collect up to $600 million in taxes and licensing revenue and also safeguard players by establishing regulated sites that protect against cheating and ensure prompt payout of winnings.
 
“I think we have to do something,” he said. “I don’t know what yet.”
 
Experts testified that software exists to protect players and ensure only California residents 21 or older are permitted on a legal intrastate site.
 
“There is the technology to do this,” said Chris Derossi, chief executive of online gaming software company CyberArts. “Those consumers who trust their online bank should have no difficulty trusting the online poker world.”
 
Several experts testified that a high percentage of California players would gravitate to a legal site if one existed and additional players would come on board if they knew that regulated, legal sites were available.
 
“I think players would prefer to play with a legal entity within California,” said William Eadington, director of the Institute for the Study of Gambling and Commercial Gaming at the University of Nevada, Reno.
 
Leo Chu, owner of the Hollywood Park Casino, said online poker players largely prefer to play at home and there’s little that legal card clubs can do to attract their business.
 
“Whatever we do, they will play online,” he said. “We need to get these people to play where the operators will pay taxes to California. To use a Las Vegas slogan, whatever happens in California should stay in California.”
 
The Desert Sun, which has been closely following the proceedings, reports that the Agua Caliente Band of Cahuilla Indians sumitted a statement to Senator Wright's committee, in which Agua Caliente tribal chairman Richard Milanovich wrote that the tribe had a “neutral” stance at this time.
 
“We haven’t seen a product emerge yet that we believe is either ready to embrace or oppose,” Milanovich wrote. The tribe, which operates The Spa Resort Casino in Palm Springs and Agua Caliente Casino Resort Spa in Rancho Mirage, is “intrigued” with the notion of the intrastate Internet poker in California from the vantage point of how it would be structured, how it would be regulated and how to ensure that those engaged would ultimately capture a significant market share from the non-licensed offshore sites.



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