California Tracks Respond To Online Poker Compromise Proposal
Online Poker Report

California Tracks Not Impressed With Pechanga’s Online Poker “Olive Branch”

Santa Anita racetrack
California racing industry officials say a revenue sharing “olive branch” on Internet poker extended by a coalition of American Indian tribes won’t break what appears to be a hopeless deadlock in getting an iPoker bill out of the state Legislature in 2015.

Track operators, thoroughbred breeders and others in the industry also reject what some perceive to be a condescending acknowledgement by the tribal coalition that horse tracks could participate in iPoker as an affiliate to a licensee rather than a website operator.

“We feel that Internet space is really our space,” Joe Morris, president of the Thoroughbred Owners of California, told Online Poker Report. “If anyone enters that space, we want a seat at the table.

“We’re the only legal entity in it now, conducting business,” Morris said of the racing industry’s online wagering, approved by the state Legislature in 2000. “We’ve done so without any challenges for the last 14 or so years.”

“Right now horse racing has exclusivity in Internet wagering,” Josh Robinstein, COO of Del Mar Thoroughbred Club said in a prior interview. “If you’re going to expand Internet wagering you got to include horse racing.”

Compromise suggested at June hearing

Mark Macarro, chairman of the Pechanga Band of Luiseño Indians, last month told an Assembly Government Organization committee that a coalition of nine tribes opposed to licensing race tracks would agree to legislation giving the pari-mutuel industry a share of online revenues.

“If that is not an acceptable form of participation, the racing industry also has the means to enter into private partnerships with licensed operators to participate as affiliates,” Macarro said.

“Racetracks can enter into arrangements whereby they refer their web visitors and players to poker websites for a fee.”

Tracks respond lukewarmly to offer

When asked by iPoker bill sponsor Adam Grey to respond to Macarro’s suggestion, Keith Brackpool of the Stonach Group, a coalition of track owners and operators, said the offer was unacceptable.

“I appreciate the offer,” Brackpool said, “but we don’t believe at this stage that a level playing field would be the other part of the gaming community having a license and determining what morsel of that we would receive.”

Morris said the revenue sharing offer was made to the tracks more than a year ago.

But the notion tracks could participate as “affiliates” to a licensed website hadn’t been mentioned prior to the Assembly committee meeting.

The profitability of such an arrangement “depends on the [industry] model,” Morris said, but he was not impressed with the offer.

“We want the same shot [at a license] as everyone else.”

Morris also warned that a revenue sharing agreement made during one administration could be done away with in the future by a governor or legislature.

Participation of tracks sticking point for some, not all

The coalition of nine tribes headed by the politically powerful Pechanga, Agua Caliente and Viejas Indian bands are standing firm on its belief expanding iPoker license eligibility to the racing industry would violate public policy for limited gambling in California.

Coalition tribes also believe expanding iPoker license eligibility to race tracks could lead to erosion of the statewide exclusivity of tribes to operate casino-style gambling.

Unlike commercial casinos, tribal gambling funds government programs and services.

Not all tribes are aligned with the Pechanga coalition’s position.

At least five prominent Indian tribes – notably the Rincon, Pala, Morongo and San Manuel bands and United Auburn Indian Community – are not opposed to racing’s involving in an online poker industry.

Some of the tribes also oppose extending a subsidy to the racing industry, contending tracks can compete on their own.

No poker without racing?

Still others believe the racing industry’s political clout is needed to get a bill out of the legislature.

Macarro hinted at racing’s political strength on Capitol Hill at the June Assembly committee hearing.

“We are realistic about the politics of this issue,” Macarro said. “That is why Pechanga is prepared to support other opportunities for the racing industry to participate and benefit from online poker.

“We respect the sport of horse racing and recognize the importance of the jobs that rely on the industry.”

Robyn Black of Eclipse Government Affairs, a lobbyist for the thoroughbred racing, has predicted it is not likely an iPoker bill will make it out of the state Legislature without the industry’s support.

A largely agricultural industry, racing employs some 22,000 largely union workers.

“There are tribes that realize if they want to be successful … that they should probably include us,” Black said.

“Any discussion on Internet gaming has to include horse racing. It should not be exclusive to tribes. It should not be exclusive to card rooms. If it was going to be exclusive to anybody, we’re the only ones on the Internet.”

Chances for passage dimming

Lacking tribal consensus on licensing tracks and “bad actor” and “tainted assets” provisions in draft iPoker legislation is expected to deep-six any chances of a bill making it out of the 2015 session.

The racing industry may not rue adjournment without an iPoker bill.

Morris said California is the only state that does not generate an alternative means [primarily slot machines] of funding its purses. Yet it has remained a successful industry, its handle reaching $2.5 billion for the first half of this year.

“We’re actually having a pretty good year,” Morris said.

“We only need it [iPoker] if it happens,” Morris said. “If it happens and we’re not part of it, it would certainly hurt. If it doesn’t happen, we’ll get along, as we do now.”

Image credit: Cheryl Ann Quigley / Shutterstock.com

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Dave Palermo
- Dave Palermo is an award-winning metropolitan newspaper reporter. He has written about American Indian governments for more than 20 years, working as an advocate for several tribes and tribal associations. He also has co-authored books on gambling and gambling law.