Rhetoric Ramps Up As Tribes Push And Oppose California iPoker Bill

Tribal Lobbying Conflict Over California Online Poker Growing Volatile

California poker lobbying
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The political clout of seven American Indian casino tribes is being put to the test in what is shaping up to be a volatile lobbying war over a draft online poker bill generating unprecedented momentum in the California legislature.

Running down Wednesday’s online poker hearing

The tribal coalition led by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians claimed a temporary victory Wednesday in blocking AB 2863 from anticipated passage in the Assembly Appropriations Committee.

Appropriations instead called for amending bill language on taxes and fees and the suitability of potential website licensees, particularly international online giant PokerStars, accused of taking U.S. wagers in violation of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

The Pechanga/Agua coalition is opposed to licensing PokerStars and other companies that accumulated resources and player data after passage of UIGEA and could have a competitive advantage participating in a California online poker market.

An amended bill may come back before the committee within the next two weeks, marking the furthest online poker legislation has gotten in almost a decade of intense debate highlighted by the inability of tribes to reach agreement on bill language.

“Through good faith discussions with all stakeholders, I believe we are closer than ever to passing an iPoker bill,” Assembly sponsor Adam Gray said.

But there is still work to be done.

Committee Chairwoman Lorena Gonzalez believes companies taking U.S. wagers after 2006 should be denied licensing prior to 2021 unless they pay $20 million to the state general fund. She also recommends revisions in tax and fee provisions ensuring revenues to the state in the event the industry does not generate $60 million for a racing subsidy.

The proposed amendments could unravel alliances based on the current wording of the legislation.

Tribal consensus needed for poker progress

Sacramento insiders believe consensus by a dozen politically powerful Indian tribes is necessary for passage of legislation requiring a two-thirds vote of the state Legislature. Many view opposition from the Pechanga/Agua group as guaranteeing defeat of any online poker bill.

But there is sentiment a large and growing rival coalition of tribes, card rooms and race tracks – advocating the need for player consumer protection, tax revenue and preservation of a struggling pari-mutuel racing industry – can trump the political clout of the Pechanga/Agua group.

“I think there’s a good chance their political opposition can be overcome.” Jockeys’ Guild attorney Barry Broad said.

Much of the optimism is based on the characterization of the Pechanga/Agua coalition as “obstructionists,” indiscriminately wielding their political clout in Sacramento.

“At least some of those tribes have a reputation for being bullies, politically,” Broad said. “My sense is legislators are kind of fed up with that.”

A coalition of five tribes, three Los-Angeles card rooms, PokerStars (and its parent company, Amaya) and a diversified racing industry and its employee unions is pressing for consumer protection legislation for the approximately one million poker players in California gambling on unregulated websites.

The bill also is supported by the California Nations Indian Gaming Association (CNIGA), a trade group for 33 tribes, 21 of which operate casinos.

CNIGA Chairman Steve Stallings is hopeful there can be some resolution of the suitability debate as the bill winds its way through the Assembly and Senate.

“It depends on whether they’re [Pechanga/Agua group] going to be obstructionists or contribute to making things better, somehow,” Stallings said.

‘Obstructionists’ = a sensitive term

Pechanga Chairman Mark Macarro bristles at the characterization of being an obstructionist.

“If we wanted to stop iPoker we would not be dedicating the time, energy and resources to shaping good public policy that will protect our rights now and for the decades to come,” Macarro told Online Poker Report.

Agua Caliente Chairman Jeff Grubbe told Appropriations Committee members the group had endorsed previous draft legislation.

“So we are not obstructionists,” he said.

But the coalition has taken a hard line on both “bad actor” provisions and opposition to extending license eligibility to the pari-mutuel racing industry, positions that have delayed progress on getting a bill through the legislature.

Grubbe was not appeased by the proposal PokerStars and others pay a $20 million “late taxes” fee to get back into the market, calling it a “get out of jail card … not anywhere near full restitution.” He suspected UIGEA violators would “gladly pay these fees without blinking an eye.”

The Pechanga/Agua group previously argued that licensing race tracks as poker website operators would have constituted an expansion of gambling in violation of public policy and threaten the constitutionally guaranteed exclusivity California tribes have to operate casino-style gambling.

It was Macarro who suggested the racing industry get an annual subsidy in lieu of website license eligibility, which in the bill is granted to tribes and card rooms.

Track owners, horse breeders and employee unions eventually backed off demands for license eligibility. Gray’s bill calls for giving the racing industry a $60 million annual subsidy.

Many believe the Pechanga/Agua coalition is taking an unreasonable position with regards to PokerStars, noting bill language singling out one company would likely result in litigation on constitutional grounds.

They contend the coalition opposes PokerStars because of fears member tribes could not compete with the online giant.

“It’s all about money and competition,” said a lobbyist echoing the sentiment of several industry colleagues.

The great divide on iPoker

Tribes backing AB 2863 include the Morongo and San Manuel Mission Indians, whose business partners include the Hawaiian Gardens, Bicycle Club and Commerce Club card rooms and, notably, AmayaPokerStars.

They are joined by:

  • The Rincon Band of Luiseño Indians, whose San Diego County casino is managed by Caesars Entertainment, owner of the World Series of Poker (WSOP);
  • United Auburn Indian Community, partners with Bwin.party, LTD.;
  • And the Pala Band of Mission Indians, whose Pala Interactive operates online gambling in New Jersey.

 

PokerStars and WSOP – and to a lesser degree Bwin and Pala Interactive – would likely dominate a California poker market. The five tribes and their business partners are anxious to get up and running.

Unlike Indian casinos operated under federal law with no taxation and limited state regulation, the tribes/card rooms/PokerStars coalition contends online poker would be strictly commercial business ventures, regulated and taxed by the state, and would not threaten tribal sovereignty or casino exclusivity.

The debate is far more nuanced, however, and emotions are running high.

Moral high ground

Macarro, a respected tribal leader, may have tweaked a few nerves Friday in denying accusations the Pechanga/Agua coalition was being obstructionist.

“Our position is rooted in shaping policy that protects tribal rights,” he said, “not give a boost to the stock prices of publicly traded companies desperate to get iPoker at any cost.”

Assuming a moral high ground may have been taken as an affront to tribal leaders such as Lynn Valbuena (San Manuel), Robert Martin (Morongo), Bo Mazetti (Rincon) and others with long and distinguished histories as champions of tribal sovereignty.

Tribal business ventures – whether a commercial enterprise or under the auspices of the Indian Gaming Regulatory Act (IGRA) – generate government revenue benefiting tribal citizens.

“This is commercial gaming, taxed and regulated by the state,” Stallings said. “It is not gaming under IGRA.”

“This is a state asset, not a tribal asset,” Jake Coin, San Manuel director of public affairs, said in a 2014 interview. “I think it’s exciting to see partnerships and coalitions that want to work together to create jobs and opportunity and to benefit the state with this new form of gaming.”

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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.