AB2863 Yet To Drum Up Enough Lawmaker Support For Assembly Vote
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Opposing Factions Collide Head-First Over Suitability Language For California Online Poker Bill

California conflict
Tensions between a coalition of American Indian tribes and California Assemblyman Adam Gray over draft online poker legislation came to a head at a June 27 capital meeting that began with Gray reciting criminal codes dealing with threatening a legislator.

Gray, sponsor of the Internet Poker Consumer Protection Act of 2016 (AB 2863), invited two camera operators and a sergeant at arms to the meeting, described by five attendees as “odd,” “bizarre,” and “the most ridiculous, insulting stunt I’ve ever seen in a legislative arena.”

The session followed a June 13 meeting between Gray and tribal leaders at which the assemblyman and Mark Macarro, chairman of the Pechanga Band of Luiseño Indians, got into a heated argument over license suitability language in the bill.

Macarro is the primary spokesman for a coalition of seven politically powerful tribes taking a hard line on the suitability of Amaya/PokerStars and other foreign companies accused of taking U.S. wagers in violation of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

“Yes, it got a little heated, absolutely. It got very heated between those two,” said one of the attendees, who like the other four witnesses did not want to be identified.

“(Macarro) was expressing some frustration with the process and the lack of meaningful movement toward suitability standards,” said one of those at the meeting.

Calls to the Assembly Government Organization Committee (GO), of which Gray is chairman, were not returned.

Pechanga tribal officials declined comment.

Bill pulled after legislators polled

The coalition of Pechanga, Aqua Caliente Band of Cahuilla Indians and five other Indian governments has been characterized as “obstructionists” by a diversified group of tribes, card rooms, racing interests and labor unions supporting AB 2863.

The coalition previously took a defiant position against giving race tracks eligibility to operate poker websites. The racing industry eventually conceded its license eligibility in exchange for a $60 million annual subsidy.

Gray had planned to put AB 2863 to a vote by the full Assembly on June 30, but pulled the bill that morning when a tally of lawmakers revealed the legislation was about a dozen votes shy of the two-thirds majority needed to get it off the floor and to the Senate.

The effort will be attempted again when legislators return in August after a summer recess.

The coalition led by Pechanga and Agua Caliente view the vote tally as a victory.

But the coalition in favor of AB 2863 remains optimistic, contending many legislators were unfamiliar with bill language and recent suitability and financial amendments passed through the GO and Assembly Appropriations Committee. They asked for more time to review the bill.

Although online poker has been thoroughly vetted in the California Legislature for the last decade, much of the debate has been limited to the GO and appropriations committees.

“If you weren’t on GO or appropriations, you haven’t had much time to look at the bill,” one lobbyist says. “They (assembly members) asked us to give them more time. We’ve got some work to do.”

Bad actor concession does more to provoke than resolve

Some believe Gray’s actions at the June 27 meeting were meant to capitalize on the growing perception of successful casino tribes as political bullies in Sacramento, threatening inexperienced lawmakers subject to term limits.

AB 2863 language currently states that companies taking U.S. wagers after 2006 would have to wait five years before applying for a website license unless they pay the state $20 million, after which they could immediately apply.

The Pechanga/Agua coalition wants “bad actors” to wait 10 years before applying for a license, after which they would have to pay $60 million before submitting their license application.

The coalition’s position, stated in a June 29 letter to Gray, backs off its previous demand that companies taking U.S. wagers after UIGEA be permanently banned from entering the California online poker market.

“We note that this represents a significant concession from our longstanding position of permanent disqualification of assets used in illegal activities and provides a pathway for offshore service providers to access the California market,” the coalition said in its letter.

It’s highly questionable whether PokerStars – or any company, for that matter – would agree to both sitting out a decade and paying the $60 million penalty.

The pro-AB 2863 group sees the onerous provisions as further evidence the Pechanga/Agua coalition is seeking to block any effort to legalize online poker in California.

“I think they hurt themselves with that letter, saying they’re negotiating in good faith and coming up with those provisions,” one lobbyist said.

“It exposed them as truly being obstructionists. They’re wearing kind of thin on some people.”

Amaya/PokerStars apparently agrees with that assessment.

“It is a shame that obstructionist forces continue to block the passage of a pro-consumer online poker bill in California,” Eric Hollreiser, Amaya’s VP of Corporate Communications, told Online Poker Report.

“We finally have real progress this year, with the majority of gaming tribes supporting the legislation, along with the AFL-CIO, SEIU (Service Employees International Union), Teamsters, horse racing tracks, card rooms and gaming operators.

“Unfortunately, a recent amendment to AB 2863 is unconstitutional and our opponents seem intent to expand upon that flawed and unconstitutional language,” Hollreiser said.

Amaya/PokerStars has a business partnership with the San Manuel and Morongo Indian Bands and the Hawaiian Gardens, Bicycle Club and Commerce Club card rooms.

Other pro-AB 2863 tribes include the Rincon Band of Luiseno Indians, whose casino is managed by Caesars Entertainment, owners of the World Series of Poker; United Auburn Indian Community, partners with Bwin.party, Ltd.; and Pala Band of Mission Indians, owner of Pala Interactive, which provide online gambling in New Jersey.

None of the Pechanga/Agua tribes have publicly announced having a technology partner.

Consensus likely vital to bill’s success

Gray has been meeting with tribal leaders roughly every two weeks in an effort to iron out differences. Political insiders believe there needs to be consensus among the dozen or so tribal governments for a bill to get out of the California Legislature.

The assemblyman and tribes are expected to meet again when lawmakers return from summer recess.

One lobbyist noted that the Pechanga/Agua coalition did arrive at the June 27 meeting with a compromise position, a potentially conciliatory gesture that deteriorated with the video cameras, sergeant at arms and Gray’s recitation of criminal statutes.

“It took a meeting that could have been productive and injected this Alice in Wonderland start,” the lobbyist said. “It was not helpful.”

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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.