New Bad Actor Wrinkle Could Torpedo Online Poker Bill

Plans For Monday Vote On California Online Poker May Be Shelved As Opposition To AB 2863 Mounts

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The politically powerful Viejas Band of Kumeyaay Indians and Lytton Band of Pomo Indians are lobbying against the Internet Poker Consumer Protection Act, a move that could ensure AB 2863 will not make it out of the California Assembly, sources said Saturday.

That opposition may already be impacting the process, according to other sources, who said that bill sponsor Assemblyman Adam Gray may have shelved his plans for bringing AB 2863 up for a vote in the Assembly on Monday.

Two tribes looking for bad actor tweak

Viejas and Lytton are not allying themselves with the Morongo and San Manuel Mission Indians, who with three Los Angeles-area card rooms have a business partnership with Amaya / PokerStars.

The Morongo/San Manuel partnership is also opposed to AB 2863 because it would prohibit PokerStars from being licensed as a website operator until 2022.

Rather, Viejas and Lytton are disturbed with language in AB 2863 amendments adopted last week that sets 2022 as the date for lifting a five-year banishment of PokerStars as a potential website operator, a so-called “bad actor” clause for companies who accepted or facilitated U.S. wagers after the enactment of the Unlawful Internet Gaming Enforcement Act (UIGEA).

Concerns that a five-year penalty box could shrink

Viejas and Lytton want the five-year banishment period to begin with “the first bet,” meaning implementation of the online poker industry in California, and not necessarily end in 2022, as stated in Gray’s amendments.

The process of establishing a regulatory system and conducting background investigations and licensing of potential owners and website operators could take years, delaying the launch of an online poker industry and reducing the so-called “penalty box.”

The process could be further delayed by litigation threatened by PokerStars and members of the business partnership.

“They can jam up the regulatory process to make the penalty box as small as possible,” said David Quintana, lobbyist for the Viejas Band of Indians. “They might throw in some legal challenges, anything they can think of to shrink the five years.”

Viejas and Lytton are also seeking a fine. Previous amendments to AB 2863 called for a $20 million “delayed tax” payment in lieu of the five-year penalty box.

Opposition narrows chances for passage

As many as 10 casino tribes, many of whom have voiced strong opposition to licensing PokerStars, have signed onto “bad actor” amendments to AB 2863 adopted last week, prompting optimism the bill would, after a decade of efforts, finally make it out of the state Legislature.

But opposition from Viejas and Lytton – coupled with the political clout of the Morongo/San Manuel coalition – would make it difficult for proponents to get the 54 votes needed to get the bill out of the Assembly, yet alone the Senate. The bill requires 2/3rds vote of legislators.

“I’m inclined to agree,” Quintana said. “I’m working it. We are opposed.”

A tribal source that requested anonymity said getting 54 Assembly votes with opposition from the Morongo/San Manuel coalition would be “a steep climb.”

“Unfortunately, the bill is now doomed to fail and this means millions of Californians will continue to be at risk while playing on offshore, illegal online sites,” the Morongo/San Manuel coalition said in a statement.

Gray had been hoping to get AB 2863 to a floor vote in the Assembly on Monday, giving the measure eight days to get through the Senate.

The amended bill “should secure two-thirds [vote] in the Assembly,” Trent Hager, chief of staff for Gray, told the Los Angeles Times late last week. Hager predicted the bill “will be fairly well received in the Senate.”

Tribal consensus has been elusive

But although stakeholders in an online poker industry would include card rooms and the racing industry, it is the $7 billion tribal government gambling industry that is calling the shots.

Without consensus among the Indian tribes, the bill is likely to go nowhere.

The seven members of a politically powerful coalition led by the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians – which included the Viejas and Lytton bands — were prepared to accept a five-year penalty against PokerStars to endorse AB 2863.

But Viejas and Agua balked at the implementation language in the “bad actor” provision as amended by bill sponsor Assemblyman Adam Gray.

“Pechanga and Agua told us [Gray] was going to accept the first bet” provision, Quintana said. “He was good with it. When he came back with the amendment he had this [2022] date in it.

“That’s when Viejas said, ‘No. We’ve got to stand by our principles.’

“Not all the coalition went along with this,” Quintana said, noting that the Yocha Dehe Wintun Nation has taken a neutral position on the bill.

- 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.
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