Distinctions Among California Tribes Make Consensus On Online Poker Difficult
Online Poker Report

California Tribes And Online Poker: A Complex Relationship That Will Continue To Complicate Legislative Efforts

California coast
Last month, Amaya PokerStars and its American Indian casino and card room partners weighed in on online poker just as the California Legislature gaveled to a close, voicing opposition to “bad actor” provisions in what became a failed bill to legalize the industry.

A decade of headlines highlight the inability of stakeholders – American Indian casinos, card rooms, race tracks and organized labor – to agree on online poker bill language.

But bill proponents largely blame the failure to get online poker through the state legislature on the 60 California tribes that operate casinos. Collectively, these casinos generate $7.9 billion a year — money largely used to fund government services for indigenous citizens.

Sacramento insiders contend consensus on bill language by a dozen of the more politically influential tribes is needed to generate the two-thirds vote of the Assembly and Senate required to get a tax bill approved.

That hasn’t happened.

But few understand what is going on in Indian country or why tribes remain divided on the issue.

It’s worth a look.

Online poker proponents aren’t even close

One lobbyist tallied fewer than 25 votes in support of Assemblyman Adam Gray’s Internet Poker Consumer Protection Act (AB2863) when the state legislature gaveled to adjournment on Aug. 31. That’s fewer than half the 54 votes needed to get the measure through the Assembly.

Another lobbyist gave the measure as few as 11 votes.

“The way the bill was handled was not good. It left [legislators] feeling uncomfortable,” tribal lobbyist David Quintana said of the back-and-forth between stakeholders debating the issue.

Lawmakers were particularly befuddled near the close of the session, Quintana said, when late changes to AB2863 license eligibility provisions prompted the PokerStars/tribal/card room coalition to abruptly flop from promoting to opposing the bill.

“That last-minute switch where the supporters became the opponents,” Quintana said, “made legislators go, ‘What the …?’”

Tribes remain deadlocked.

About 10 tribes are seeking stringent penalties for foreign companies such as PokerStars, which is accused of taking US wagers in violation of the Unlawful Internet Gaming Enforcement Act of 2006. A mandatory five-year “penalty box” appears to be the preferred punishment.

“There has to be consequences,” said Quintana, whose clients include the Viejas Band of Kumeyaay Indians.

About 34 mostly small tribes, members of the California Nations Indian Gaming Association, don’t appear overly concerned with PokerStars, although the group has supported a penalty box or fine. The same goes for most card rooms and the racing industry.

Meanwhile, the San Manuel and Morongo bands of Mission Indians – business partners with Amaya/PokerStars and three Los Angeles area card rooms – oppose the five-year shelf, apparently with the support of Poker Players Alliance (PPA) members.

But why, online advocates sulk, can’t tribes come to some agreement?

And why, they plead, aren’t tribal leaders joining industry vendors in seeking the riches of California online poker?

The anxiety is palpable, aggravated by the inability of many in the gambling industry and trade press to grasp the distinction between commercial, for-profit gambling and tribal government casinos.

No two tribes are alike, quite the contrary

Indigenous communities are unique in language, history, culture and traditions. They have diverse government and social structures, familial politics and economic ambitions and strategies.

Tribal governments are, in fact, more distinct than equally sovereign states and state-chartered counties and municipalities, which themselves aren’t known for their ability to get along.

For that reason, and others, it is difficult to generate consensus among the 110 tribes in California – which has more indigenous communities than any state in the country – on online poker or, for that matter, most any issue.

“We’re not Nevada or New Jersey,” Quintana said of the relative ease in which online poker was legalized in other states.

Where the interests of states diverge

Online poker in California would be taxed and regulated by the state of California. Licenses to operate poker websites would be granted to card rooms as well as the tribes. The racing industry would get a subsidy.

Online poker would not be gambling under the Indian Gaming Regulatory Act (IGRA) of 1988, by which California tribes operate and exercise primacy in regulating casinos.

Nonetheless, more than a few people cringed in January 2013 when former senator and online poker bill sponsor Roderick Wright issued a warning to tribes lined up against his proposed legislation.

“The asset [online poker] belongs to the state [and] the state will develop the scheme as to how the asset is managed,” Wright told delegates at the National Council of Legislators from Gaming States (NCLGS) winter meeting in Las Vegas.

“The other thing that will happen in California is everyone who participates in the scheme will be totally subject to California law.”

Wright, who was convicted of voter fraud in 2014 and resigned from office, was otherwise an astute politician.

His remarks to NCLGS, however, generated a great deal of criticism. It was a pretty stupid thing to say.

Wright was correct. Online poker in California would, indeed, be taxed and regulated by the state of California.

But to suggest tribal governments do not have a vested interest in the statewide gambling industry – casinos, card rooms, racing, the lottery, charity bingo, you name it – is absurd.

California has the country’s largest gambling industry, generating about $11.5 billion a year.

California tribes in accordance with the Proposition 1A ballot initiative of 2000 have the exclusive right under the state Constitution to operate casinos, which generate about $8 billion of the statewide gambling revenues.

Only a few tribes would greatly benefit from online poker. They include Morongo and San Manuel, partners with Amaya/PokerStars; the Rincon Band of Luiseño Indians, whose casino is managed by Caesars Entertainment, owners of the World Series of Poker; and the Pala Band of Mission Indians, owners of Pala Interactive.

But all 110 tribes have a stake in what happens with gambling in California. That includes the 60 tribes with casinos and 50 non-casino tribes getting a share of tribal casino revenue.

Gambling in California is all about the tribes

Gambling in California – whether it is commercial gambling or gambling under IGRA – is all about the tribes. They may not have the numbers – there are believed to be fewer than 40,000 enrolled members of the 110 tribes – but they do have the money and the political clout.

The pundits can speculate about what card rooms, the racing industry, unions and vendors such as PokerStars want out of online gambling legislation in California. But nothing happens unless the tribes buy into it. Nothing.

Unlike captains of commercial casino companies accountable to investors and shareholders, tribal leaders are responsible for the health and welfare of their citizens. Most tribal government revenue comes from casinos.

Tribal leaders are acutely aware the future sustainability of California’s indigenous communities depends on a healthy, well-regulated and responsible gambling industry.

The integrity of tribal government gambling industry is crucial.

The California Gambling Control Commission and Bureau of Gambling Control will attest to the excellent job tribes do in regulating their casinos.

Tribes are also cognizant of their social responsibilities.

California already had the country’s sixth largest gambling industry before the first compacted Indian casino opened for business in 2000. Yet not a dime was spent on gambling addiction until the tribes funded the Office of Problem Gambling.

Range of tribal opinions on online gambling is, indeed, wide

No one has more to lose from gambling expansion and poorly thought-out statewide gambling policy than the tribal governments.

So it is understandable the Pechanga Band of Luiseño Indians and Agua Caliente Band of Cahuilla Indians would be concerned about extending licenses to operate poker websites to California race tracks.

It is also reasonable for Pechanga, Agua Caliente and other tribes to be concerned about allowing companies with questionable regulatory histories to do business in the state.

Pechanga Chairman Mark Macarro and Agua Caliente Chairman Jeff Grubbe are doing what they were elected to do, which is look after the future of their tribal citizens.

The same is true for the Morongo and San Manuel bands of Mission Indians.

It makes sense for tribal leaders to want to partner with the world’s leading online gambling company in generating government revenue for their tribal citizens. That makes for a pretty savvy business plan.

In any event, no one can question the integrity of Morongo Chairman Robert Martin or San Manuel Chair Lynn Valbuena, both nationally respected tribal leaders and champions of Indian sovereignty and self-governance.

The same can be said of Rincon Chairman Bo Mazzetti and Pala Chairman Robert Smith.

All California tribal leaders have political and legislative agendas tailored to meet the needs of their tribal citizens.

It’s important to remember that most of California’s indigenous citizens are less than a generation away from poverty and unemployment; grabbing dinner off a processed food truck and washing breakfast cereal down with water.

If Viejas and other tribes in the midst of austerity programs opt to take a hard line on online poker for fear gambling expansion would cut into their government revenues, that’s a strategy they should pursue.

Online poker, like most issues, is both nuanced and complex

Online poker may not rank high on the list of tribal priorities.

Tribal leaders on a daily basis deal with trust land acquisition and management; economic diversification, government business enterprises and leasing agreements; renewable energy and water rights; tribal courts and child welfare; and housing, enrollment, health care and tax issues.

“So little of our tribal council meetings have to do with casinos,” a tribal councilman said. “You’d be surprised.”

Several tribes recently renewed tribal-state regulatory compacts and mitigation agreements with surrounding counties and municipalities; contractual arrangements covering land development, fire and police protection, traffic mitigation and environmental issues.

The compacts will chart the future of the tribes for the next 25 years.

Six of the tribes recently met with the Senate Government Organization Committee to discuss the landmark agreements.

When the chairman of one of the tribes sat down to lunch following the meeting, his aide received a cell phone call from a metropolitan newspaper reporter.

“I thought he was going to ask about the compacts,” the aide said.

“But he wasn’t interested. He wanted to talk about online poker.”

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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.