Suitability Remains Primary Sticking Point For CA Online Poker

Push For California Online Poker In 2017 May Be Doomed Before It Even Begins

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A dozen politically powerful American Indian tribes are not likely to reach the consensus needed to move an online poker bill in the 2017 California legislative session, tribal officials said this week.

Consensus on suitability language a pipe dream

A tribal/card room coalition with Amaya/PokerStars plans to again introduce legislation to legalize California online poker, Robert Martin, chairman of the Morongo Band of Mission Indians, told Online Poker Report Wednesday.

But Martin, whose tribe is business partners with PokerStars, the San Manuel Band of Mission Indians and three Los Angeles area card rooms, is not optimistic other tribal governments will agree on bill language that will grant PokerStars vendor license suitability.

Political insiders believe consensus among a dozen of California’s more lucrative casino tribes is essential in enacting a bill requiring two-thirds approval of the state Assembly and Senate.

But tribal leaders contend unanimous agreement on bill language is not likely.

“I really wish we could have consensus but I just don’t see it happening,” Martin said.

“We’ve been at it nine years now and we’re not that much closer,” he said of efforts to get legislation in what is likely the nation’s most lucrative online poker market.

Steve Stallings, chairman of the California Nations Indian Gaming Association (CNIGA), a group of some 33 tribes, agrees online poker doesn’t stand much of a chance in the 2017 session, if ever.

“I don’t really see any prospects for anything happening,” Stallings said.

Baazov’s legal troubles deepening divisions

The Pechanga Band of Luiseño Indians and the Agua Caliente Band of Cahuilla Indians head a coalition of about eight tribes seeking strict “bad actor” language in licensing PokerStars, accused of taking US wagers in violation of the Unlawful Internet Gambling Enforcement Act (UIGEA) of 2006.

Former Amaya Chairman David Baazov, under indictment for activities surrounding Amaya’s acquisition of PokerStars, remains a major shareholder and has tendered an offer to buy the company, the target of several regulatory issues.

“What we know for certain is that Poker Stars/Amaya is even more of a sewer swamp than we originally thought, hence the need to keep strong on bad actor language,” Pechanga Chairman Mark Macarro said.

“The biggest problem with the other tribes is PokerStars,” Martin acknowledges. But Morongo, San Manuel and the Hawaiian Gardens, Commerce Club and Bicycle Club are standing firm with their overseas business partner.

Several California tribes are willing to accept PokerStars into a statewide industry, the chairman said.

“With Agua Caliente, Pechanga, Barona (Band of Mission Indians), we don’t seem to agree a lot,” Martin said.

Gray’s flip-flop leaves online poker in need of new champion

Assemblyman Adam Gray, in a desperate, 11th hour attempt last August at getting tribal consensus for his AB 2863, amended the online poker bill to require a five-year delay in licensing PokerStars, a change demanded by the Pechanga/Agua coalition.

Previous bill wording would have allowed the company to buy out of the five-year ban.

The amendments prompted the PokerStars/Morongo coalition to abruptly flop from promoting to opposing the bill, killing for yet another year the prospects of California online poker legislation.

Some suspect Gray may try floating a bill again this year. But his 11th hour maneuvering angered his tribal constituents and alienated Senate colleagues who viewed his actions as pressing the envelope of ethical behavior.

“That very rarely happens,” said a Senate source who requested anonymity. “A good politician will go the distance.”

Gray’s office did not return telephone calls and emails for comment.

Chairman Martin said tribal consultants are meeting with legislators in an effort to seek out potential bill sponsors. Gray is not one of them.

“We thought we could trust Adam Gray,” Martin said. “At the 11th hour he just turned on us.

“I don’t think we’ll be going back to Adam Gray. We’re going to have to find somebody to carry the ball for us.”

With some 24 newly elected legislators in Sacramento, it may be difficult finding a bill sponsor familiar with online gambling on the Assembly or Senate Government Organization committees charged with tribal issues.

Gray is chairman of the Assembly GO Committee, but the chairman on the Senate side, Isadore Hall, retired to run for Congress, a race he lost. More important, highly respected Senate GO Committee Director Arthur Terzakis is retiring, leaving the committee with little in the way of gambling expertise.

“That’s huge,” former California gambling regulator Richard Schuetz said of Terzakis’ departure. “He’s the only guy in the building who has any real institutional knowledge about Internet gambling.”

Online poker the low man on the totem pole

Online poker has never been regarded as a significant political issue. And Senate Pro-Tem Kevin de Leon has never been enamored with gambling matters.

With President-elect Donald Trump soon to take office, California legislators will be preoccupied with taxation, health care, climate and environment issues, and shifting White House immigration policy, all the while fending off Trump threats to withhold federal funding of sanctuary cities.

“There are a lot more important things on the agenda than Internet poker,” said a legislative source who requested anonymity.

“I’ve probably had since the end of the session maybe 500 discussions on political and policy issues,” said lobbyist David Quintana, whose clients include several tribes. “I don’t think a single one of them has been about iPoker.

“The very, very messy way it all ended last year left a lot of people a bit gun shy. It ended up very awkwardly last year.”

Tribal governments are also faced with a serious transition from Indian-friendly President Barack Obama to Trump, a man who has never been known as a friend of indigenous Americans.

Poker legislation is largely being pushed as a consumer protection bill for some 1 million internet poker players. It is not expected to generate much in the way of revenue to a state with the world’s eighth largest economy and a gross product of $1.6 trillion.

With Gray’s bill offering the racing industry a $60 million payment as mitigation for ceding its monopoly on online wagering in California, the share of taxes left for state coffers is fairly insignificant.

“The last bill had a subsidy that ate up everything that would have gone to the state,” Schuetz said.

Prospects of passage in 2017 looking dim

Amaya/PokerStars, along with 888 and Caesars Entertainment, partners with the Rincon Band of Luiseño Indians, and Pala Interactive, an enterprise of the Pala Band of Mission Indians, will continue to lobby legislators, aware they each stand a chance of grabbing a major share of an online poker industry.

A number of tribes – Rincon, Pala, United Auburn and the Sycuan Band of the Kumeyaay Nation, to name a few – may also be anxious to get into the online poker business, but are aware of the futility of lobbying the issue without tribal consensus.

“We’re not really going to try and carry any water on the issue unless the other tribal coalitions – the Morongo group and the Pechanga group – move something forward in some kind of compromise,” Stallings said.

“If tribes want the status quo, from our position we’re prepared to do that.”

Schuetz agrees with tribal leaders who contend an effort to press online poker for yet another year would be both futile and expensive.

“I would argue that you will see legislation cropping up again this year,” Schuetz said. “As (former) Sen. (Roderick) Wright so accurately said, ‘The debate will continue as long as there are lobbying dollars to spend.’ I think that’s what it’s all about.

“Nothing is going to happen this year,” Schuetz said. “The only people who will float this are the lobbyists trying to find some sucker to pay them.”

The looming threat of RAWA could prompt action in CA

Tribal officials left open the possibility a legalization movement could be ignited by Washington efforts to revive the Restoration of America’s Wire Act (RAWA), an effort to roll back a 2011 Justice Department opinion that the Wire Act of 1961 only applied to sports wagering.

“Depending on how that goes you might see a movement in California to supersede it,” said Stallings, councilman for the Rincon Band of Luiseño Indians.

“The tribes also might just acquiesce and see a ban on Internet gaming.”

“I have a better chance of being the big Lotto winner than of knowing which end is up on iPoker in the 2017 California legislative session,” Macarro said.

- 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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