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California is the 800 pound gorilla in the room of U.S. online poker regulation. So when a member of the state legislature proposes regulating the activity – even if his bill rehashes an approach that has failed in the past – people take notice.
Marco Valerio caught up with Sen. Wright at the 2013 National Conference of Legislators from Gaming States and conducted this exclusive interview where Wright discusses the bill, his feelings regarding poker, the role tribal gambling interests play in his view of California’s online gambling future and much more.
Valerio: As you prepare to reintroduce your online poker bill in the California state legislature, what would you say is different this time around from last year, when a similar online gaming bill that you also sponsored did not pass?
Sen.Wright: What I’m finding is that more of the stakeholders are better educated. From the initial introduction of this bill to today, a substantially greater number of the participants also have partners, so they’re much more likely, and qualified, to go into the business.
As people understand and realize that it’s profitable for them, they’re much more likely to play. I watched the Morongo [Band of Mission Indians] move into the business. I watched Thunder Valley and some of the major tribes shift their position because they see how they can benefit.
Nevada gaming companies are also entering a lot of partnerships, and submitting online poker licensing applications in this state by the dozens. As you watch the regulatory process take shape in Nevada, what would you say are some of the most important differences, and similarities, between our state and California?
My perception – this is just a view of mine – is that California has the sufficient liquidity; there are enough players in California for us to make our own game. Clearly, that’s not the case in Nevada. So Nevada is hoping that there will be overlays that will allow them to pursue players in other states. We don’t have that as a consideration in California. So as I look at the Nevada game, I believe it to be a stalking horse for federal legislation that will allow them to encroach their borders and come into California.
Speaking of federal legislation of online poker, I heard you express some opposition to it at this conference, particularly with respect to the failed Reid/Kyl bill. Are you against Reid/Kyl specifically, or federal legislation in general?
The problem I have with federal legislation is that gambling in this country has always been a process relegated to the states, and I don’t think that we should change that given the nature of online gaming. If states want to create their own intra state regulations and form things like Powerball or something, those should be the option of the individual state. But the federal government should not be in the business of controlling or taking money out of the gambling revenues that are generated by the state. That’s never been a federal process, and it shouldn’t begin now.
What about interstate compacts? Could they work out?
Well, I mean, I believe under the current iteration of UIGEA, that would be illegal, but I think that in time, as more states get into the game, I think that option should be made available to states on a state-by-state basis, so that again, it would not be the federal government dictating what the rules are, but it would be those states, just as we do in Powerball, making a decision to participate or not participate.
The nature of online poker, however, is different from casino gaming. A large online player pool is typically desirable, but that could turn out to be complicated if left completely up to the states. Do you think these circumstances favor the need for federal legislation to allow smooth interstate transactions?
Not really. Again, in California, we would be perfectly able to regulate a game, and there’s sufficient liquidity in the state to make our game work. If we were to expand and have state-to-state relationships, then clearly you’d have to be assured that the state with whom you formed the relationship had a regulatory scheme that was compatible with other states, and I think that once we in California and other states go live [with online poker], there will probably be a kind of thread by which most people operate, similar to what happens in the lotteries, that will allow for the cross fertilization of the games anyway.
Do you think that can happen eventually?
I think so. Again, it would be a state-by-state choice. Clearly, in states like Rhode Island or Wyoming, where there’s very little population, it would be in their interest to have a broader liquidity pool. For a state like California, it would allow our operators the ability to have people playing in a broader time space, because the time differences alone mean that you have different pools of players over different spans of time. Ultimately, it will probably go international, where people will virtually be playing around the clock. At any given point, 2 o’clock in the morning in California might well be 3 o’clock in the afternoon in, say, Europe, and so eventually I see the game expanding on an international platform.
But I think you have to crawl before you walk and we have to master it locally, then create the state relationships, and then move on from there.
I’d like to talk a little bit about tribes. In Nevada, tribal gaming interests haven’t really been a part of the online poker process, but in California they’re a huge deal. Could you give our readers a sense of what the situation is in your state with tribes and online poker?
The tribes in California are a major force in the gaming business. The combined take of the tribes in California actually exceeds the take of Las Vegas now. And they will be major players because they’re in the gaming industry, and the smart business of running an online business will attempt to merge some of these online businesses with the brick and mortar business. And with +60 casinos in California, they would be best suited to take advantage of this synergy between merging the online player with the brick and mortar player and vice versa. So, they will be major players and we anticipate fully that some of our hubs in California will be operated by tribal governments. But it won’t be the tribal government, it will be a tribal LLC that will be affiliated with a tribal government.
What about conflict within the tribal community about whether or not to support? Must a majority of tribes be satisfied, or is there a quorum that you’re going for?
We’ll get as many as we can. Many of them have different interests. Clearly we would not be able to violate the compacts that we have, so the Class 2 games that are currently being played in California will be the only games allowed on the Internet platform as well, so it will not be a violation of exclusivity. And we will not go into trying to renegotiate the tribal compacts as they’re written.
We in the poker media are following your movements very closely, and I’m just curious about where you personally obtain your information and counsel about online poker.
Different people. You know, I have a staff, I chair the Senate Governmental Organization Committee, which oversees gambling issues. For the record I don’t even know how to play poker. I’m not big on gambling, I mean, gambling to me was when I went shopping yesterday over at the Venetian. But it’s just never been something that I was involved in.
But I don’t think you need to know how to play poker to understand how to regulate the game. Just like, you know, I’ve spent many years in utility regulation, but I ain’t climbin’ up on top of a pole or stringing any wires either. The idea is regulating the game and making sure it’s fair. So I look at the games and I look at the outcome but I’m really looking more at how the game is regulated than the specific strategy of how you play.
But leaving strategy aside, is there anyone else who supplies you with information about the business of poker?
You know, I’m certainly in touch with the card club owners in California. There are some 89 card clubs in California. I have four casinos in my district alone. The Hustler Casino and the Normandy Club in Gardena, the Inglewood Casino in Hollywood Park, and the Crystal Palace in Compton. Card Clubs have been a part of my community and my district for a hundred years, so it’s not a new phenomenon to me. I’ve just never been a poker player.
Thank you very much for this interview, Senator. Any closing thoughts for our poker playing readers, especially those in California?
I would hope that many of the online players who are a little bit of a different breed than many of the brick and mortar players would get behind this, and whether you’re a brick and mortar player or an online player, this is an opportunity for California to have another avenue for people to express how they feel, and I hope they would get behind Senate Bill 51 (SB51) in the California legislature.