Unnecessary Delay for California Online Poker

written by I. Nelson Rose

#11-10 © Copyright 2012, I. Nelson Rose, Encino, California.  All rights reserved worldwide.  Gambling and the Law® is a registered trademark of Professor I. Nelson Rose, www.GamblingAndTheLaw.com.

Gambling and the Law®:

On August 22, 2011, California State Senate President Pro Tem Darrell Steinberg and Sen. Roderick D. Wright, Chair of the Governmental Organization Committee, sent a “Dear Stakeholder” letter, announcing that the bills to legalize intra-state Internet poker would not be voted on last year.

Why the delay?  After admitting that the issue has been studied for the past three years, including “numerous hearings” and “hours of testimony over the last several months,” Senators Steinberg and Wright declare:

“Despite these efforts, significant, unresolved issues remain, including tribal exclusivity and waiver of sovereign immunity, the types of games that would be authorized, who would be eligible to apply for gaming site licenses and potential federal constitutional questions.”

A non-lawyer would take about three seconds to read that sentence.  I took more than two hours to analyze it and write this response.

It is always risky to give excuses.  First, these have to be the only important problems remaining; if there were others, they would have been mentioned.  Second, we can treat this as a list, a list with short answers:

1) Tribal exclusivity.  A few tribes assert that their compacts with the state, giving them the exclusive right to have slot machines in return for revenue sharing, mean no one else can operate Internet poker.  They argue that a home personal computer becomes a slot machine if used for online betting.  If that were true, the state would already be in breach for having authorized at-home wagering on horse races.  Also, this is probably an argument most tribes would not want to win.  If California were to no longer receive a share of tribal gaming revenue, the state would authorize highly-taxed, privately-owned landbased casinos in its major cities.

2) Waiver of sovereign immunity.  The state has signed dozens of compacts with tribes for both casinos and off-track betting.  Waivers for online poker would be no different.

3) The types of games.  Sports betting is prohibited by federal law.  Remote betting on horse racing is already legal.  No one is going to compete against the California State Lottery.  Casino games are limited to tribes, and bingo to tribes and charities; it would require an amendment to the California Constitution to allow private operators.  So, there’s only poker.

4) Who would be eligible to apply.  Politically, the state’s tribes and cardclubs have to get at least one of the licenses each.  Politicians are looking at legalizing online poker to raise revenue.  So, at least one license has to go to an outside company with more money than any California operator, such as Caesars or Bwin/party.  The only question is whether there will be three, five, or an unlimited number of licenses.

5) Potential federal constitutional questions.  This is probably a reference to the position by the Bush Administration that even intra-state Internet poker violates the federal Wire Act.  If true, there would be nothing more to discuss.

So, what is really going on?  Maybe it really is questions like these, which could be answered quickly by any competent gaming lawyer.

Let’s hope that it is not just politicians delaying so they can get more campaign contributions.


© 2012, I. Nelson Rose.  Prof. Rose is recognized as one of the world’s leading experts on gambling law, and is a consultant and expert witness for governments, industry and players.  His latest books, Internet Gaming Law (1st and 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com

I. Nelson Rose

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