iPoker: Tribal coalition not bluffing against opponents

casino royale bondA powerful coalition of the state’s most prominent Native American tribes isn’t bluffing in its opposition to one proposal to legalize online poker in California.

Led by the Pechanga Band of Luiseño Indians, a half-dozen tribes have registered their opposition to Assembly Bill 167, by Assemblyman Reggie Jones-Sawyer, D-Los Angeles. The bill would allow race tracks and a controversial gambling coalition to enter the online poker market.

“The citizens of California deserve protection from bad actors,” the tribes wrote in the opening salvo of this session’s online poker debate. “Assembly Bill 167 and any legislation that would expand the scope of gaming in California to grant Internet poker licenses to horse racing associations or which would ease regulatory standards to accommodate actors whose past behavior and tainted brands and assets would erode the integrity of intrastate Internet poker under consideration.”

In addition to Pechanga, other tribes that have signed the opposition letter to AB167 are the Agua Caliente Band of Cahuilla Indians, the Barona Band of Mission Indians, the Lytton Band of Pomo Indians, the Viejas Band of Kumeyaay Indians and the Yocha Dehe Wintun Nation.

The early opposition comes before legislative committees officially take up dueling proposals to legalize online poker in the state and dashes the hopes for a third compromise measure that would open up the country’s largest online gaming market.

Dueling poker bills

The debate over legalizing online poker is expected to be one of the session’s most heated as lawmakers take sides in a battle between rival gaming interests. This session, two proposals have been introduced to establish the basic iPoker regulatory structure, set licensing requirements for gaming providers and levy taxes on gross online gaming revenue.

With AB167, Jones-Sawyer has aligned himself with the state’s horse tracks and a controversial gaming coalition of card rooms, two Indian tribes and the online PokerStars. Rivals accuse of PokerStars of being a bad actor in the gaming market.

A second measure, Assembly Bill 9, is authored by Assemblyman Mike Gatto, D-Glendale. It explicitly would block both groups from marketing poker to the state’s 2 million online gamblers. Gatto’s measure, which sides with the state’s big tribes, also proposes a lower tax rate than Jones-Sawyer’s measure.

The tribes’ opposition to horse tracks isn’t surprising as the two groups have repeatedly battled over ballot measures to change the state’s gambling regulations.

In their opposition letter, the tribal coalition said voters repeatedly have upheld tribal gaming and, “By comparison, the voters have rejected expanded gaming at horse-racing facilities by an astounding 84 percent to 16 percent vote.” That’s a reference to Proposition 68 from 2004, when horse tracks and card rooms unsuccessfully sought approval for up to 30,000 slot machines in urban areas.

Tribes focus on “bad actors”

The fight over horse tracks was expected, but gambling industry experts were taken aback by the focus on AB167’s “bad actors” provision.

“I was somewhat struck by the tone of the letter, which spends only one paragraph on the issue of the tracks, but quite a few paragraphs focused on ‘bad actors’ and PokerStars,” wrote Chris Grove of the OnlinePokerReport.com.

PokerStars, a popular online poker site, defied the 2006 federal Unlawful Internet Gambling Enforcement Act, which effectively banned online gaming. In 2011, the U.S. Department of Justice used UIGEA to seize the Internet domains and freeze the accounts for several online poker sites, including PokerStars. The following year, the company reached a settlement with the Justice Department that dismissed the charges without admitting any wrongdoing.

Now owned and operated by the Amaya Gaming Group, PokerStars has partnered with two tribes, Morongo and San Manual, and three card rooms, Bicycle, Commerce and Hawaiian Gardens, to develop an online poker venture. Jones-Sawyer has embraced this coalition, arguing the group represents “broad consensus.”

“The dialogue over the past year has allowed us to reach even broader consensus and mutual agreement as to who will be able to participate in providing Internet poker to the citizens of this great state,” Jones-Sawyer said in a press release defending his proposal to include PokerStars. “My goal remains unchanged: to set a standard in California that is the shining example for the entire nation.”

But the state’s leading tribes, who’ve worked for decades to earn the trust of voters, believe PokerStars’ past actions should prevent it from gaining access to the online poker market.

“The language proposed in AB167 is not sufficient to protect the integrity of the California market,” the tribal coalition led by Pechanga wrote. “As proposed, AB167 provides no such protection, and instead would reward those gaming corporations that acted inconsistent with federal law and the letter of California law by authorizing them to use the fruits of their illegal conduct to obtain a license in California.”

Will Gray and Hall fold compromise hand?

While the fight over online poker is far from over, the tribes’ first action deals an immediate blow to Assemblyman Adam Gray, D-Merced, and State Sen. Isadore Hall, D-South Bay. The pair had introduced identical spot bills, Senate Bill 278 and Assembly Bill 431, to serve as a compromise measure.

“The issue of iPoker in California has historically been divisive; dealing legislators, the governor and the public a folding hand,” Hall and Gray, the chairmen of the Governmental Organization Committees in both houses, said in a joint statement earlier this year. “It is time to work together, stop bluffing and take control of this issue. Our bills do not create winners and losers.”

Yet it’s the tribes who could force Gray and Hall to fold their compromise measure, and with it the potential for legalizing online poker in 2016.

“More and more, Assemblyman Gatto’s view that online poker legislation had only a 35 percent shot at being passed in 2016 seems unduly optimistic,” wrote Steven Stradbrooke, a gambling industry reporter at CalvinAyre.com.

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