GPWA Times Magazine - Issue 12 - April 2010

Thatmeant thatwhile the state could au- thorize card rooms to offer poker – and there are many state-authorized poker rooms inCalifornia– it couldnot license any gaming establishment to offer slot machines, or any other form of gambling that involves gamblingdevices. This exclusivity right is why Indian casi- nos inCaliforniapaya substantial sumof money–onewitnessestimated it at$365 millionayear– tostatecoffers.And if the exclusivity right is ever violated, the ca- sinos will not have to pay that money to the state. So the legal argument surroundingonline poker iswhether it reliesongamblingde- vices,whichviolate theexclusivityclause. The legislative counsel for the California assembly doesn’t think so, according to Wright. Neither does George Forman, a lawyerassociatedwith theMorongo tribe, which wants to bring regulated online poker toCalifornia. “Tribes have no exclusivity with respect to poker,” Forman said. “It is lawful in California for California and the legisla- ture canoffer it.” “The constitution allows slot machines and banked/percentage games only on tribal games,” added Forman. “Poker is not a banked or percentage game. [The] compact defines a gaming device as a slotmachine. A slotmachine is a banked game, or a house game. In online poker there is no gamingdevice. The only thing that Web site servers do is shuffle and deal the cards. They don’t play against themachine or play against the house. I don’t think there is an intellectually de- fensible legal argument that onlinepoker could constitute a breach of the exclusiv- ity laws.” Not surprisingly, Forman’s opinion was vigorously contested by other Native American tribes who absolutely do not wantCalifornia to regulateonlinepoker. LeslieLohse, the chairwomanof theCali- forniaTribalBusinessAlliance, said there was no doubt that “Internet connected devices” for poker were a clear violation of the compacts. “Termsof thecompactclearlydefinegam- ing devices, which clearly includes poker on Internet connecteddevices....Theonly thing thatmatters is the electronicdevice allows the player to connect and place a bet.” Lohse also made it perfectly clear what would happen if California moved for- wardwithplans to licenseonlinepoker. “Tribes are paying the state $1 million a day,” Lohse said. “If non-Indian busi- nesses offer gaming devices, the tribes will stopmakingpayments.” “Your time isbetterspent looking inother directions toaddress thebudgetary issues of the state of California,” Lohseadded. Lohsewasn’t theonlyNa- tive American represen- tative who bluntly op- posed licensing online poker. “Internet poker is a game changer,” said Mark Macarro, chair- manofthePechanga. “We know we tried to insulate ourselves from thisvery thingby signing a 20-year com- pact. Maybe in another 20 years we can talk about this if there are no moreexclusivity issues.” Wright, for his part, was not content to let this argu- ment stand. “This isn’t about whether we should allow In- ternet poker,” Wright said. “That shiphas sailed.” “This is about what we should donow. Shouldwedonothing?” Wright asked. “Yes. We should do nothing,” Ma- carro said. “It’snot possibledue to the exclusivity agreements the state made with theTribe.” At this point, State Sen. Leland Yee jumped into the fray. “Acontract isacon- tract and an agreement is an agreement,” Yeesaid. “But...asanation, youcan’t turn a blind eye to the fact we’re cutting child care and education.We’ve got a job todo and that is to take care of the people of California.” And that, inessence, is thepolitical prob- lem. The Native American tribes are big players inCaliforniapolitics.And theU.S. has aprettypoorhistory in termsof deal- ingwith them. Deals, treaties and agree- ments have been continuously and capri- ciouslybrokenbyAmericangovernments, so honoring a treaty— and not changing itmidstream— is averybigdeal. “It’s about making agreements and hon- oring commitments,” Lohse said. “The ink is not even dry on the last two com- pacts signed.” The Native American tribes have a lot of money to spend on political campaigns. So legislatorswill think twice before crossing them.Combine thatwith the potential legal chal- lenges online poker could present and you get an en- vironment inwhich it could be tough to get votes for an onlinepokermeasure. Online poker might be coming to California. But it’s not going to get there without a fight. And this fightwill beun- like any the industry has ever seen before. 33 Online Poker in California