GPWA Times Magazine - Issue 18 - October 2011

Gambling and the Law: California’s Unnecessary Delay News commentary by I. Nelson Rose O n August 22, 2011, California State Senate President Pro Tem Darrell Steinberg sent a letter announcing that the bills to legalize intrastate Internet poker would not be voted on this year. The letter was also signed by Sen. Roderick D. Wright, Chair of the Governmental Organization Committee, and author of one of the bills. Both legislators made it clear they are in favor of Internet gaming; just not now. Anyone receiving the letter knew it was going to be bad news from the start. It opens with “Dear Stakeholder” – not exactly the warm salutation you would expect from sophisticated politicians. Sen. Steinberg told the Sacramento Bee that, although he person- ally supports legalizing Internet gambling in California, he “does not want any legislative action on the issue this year.” Why the delay? After admitting that the issue has been studied for the past three years, includ- ing “numerous hearings” and “hours of testimony over the last several months,” Senators Steinberg and Wright declare: “Despite these efforts, signifi- cant, unresolved issues remain, including tribal exclusivity and waiver of sovereign immunity, the types of games that would be autho- rized, who would be eligible to apply for gaming site licenses and potential federal constitutional questions.” The State Legislature goes into Interim Study Recess on Sept. 9. We fully expect an objective proposal will be developed during the interim. The G.O. Committee will hold a hearing in January 2012. Do lawmakers in Sacramento really need another half-year to study the issues? For the record, the State Legislature spent only a few days deciding that California should have legal land- based casinos. A senior Assembly staff member told the Los Angeles Times how Prop. 1A and the model compact passed in 1999: “It was a stacked deck. It just sailed through both houses in three days with- out a single genuine public hearing, with hurry-up legislative hearings often held in out-of-the-way conference rooms, and after hours of closed-door negotiations between the governor, legislators and Indian representatives.” But, maybe the legal issues involving Internet gambling are more complicated than those surrounding Nevada-style tribal casinos. Unfortunately, none of the remaining “unresolved issues” seem all that difficult to resolve: Tribal exclusivity - If that is an issue, there is nothingmore to discuss. A fewCal- ifornia tribes have taken the position 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 In- ternet poker. Their reasoning is 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, because California would then have no reason not to authorize highly taxed, pri- vately owned land-based casinos. Waiver of sovereign im- munity - The state has signed dozens of compacts with tribes for both casinos and offtrack bet- ting. There is no reason for waiv- ers for online poker to be any dif- ferent fromthoseprior compacts. The types of games - Sports betting is prohibited by the fed- eral Professional and Amateur Sports Protection Act. Remote betting on horse racing is al- ready legal in California. No one is seriously thinking about competing against the California State Lottery, one of the largest in the world. Bingo is limited to charities and tribes, and would require an amendment to the California Constitution to allow private operators. Casino gaming is also limited by the Constitution to feder- ally recognized tribes. So theonlygame that could attract competitive bids from card clubs and outside corporations is poker. Who would be eligible to apply - This is obviously the big money question. Politically, at least one of the licenses has to go to a consortium of tribes, and one 1. 2. 3. 4. Indian tribes and other groups on various sides of this issue are spending huge sums on lobbying, campaign contributions and consulting. The more this issue drags out – and the more that lawmak- ers can gin up drama and stress over it – the more money will flow through the Capitol.” ‘‘ 54 Gambling and the Law: California’s Unnecessary Delay