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California Inches Closure to Online Poker Legalization

Posted on April 20th, 2011

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As it stands today, California’s drive to legalize online poker gambling is undergoing minor gains that could possibly serve to make the state the first to pull off what many other states have tried and failed to do for a long time now. So here’s what happened thus far in this continuing saga of concessions and deliberations.

In December, Senator Lou Correa filed Senate Bill 40 aimed at creating a single internet poker site that would supply the whole state with regulated online gambling services. The measure was at the behest of the California Poker Association (COPA), an organization of card rooms and Indian tribes led by the Morongo Band of Mission Indians which has their casino just outside of Palm Springs, California. Shortly thereafter, Senator Rod Wright, the current chairman of the Senate Governmental Organization Committee re-introduced Senate Bill 1485 as new Senate Bill 45, an old measure that sought to authorize and regulate all forms of online gaming for the state. Wright filed his bill with no prodding from external organizations or lobbyists. According to the senate bill assignment schedule, the Senate Governmental Organization Committee was the designated committee to review SB 40.

A month after both bills were introduced, Wright requested all parties to “take a measured approach” to all gambling-related legislation and therefore proposed to hold hearings “in aid of legislation” on the subject. The schedule called for the hearings to individual tackle each of the aspect of online poker and internet gaming such that there is a structured approach to all the reviews for each critical provision contained in the measures. The hearings boast a solid line-up of expert witnesses such as Malcolm Graham, Chairman for the United States Online Gaming Association and also of PKR. The hearings were done in the most professional manner possible, never confrontational or aggressive and only sought to ferret out the issues for better resolution.

The latest development in these turn of events saw Sen. Correa file a series of amendments to SB 40 each transforming the original language of the bill and presumably motivated by the results of the hearings. The single regulated site became five with three going online immediately after the bill is approved. Some provisions were also worded to favor COPA alone. After a trial period of three years, subsequent assessment by the state gaming regulation commission will look into whether or not there is a need to put up two more sites as stipulated in the initial construction of the measure.

Out of the hearings, a viable model is taking shape that could very well make California the first U.S. state to have its hands on a working online poker bill. The essential components as seen by experts:

First, a strict adherence to poker only sites, not the virtual cacophony of gaming offers with other games, such as craps online or black-jack as is currently the case with unregulated casinos operating out of various jurisdictions and with underground operations in the U.S. Only after substantial knowledge is gained should the state look into potentially expanding operations to include other games. Form an economic position however, poker will assure the fastest and cheapest turnaround of investments and should be made the sole vehicle of introduction for the measure.

Second, open market proposals are critical to the success of the California bill. Everyone should be given a fair chance to put forward their best offers prior to selecting an operator. There is no merit in obviously handicapping everyone else if what is beneficial for the state is a system that pays back at a good value without having to provide as much except for the license to operate.

Third, proposals need to be revenue neutral so the state will not expect to cough up any money especially with a currently downsized budget.

Fourth, the burden of proof for showing eligibility lies with the applications, not the state. In the same way, bidders are expected to show that they are financial capable of running operations, not to mention the ability to ensure that sites are secure from any risk of crime that would jeopardize money transactions.

Fifth, current violators of the Unlawful Internet Gambling Enforcement Act will not be allowed to participate as it raises a question on their integrity in following government regulations pertaining to gambling.

California certainly has reason to be optimistic given the turn of events that has given it the inside track to legalizing online poker. Still, it’s a different issue altogether when lawmakers all site down to vote. In that regard, there is still no certainty.