THE FIGHT: Tribal Proposal May Break Gridlock in California

California, Nevada and New Jersey continue to dominate the stage in THE FIGHT to legalize online poker. This week California took the lead, with a new proposal from the tribes, long-time antagonists of all online gaming legislation. Nevada and New Jersey, with online gaming already legalized, pushed forward in their individual efforts to bring the games to as many people as possible as quickly as possible.

Last week’s edition of THE FIGHT mentioned the rumor that the California tribes were changing their tune regarding online poker in the Golden State. Earlier this week, the rumor became fact. The chairmen of eight separate bands of Indians signed a joint letter for distribution to California tribal leaders that included a draft of proposed intrastate online poker legislation.

“Fundamentally, we felt it was important for elected leaders of tribal governments to come together and identify both challenges and solutions presented by Internet poker,” the letter reads. “Indian County simply cannot afford to get this policy wrong.”

The draft legislation attached to the letter, which the tribes note is “neither perfect nor final”, is an online poker-only bill. It represents the first time that the tribes with casinos, as a collective, have put forth a unified proposal to legalize any form of online gaming. The tribes believe that they can protect their California monopoly on brick-and-mortar Class III gaming – essentially, slots and table games – by restricting the bill to poker and requiring the bill to re-affirm the tribal monopoly on those other games.

The legislation includes two notable prohibitions. The first is a “bad actor” prohibition that has become the norm in almost every state that considers legalizing online poker. There is also a prohibition on Internet cafes, a variant on the traditional “pay as you go” model for buying internet time at cafes in which the cafes offer chances to win prizes to customers who purchase internet access. Patrons play video slot-like games on the computers to find out if they’ve won a prize.

The bill restricts internet poker licensees to California card clubs and California tribes that offer gaming, a provision that is sure to stick in the craw of California racetracks and outside brick-and-mortar casino groups.

The tribal bill hasn’t been introduced in the state legislature yet. Presumably it will go through a round of revisions from the tribes themselves before it is introduced into the legislative session. Once that happens, the tribal proposal will be competing against a bill introduced by State Sen. Roderick Wright. Wright’s bill doesn’t include the same prohibitions, allows for a broader universe of licensees, and has steeper upfront licensing costs than the tribal bill.

Brian Sandoval

NV Gov. Brian Sandoval

While the competing bills duel it out in California, Nevada is pushing ahead with interstate compacts. Republican Gov. Brian Sandoval revealed to the Las Vegas Review-Journal yesterday that he has begun preliminary talks with governors of other states about pooling players for purposes of online poker. Curiously, the LVRJ cites Texas, a state that has not shown much interest in legalizing online poker, as a possible state with which the governor has talked. It does not cite the more obvious choices of New Jersey and Delaware.

“It’s very much in the early stages and we have a great opportunity because we have the infrastructure and other states have the players,” Sandoval told the LVRJ.

It’s good that Nevada is starting to look into player pooling. With Ultimate Poker already offering real-money games, and other sites like sure to follow within a few months, Nevada is ready to get the ball rolling again for U.S. online poker. What the state lacks is a critical mass of players. If Sandoval is truly talking to states like Texas, the player pooling arrangements – like everything else in the tortured legislative process attached to U.S. online poker – are likely to take longer than anyone expects.

In that regard, New Jersey at least seems to be holding its own feet to the fire. John Brennan of the Bergen Record reported this morning that New Jersey regulators have released a draft of the state’s proposed online gaming regulations. A 60-day period for public comment on the regulations will commence on June 3. Once the regulations are finalized, state regulators will give a 45-day notice, at the end of which casinos can begin to accept wagers over the internet. That date should fall some time in the 4th quarter of 2013.

Six months may seem like an eternity to some online poker players, but when you consider the pace of THE FIGHT to legalize online poker since the UIGEA was enacted, six months isn’t long at all.

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Kevin McGrady

Legislative and Politics Beat Writer: Kevin McGrady practiced corporate law in New York City for eight years before moving to Las Vegas in 2008 to join the gaming industry. Kevin is a graduate of New York University and Columbia University School of Law.
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