Last week I detailed the optimism attendees of the C5 Online Gaming Conference harbored towards Pennsylvania.
As heartening as this was, equally disheartening was the relative malaise that overtook the room anytime the prospect of online poker coming to California was mentioned.
Although not phrased in such a way, the general feeling seems to be that California is a lost cause, at least for the foreseeable future.
Not only are there too many gaming interests with different motivations (tribes, card rooms, and racetracks), but there is also a deep-seeded animus between many of these factions that continues to complicate the matter.
Whether it’s tribes versus card rooms or intertribal politics, the situation on the ground in California has so many moving parts that it may take an act of God (or an alien invasion if you’re not the religious type) to get them all on the same page.
What the panelists said about CA online gambling
This melancholy attitude was on full display during a C5 panel titled The Tribal Roundtable: Gaining Momentum in the iGaming Industry.
The panel featured two consultants who have worked with a number of California tribes, as well as Foxwoods’ Director of Administration for Interactive Gaming, Frank Pracukowski, who deferred to the other panelists when the subject of California online poker was broached.
Not deferring on the topic was Katherine A. Spilde, an Associate Professor and Endowed Chair at Sycuan Institute on Tribal Gambling.
While discussing the gridlock, Spilde noted that “tribal politics is a different animal altogether” and something that is difficult for those not intimately involved in to understand.
Spilde went on to say that beyond protecting their individual gaming interests, longstanding tribal conflicts were a significant reason why online poker bills have stalled in the legislature for more than half a decade.
John N. Roberts, the Executive Director of the Pokagon Gaming Commission in Michigan, likened the situation in California to the classic case of herding cats. And after following the state’s progress (or lack thereof) during the past several years, the analogy seems to be an apt one.
The two key legislative issues
The two issues that are commonly cited as the reasons California online poker expansion remains in a state of limbo are:
- Whether so-called “bad actors” (loosely defined as online poker companies that continued to operate in the U.S. post-UIGEA) should be prohibited through legislation, or if suitability should be left up to regulators.
- What role, if any racetracks should play in the online poker industry.
But if the C5 panelists are correct, there might be a third issue to add to that list – an issue few people are talking about.
The elusive third issue
The tribal roundtable panel at C5 was in agreement that the issue of precisely who would provide regulatory oversight for online poker in California also had the potential to be a deal breaker.
An abundance of regulators
Regulatory oversight in California is complex. And presently, Adam Gray’s bill, AB 431, doesn’t deal with who will regulate online poker sites.
In fact, Gray amended his bill, removing references to particular regulatory bodies in favor of the more generalized “state”:
“Any Internet poker framework shall contain consumer protections for Californians who seek to engage in a legal alternative to unlawful Internet poker, ensure a fair share of revenue for the state, and protect the public interest by ensuring that the various aspects of Internet poker are sanctioned and regulated by the state.”
“The bill would require the commission [defined as the CGCC], in consultation with the department [defined as the Department of Justice], to promulgate regulations for intrastate Internet poker.”
The state has two gaming regulatory bodies that report to different branches of the government. The California Gambling Control Commission (CGCC) answers to the Governor and the California Bureau of Gambling Control (CBGC) reports to the Attorney General.
If this convoluted system isn’t off-putting enough, there is a cloud of accusation that has formed stemming from an investigation into former CGCC enforcement agent Robert Lytle. the situation is prickly enough that CGCC head Tina Littleton has stepped down “to pursue other opportunities.”
But regulatory oversight doesn’t stop there.
Tribes are more or less self-regulated entities, as each gaming tribe has its own regulators who oversee gaming on tribal lands. The state does have some oversight and say on gaming matters, but most of the regulation of tribal casinos is handled internally, as outlined in the Indian Gaming Regulatory Act (IGRA).
It would appear tribes would like to keep it that way. As the C5 panelists noted, tribes see regulatory oversight by their own regulators as a way to prevent the state from encroaching on what the tribes feel is their sovereign right.
Tribes versus card rooms
The fight over bad actor clauses involves the Morongo and Pechanga tribes. And when it comes to racing’s involvement, it’s essentially Pechanga against the racing industry.
The fight over who will provide regulatory oversight will be fought between tribes and card rooms. This fight is already being waged.
Earlier this year, Dave Palermo wrote a blistering article on the Lytle situation and California’s complicated, inefficient, bifurcated regulatory system. In the column, spokespeople for tribes took card rooms to task for what they called the regulatory “Wild Wild West” where “internal controls are nil.”
Needless to say, the California Gaming Association (which represents the state’s many licensed card rooms) disagreed with this assessment, and fired back. The CGA believes that it is the lack of transparency in tribal regulatory oversight that should be concerning.
If the panel at C5’s concerns are realized, this could be yet another a looming issue when Adam Gray’s (or another bill) becomes more detailed.
This is not good news for a state that already has several major issues to contend with.