Steve Ruddock California online poker hearing recap

Anyone expecting Wednesday’s joint legislative hearing of the California Assembly and Senate Governmental Organization Committees to deal with the thorny issue of online poker expansion was likely very disappointed, as the hearing was little more than an overview of legalized gaming and the current regulatory processes in the Golden State.

The hearing was chaired by the Assembly GO Committee Chair Adam Gray, whose online poker bill, AB 431, passed the Assembly GO Committee on April 27 by a 20-0 margin.

Online poker talk was limited to abstract discussions of its impact on state and tribal regulatory bodies.

Isadore Hall III absence a harbinger

Based on the official witness list and the title of the hearing, “Overview of Gambling in California:  Legality, Authorization, and Regulation,” it started to become apparent the hearing was not going to cover the topic many had hoped for.

This suspicion was confirmed when Senator Isadore Hall III, the Chairman of the Senate GO Committee skipped the hearing.

Hearing not a total loss

Online poker may have been a backburner issue at Wednesday’s hearing, but several of the invited speakers offered up comments that gave the state’s current impasse some much needed clarity.

As Chris Grove noted on Twitter:

Four representatives from the state DOJ/CGCB (California Gambling Control Board) and one from the CGCC (California Gambling Control Commission) used the opportunity to detail their current budgetary constraints and further indicated they would need more funding in order to regulate online poker.

Next up was a horse racing regulator, Rick Baedecker, who serves as the Executive Director of the California Horse Racing Board.

Baedacker reiterated the racing industry’s previous comments with regard to online poker – something that as Chris Grove noted, is not usually the domain of a regulator – namely that the racing industry is not interested in subsidy.

Baedacker also said that racing is the only entity in California with experience taking online wagers and should therefore not be excluded from online poker licensing.

The tribal regulator who spoke, Ron Jaeger, from the United Auburn Indian Community (currently partnered with bwin.party) spent the bulk of his time criticizing the state’s two regulatory bodies, the CGCC and the CGCB, an oft-repeated refrain from tribes, particularly in the wake of the Robert Lytle fiasco.

Online poker a boon for card rooms but meh for tribes

Revenue figures offered by Anita Lee, a Senior Fiscal and Policy Analyst in the state Legislative Analyst’s Office, gave what many feel has been tribal complacency regarding online poker some much needed perspective.

According to Lee, annual tribal casino revenue in California is a whopping $7 billion, whereas the state’s card rooms generate just $850 million in annual revenue.

If the California online poker industry is worth somewhere in the $300 million range analysts have projected (give or take $50 million), card rooms would be adding a significant new source revenue, while the addition of online poker would only move tribal revenue slightly.

It’s the difference between increasing annual revenue by 10% or more for card rooms, and just 2% to 3% for tribes.

These revenue numbers may help explain why tribes are content to let online poker bills die if the legislation doesn’t meet all of their demands.

Upshot

Little new ground was covered during this week’s hearing, but these are precisely the types of hearings that will need to be held in order for a bill such as Adam Gray’s online poker shell bill, AB 431 to continue to move forward.

Steve Ruddock
Steve Ruddock - Steve is one of the most recognizable names in the online poker media space. He brings his deep knowledge and equally deep well of opinions to his coverage at CaliforniaOnlinePoker.com.