James Guill California Poker Flag

John Mehaffey over at USPoker.com wrote an interesting article regarding whether California online poker interests can find common ground to reach a compromise.

At present, the state is at a near standstill in regards to whether online poker should be legalized within the state. Unless a miracle happens, the issue is a dead one for 2013.

The three main parties involved are Indian Nations, legalized card clubs, and off-track betting operators. Each have a stake in the future of online poker in the state and each has their own issues regarding legalization.

Taxes and licensing fees are points of contention by most operators. One bill, SB 51, would tax operators 10% of total revenue. Two other bills do not even address tax rates.

Next, licensing fees vary wildly from bill to bill. For example, SB 51 requires a $5 million suitability fee for any online poker applicants. Another proposal would require a prepaid tax deposit of $30 Million from applicants. These fees would make it nearly impossible for some operators to enter the market.

There are also disagreements over whether interstate compacts should be entered into. The Pechanga proposal calls for California online poker to stay exclusively within California while other operators realize that the only way to make online poker viable is to reach compacts with other states.

Also, keep in mind that some tribes are still strongly against online poker in the state because they feel it will severely impact their brick and mortar profits. Those that do support the measure feel that they should have sole authority to govern their sites and operate independently of the government.

The big problem in this endeavor is the sheer number of potential operators in the state. Not even including OTB operators, you are looking at 68 Indian casinos and 90 card clubs in the state. This alone creates a major obstacle.

As Mehaffey stated in his piece, the only way that online poker will become legalized in the state is for each side to come to some type of compromise. Without said compromise, California is looking at a prolonged fight to get poker legalized.

The biggest step to reaching this compromise would be for lawmakers and Indian tribal leadership to come together and work out their differences. With Indian nations being one of the biggest obstacles, that should be the focus. Until that portion of the compromise is completed, odds for California legalizing online poker will remain long.