Last week, the legalization of online poker was debated in a California State Senate hearing. Though there was not an official bill on the table, the idea was discussed of starting an intrastate online poker network run by Native American tribes and card rooms that would be taxed by the state to help bolster the flailing state budget.
Hundreds of millions of dollars are spent by Californians every year on online betting (illegally), so why shouldn’t California profit from the spending of their residents? Earlier this month, a study done by the consulting firm of Mike Genest, former state finance director estimated that online poker could bring in $53.6 million in revenue for the state’s budget in 2010-2011 (10% of the $536 million in estimated sales). Though this would indeed be very beneficial financially for the state’s budget, there is a potential conflict with the state’s exclusivity agreements with tribal Indian land-based casinos.
The interpretation of the exclusivity agreement around this topic is unclear. Plus, camps within the Indian community seem to be divided in their stance. For example, a powerful casino tribe from Riverside County was supportive of the measure, stating that the games should be controlled by the tribes and the state. Whereas another powerful casino tribe, from the same county, opposes the proposal based on the grounds that it is a breach of their exclusivity agreement with California. That tribe, the Pechanga Band of Luiseño Indians, has even stated that they’ll consider withholding an substantial amount of over $42.5 million in revenue annually from the state if online poker is allowed in California.
Outside of the debate around the exclusivity and participation of the Indian casinos is the general debate over online gambling – those that say that it can’t be stopped so why not cash in on it versus those who say that access should be as limited as possible to dissuade gambling, particularly for problem gamblers and minors.
In 2008, Governor Arnold Schwarzenegger negotiated with the Native American casinos for larger payments to the state. Governor Schwarzenegger has not yet taken a public position on the legalization of online poker in California following the recent debate, however.
