Dan Morain: Backers raise ante with online
By Dan Morain, Senior editor The Sacramento Bee Published: Sunday, Apr. 3, 2011
Should California legalize and regulate online poker, or should it remain illegal? To comment on this issue, please use our forum.
California voters long ago unleashed the gambling genie, approving the lottery in 1984 and Indian casinos in 2000. But get ready for more. In time, all manner of wagering will become legal over the Internet.
No one wants to leave money on the table, not the tribes that own casinos, not the business people who own card rooms and racetracks, and certainly not the state.
If you're a gambler, they'll figure out a way to get at your debit card. It may not be this year. But soon, your laptops, cell phones and iPads will become legal gambling devices.
Two bills are pending in the California Legislature to legalize intrastate gambling. Congress is considering the issue again, as are several states, Nevada among them.
Sen. Lou Correa, an Orange County Democrat, is carrying one of the measures, Senate Bill 40. He makes no effort to disguise who is behind the bill. Tribes led by the Morongo and San Manuel bands of Indians, which own large Southern California casinos, and a few large Los Angeles-area card rooms would control at least some Internet-gambling sites.
"It's their bill, not mine," Correa told me. Not that he is a passive participant. He is trying to line up votes and believes that passage of some version is all but inevitable.
Sen. Roderick Wright, a Los Angeles Democrat who has held several hearings on the issue, is carrying a separate version, Senate Bill 45.
His measure would open bidding for California-based Internet gambling sites to any group, including ones from outside the state. Both measures would require payments into state coffers. A hearing on the legislation is expected in the coming weeks.
Internet gambling is a reality as it is. People legally wager roughly $600 million via the Internet on California horse races each year. Then there are the sites that are illegal under federal law.
Google "Internet poker" and scores of websites pop up, all of them offshore. You could gamble away your paycheck today while sitting in your La-Z-Boy with your laptop.
Plenty of us already are playing. Correa's bill estimates that a million Californians play Internet poker each week at offshore sites. Wright's bill places the number at 1.5 million players.
If each gambler spends $1,000 a year, that would add up to $1 billion to $1.5 billion. If the state could take control of those transactions, it could skim a few hundred million a year.
"The only I thing I know for certain is that if we do nothing, we get squat," Wright said.
Although divisions remain among casino operators over approaches offered by Correa and Wright, some tribal leaders and their representatives who initially opposed any Internet gambling measure are beginning to embrace the general concept.
One is United Auburn Indian Community, which owns the Thunder Valley Casino near Lincoln, among the most successful gambling halls in the state.
"The tribe is actively exploring its Internet options so that it remains in front of the gaming curve," said United Auburn's attorney, Howard Dickstein. "The tribe believes that Internet gaming is inevitable."
Sophisticated operators already are poised to get involved. Las Vegas gambling mogul Steve Wynn recently announced a partnership with PokerStars, an offshore online site, once it becomes legal in this country.
Last week, Frank and Lorenzo Fertitta, part of the family that founded Station Casinos, followed with an announcement of a similar agreement with online gambling site FullTilt Poker.
The Fertitta family controls Ultimate Fighting Championship, which opens all sorts of cross-marketing opportunities between online wagering and legalized brawling.
Advocates call it a win-win – good for business, good for the state. Just as the lottery was sold as an easy way to fund schools – who can forget that cynical catchphrase "And the kids win, too" – Internet gambling proceeds could be earmarked for some heartwarming cause.
It will be easy money for everyone, except the suckers.
No doubt, the final legislation will contain elaborate regulatory mechanisms. There will be ironclad guarantees that minors cannot gamble away their parents' money and safeguards so that compulsive gamblers cannot empty their bank accounts in a single sitting.
We've seen this before.
Then-Senate President Pro Tem Bill Lockyer pushed legislation in 1997 that created the California Gambling Control Commission. It was supposed to be a model organization to oversee the rapidly expanding gambling industry.
As it turns out, the commission has few if any protectors in the Legislature. When the commission asserted authority over Indian casinos in its early years, representatives of the tribes complained to their legislative allies, who tried to strip the commission's funding.
Even now, the California Gambling Control Commission's annual budget is $11.7 million. That's less than the $11.8 million that gambling industry spent on lobbying in Sacramento in the 2009-10 legislative session.
The commission's budget for the past decade totals $75 million – less than the $82 million the Morongo Band of Mission Indians spent on campaign contributions for candidates and ballot measures during that time.
No amount of regulation can stop all gambling-related crime. Fifteen people who worked out of two Bay Area card clubs were indicted last month in a major loan-sharking case in which they extracted 10 percent interest per week on loans of up to $10,000.
Nor would regulation reduce gambling addiction, certainly not once Internet gambling becomes legal and is heavily advertised. The point of legalization would not be to curtail gambling. The point would be to attract more players and make more money.
Inevitably, the same computer you might use to watch movies, listen to music and read this column will become a gambling device, a no-armed bandit sanctioned by government.