The 1.2 million member strong Poker Players Alliance was
a prominent testifier at Tuesday's California Senate
Governmental Organization Committee hearings (see
previous InfoPowa reports), suggesting to state
officials that without the buy-in from the online poker
community, efforts to regulate the game will be futile.
The committee heard a wide range of evidence both
for and against the legalisation of online poker to
raise additional tax revenues in the cash-strapped
PPA executive director John Pappas told
the hearing that online poker can and should be
effectively regulated in the West Coast state.
"The PPA respects the due-diligence of the Committee to
investigate "if" online poker can be regulated, and we
stand here to tell you that it unquestionably can be
regulated, and in fact, already is being regulated, very
effectively, across the globe in well-respected
jurisdictions," said Pappas, who testified along with
PPA's California State Director Steven J. Miller.
"The U.S. Congress is debating federal bills that
would establish a licensed and regulated online poker
marketplace, which the PPA strongly supports."
"Given California's love affair with poker, the PPA and
our members feel strongly that if the state decides to
go down the path of intra-state licensed and regulated
Internet poker it must do it with the long-term needs of
the consumer and of the State and California Tribes in
mind," testified Miller.
Pappas advised the
hearings to respect the consumer in mking their
recommendations, because without the buy-in of the poker
community efforts to regulate the game will be
He urged them to ensure competition,
saying: "The true opportunity for California is to
capitalise and regulate the current market, add new
entrants, and provide the poker player with expanded
choice and consumer safeguards at the same time.
Limiting the marketplace to one online poker provider,
as has been discussed, will create a monopoly, turn away
consumers, and stifle innovation. In short, it will not
Other recommendations were that access to
the global marketplace be protected
access to the global poker marketplace," said Pappas.
"PPA members and poker players in California are
concerned that intrastate licensing and regulation will
limit their play to other California players only. This
not only hurts the consumers, but it hurts the tax
revenue potential for the state of California. If a
player can't find a game online that they want to play,
they will simply not play and that means that an
opportunity to generate tax revenue is lost.
conservative strategy is the favored approach when
considering the future of online poker regulation in
California. It would be unwise to push "all-in" on an
intra-state monopoly that favors a consortium of
interests when it is the consumers who ultimately hold
the best hand," Pappas concluded.
chairman of the Marongo Band of Mission Indians that has
controversially attempted to acquire exclusivity in a
legalised state online poker environment, along with
commercial card room partners, said: "We feel the games
should be controlled by the tribes and the state - and
However, this position was opposed by
another wealthy tribe, which vociferously fought the
"We simply do not agree with the
consequences of authorising intrastate Internet poker,"
said Mark Macarro, chairman of the Pechanga Band of
Luiseno Indians. Earlier nine other tribes has submitted
a letter of objection to the committee.
that the games violate the tribes' gambling agreements
with California, Macarro said his tribe may withhold
more than $42.5 million in annual casino revenue-sharing
payments to the state if California approves online
State Sen. Roderick Wright, chair of the
committee, wryly observed that: "Clearly, whatever we do
will end up in court.''
The hearing was the first
of ten panels slated for the day-long hearing in
Sacramento to weigh the issues of intra-state Internet
poker in California, and was followed in some detail by
The Desert Sun newspaper.
Drew Soderborg, fiscal
and policy analyst with the Legislative Analyst Office,
said the legalisation of online poker puts the current
gaming revenue stream at risk. Compacts ratified after
2003 require tribes to make annual payments to the
state, and, as such, it is assumed the general fund will
gain $365 million in revenue in 2010-11.
those compacts contain provisions that limit the state's
ability to compete against these tribal
bricks-and-mortar casinos, Soderborg said, it is
possible that tribes would be allowed to stop making
payments to the general fund.
"There could be
legal challenges if online poker were approved,'' he
said. "If such challenges were upheld, the state could
lose hundreds of millions of dollars in revenue
The Desert Sun also reported the
testimony of William Eadington, professor of economics
and director of the Institute for the Study of Gambling
and Commercial Gaming with the University of Nevada,
Reno, who said the tax revenue Internet poker would
generate would be "somewhat limited" due to the global
nature of this $10 billion to $15 billion industry. He
additionally pointed out that online companies did not
need to invest in the extensive brick and mortar
facilities of more traditional gambling companies, thus
denying the state the capital investment attendant on
such major enterprises.
"[Land] Casinos generate
hundreds of millions of dollars of capital investment,
through economic spinoffs that occur,'' Eadington said.
"With Internet gaming, we would not have any of these in
significant (forms), so with the value that accrues,
there is not likely to be much left over for the state."
Senator Leland Yee, a San Francisco Democrat, wanted
to know if Internet poker would violate tribal compacts,
whilst Sanford Millar, a certified specialist in
taxation law and a general counsel for Centaurus Games
LLC, said he believes the "exclusivity clause is at
serious risk" and contentions would be filed by tribes
operating Indian gaming casinos under the more recent
Frank Catania, an online
gambling regulatory expert and president of the Catania
Consulting Group said that tribal compacts to one side,
a well-regulated online gaming industry results in
private investment and highly skilled jobs. He pointed
out that California is not alone in considering
legalisation and used New Jersey and Florida as
"If we don't get involved in this, we
could lose those resources,'' Catania said. "The better
solution relies in strictly regulated environment."
Robert Stocker, an educator in gaming law and
regulatory expert, said the Internet gaming train left
the station long ago, and is picking up speed. It was a
$15 billion industry supported by over 15 million
Internet poker players, many of them in the United
States, he said.
"They'll play it tomorrow, next
month, next year, "notwithstanding the UIGEA,'' he said,
adding that whether or not the state of California opts
for legalising and regulating it or not, "the train is
going to keep on chugging along."
testimony from a UK researcher which continuously tracks
Internet gambling was that online gambling in total is
now a global market worth some $22.6 billion, and of
that some $4.9 billion flows from Internet poker, with
California-based players representing a quarter of the
Testimony was likely to go over to a
second day as InfoPowa went to press.