Online Poker and Sports Betting Unlikely in California
Once upon a time, California appeared to be the state most likely to legalize online poker. There were bills introduced each year, and the majority of lawmakers saw the benefits of regulating the game, especially when Nevada did it and the possibility of sharing poker liquidity looked more realistic. And when New Jersey launched its online poker market, California seemed like a natural addition to the group that also included Delaware.
The closest that lawmakers came to consensus among all stakeholders was in 2016, when the horse racing industry agreed to stand down (for a price) and tribal casino operators and card room operators were close to agreeing on terms. One player stood in the way, however, and that was PokerStars. The card rooms and Poker Players Alliance were aligned with PokerStars, while tribes wanted a guarantee that PokerStars would not be allowed in the new market.
That stalemate led to a breakdown in talks in 2016, and though a new California bill was introduced in early 2017, not one stakeholder seemed to have the desire to try again. And they didn’t.
As 2019 begins, there is still little hope that California will legalize online poker or any type of online gambling – even sports betting – in the near future.
Is this story an autopsy for California #iPoker or lessons to be learned. Still so much need to address that marketplace and give #CA consumers a place to play safe and regulated online poker. https://t.co/l1SGIjWKrf
— Poker Alliance (@ppapoker) December 17, 2018
Tribes Vs Card Rooms
In truth, tribal leaders and card room operators may be further apart than ever before. A longstanding disagreement between the entities took a drastic turn in late 2018.
The issue arose when tribal casino operators realized that California card rooms had been skirting the state’s gambling laws. Tribal casinos were authorized to offer house-banked games like blackjack, but card rooms had to run those games in a different style so that players served as the bank, not the card room dealer. Card rooms found that many players were not financially willing to be the bank, and games were difficult to keep going without the use of third-party proposition players hired by the card room. Those players were able to serve as the bank, and the rule that the bank had to move around the table was often overlooked, leaving the prop players as the bank for round after round of play. Tribal leaders spent years complaining to the California Gambling Control Commission and its Bureau of Gambling Control, but no significant action resulted.
In 2018, two tribes made good on their threats to fix the problem. The Rincon Bank of Luiseno Mission Indians and Santa Ynez Band of Chumash Mission Indians filed a lawsuit in the Superior Court of California via San Diego in November. The defendants included numerous card rooms, such as the Bicycle Casino and Commerce Casino, as well as unnamed proposition players and the companies that provide them to card rooms.
This case does not exactly set the stage for any friendly discussions about online poker.
No Confidence Quotes
The folks at Online Poker Report reached out to a number of the key players in the California gambling market at the end of 2018 to talk about what happened. And their sentiments do not bode well for bringing online poker back to the table.
California Gaming Association President Kyle Kirkland:
“Unfortunately, some tribal gaming advocates could not reach agreement on how online poker would be administered and regulated. As a result, legislators moved on to focus on other priorities.”
Pechanga.net Editor and Tribal Strategist Victor Rocha:
“The arrogance and ignorance of PokerStars f—ed it up. They thought they could drive a wedge between the tribes and slide right in. They underestimated Pechanga tribal Chairman Mark Macarro’s resolve. He never changed his message; PokerStars was a bad actor, and bad actors are not welcome in California.”
Agree with it being a bad look for the PPA, but important to note that PokerStars was the only online poker company sinking money into California online poker lobbying at the time. Also, 2 years hence, it's clear that bill was never passing https://t.co/kIa19EeO2P
— Steve Ruddock (@SteveRuddock) March 5, 2018
Rocha continued, referring to the ever-decreasing online poker revenue in New Jersey as compared to increasing revenue for other online casino games:
“Now, looking back with everything we know about online poker, the tribes saved themselves a lot of money by not investing in the financial death spiral we now call online poker.”
Former California Gambling Control Commission member Richard Schuetz:
“I actually believed at the beginning of the process that iGaming and iPoker was possible, for I listened to what people were saying, and I was working my butt off in assisting in it becoming a reality. I then got a wakeup call and quit listening and started watching. It was clear after awhile that this train was not leaving the station. It was all about the legislators, lawyers and lobbyists making money by leading people to believe that train could leave the station. It had no chance, period. The tribes were not comfortable with the risk and absolutely did not want card rooms to benefit.”
Sports Betting Chances
It would seem that the divide separating California’s various gambling entities would prohibit a sports betting bill from making any progress. This year will tell the tale.
In-depth analysis of California’s #SportsBetting dynamics:
“Finally, and most importantly in my view, unlike the struggle to get online #poker legalized, there’s more than enough money to go around … roughly 40 times what online poker was estimated to bring in.” https://t.co/KNWmpcl32H
— Chris Stearns (@stearnsseattle) December 30, 2018
On this issue, the reverse could happen, with card rooms opposing legislation and tribal casino operators pushing in support of it. Card rooms may want to lash out in response to the lawsuit mentioned above or in response to the failed negotiations during years of online poker talks. Tribes have their concerns as well, though, with regard to their state compacts and what exactly is allowed.
Assemblyman Adam Gray, a longtime online poker supporter and now-advocate for sports betting, proposed measure ACA-18 in August 2017, and that bill sat dormant throughout 2018.
At this point, there are efforts to revive that measure in order to put in on the ballot for voters in the November 2020 election, but the results remain to be seen.