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Card Clubs, Tribal Casinos Pushing to Legalize Internet Poker

8/12/09 - Sacramento Bee - View Source

By Peter Hecht

California card clubs and tribal casinos, long bitter political rivals, are working together in a concerted, behind-the-scenes drive to legalize Internet poker in the Golden State.

The effort to create an online California "Internet poker consortium" is being led by a wealthy Riverside County tribe, the Morongo Band of Mission Indians, and by card clubs including the Commerce Casino in Los Angeles County.

They are dispatching lobbyists to the capital and privately courting other tribes and poker rooms to build political momentum for a gambling enterprise run by a consortium of tribes and card rooms. The state's 60 card clubs and more than 100 federally recognized Indian tribes would be eligible to participate.

Though it still lacks an author to carry the bill, the Morongo tribe is pitching a plan to get an Internet poker bill passed after lawmakers return from their summer recess next Monday. Representatives from dozens of tribal groups are invited to hear the proposal Thursday at a closed-door meeting at the Hyatt Regency Sacramento.

Morongo is billing its effort as a means to generate new tax revenue for California and allow tribes and card clubs to tap into a vast offshore Internet poker industry that draws an estimated $4 billion in what are now illegal bets from U.S. residents.

In 2006, Congress passed the Unlawful Internet Gambling Enforcement Act. It sought to stem the reach of overseas gambling sites by blocking U.S. bank and credit card payments for Internet betting. Some legal scholars say the federal law has loopholes that could allow states to permit Internet gambling.

The California effort may get a boost – and legal clarification – from federal legislation introduced Aug. 6 by Sen. Robert Menendez. The New Jersey Democrat's bill would legalize online poker and "games of skill."

The bill, following similar legislation by Rep. Barney Frank, D-Mass., would give states and Indian tribes the authority to permit – or disallow – Internet poker for their residents.

"You've got a huge amount of gambling going on on the Internet right now that is a large measure unregulated," George Forman, an attorney for the Morongo tribe, said in an interview. "Huge amounts of money are being wagered. The state is not getting any of that. Money is going offshore.

"I think it is fair to say there is an interest on some people's part that this activity can and should be regulated to protect consumers and produce a revenue source for the states," Forman added.

The online poker push is stirring friction with some other California tribal groups, which claim a poker cooperative with card clubs could upset California tribes' exclusive rights to casino gambling and violate federal standards against off-reservation gambling.

"They're trying to convince people that this is a good idea and we should move forward when the Legislature comes back," said Alison Harvey, executive director of the California Tribal Business Alliance, which recently heard the pitch from Morongo tribal representatives. "I just think there's serious potential consequences of this that haven't been thought through."

In 2008, then-Assemblyman Lloyd Levine, D-Van Nuys, introduced legislation asking the California Gambling Control Commission to study Internet gambling and how to regulate it if it became legal. The bill died.

But I. Nelson Rose, a professor at Whittier Law School and a consultant on gambling issues, said an economic downturn that has cut into tribal casino earnings and state fiscal coffers could soften the political resistance.

"Any time Internet gambling would get through the Legislature is right now because the state is desperate for money," Rose said.

Morongo officials declined to discuss specifics of their plan publicly. But in private talks with other gambling interests, they have said a California poker consortium could net $450 million a year.

Harvey of the Tribal Business Alliance said Morongo is suggesting a 10 percent licensing fee to be paid to the state. Proposed bill language being circulated leaves the state's share blank.

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