Without Consensus or Compromise, there will be No Online Poker in California

The feeble threads of hope that once tied California to an imaginable future where regulated and licensed online poker sites exist has been despairingly severed. The need for compromise between tribes, card rooms and the state’s racing industry is blatant, but that need has been the only thing stakeholders could agree on. And with no consensus, regulation of online poker in California is simply not going to happen.

A long awaited California Assembly Government Organizations (GO) Committee hearing took place yesterday morning. On the original docket was the discussion of two internet poker bills, Assemblyman Mike Gatto’s AB 9 and Assemblyman Reggie Jones-Sawyer’s AB 167. However, with tribes, card rooms and the racing industry failing to settle their differences, both California legislators pulled their online poker bills from the table before the meeting took place.

The last shred of hope for reaching a unified front was stripped away at the last GO Committee hearing by a statement from the Pechanga Tribe, and the resulting response from the state’s horse racing industry.

Pechanga Coalition vs Horse Racing Industry

Stakeholders argue over Online Poker LegislationThe 7-tribe strong Pechanga Coalition is adamant that tracks be prohibited from participating in a regulated online poker market. On the opposing end, race tracks are unyielding in their position that they have every legal right to obtain a license and partake in the market.

At the last hearing, Mark Macarro, Chairman of the Pechanga Tribe, said that if the horse racing industry was not satisfied with accepting a shared revenue deal (i.e. accept a small portion of the profits from entitles who can participate in online poker), perhaps they would be interested in entering the affiliate business (i.e. promote and drive traffic to licensed poker sites for a profit).

The horse racing industry was not appeased or amused by the suggestion, finding Macarro’s form of ‘compromise’ to be derisive and condescending.

Robyn Black of Platinum Advisors is a lobbyist for the California horse racing industry, and her scathing response to the proposal pretty much said it all.

“Why should we have to compromise when we have a legal opinion that we’re legally entitled to participate as a licensee?” questioned Ms. Black. “If we had no right to this new form of gaming in Internet poker, do you think five tribes would be OK with our participation?”

Ms. Black’s continued tenaciously, “You can’t keep horse racing out. You can’t make us compromise on something for which we shouldn’t have to compromise. The only reason they are trying to offer a compromise in our opinion is that they know we are legally entitled.”

Shred of Hope for Online Poker After all?

Despite the racing industry’s seemingly unwavering position, a scrap of wiggle room became palpable when Ms. Black explained that tracks are not willing to give up their right to participate, partly because there is no guarantee that tribes would be willing to enter affiliate contracts with them.

It should be noted that, although Ms. Black never breached the subject, there is an unspoken question as to whether the horse racing industry could afford the exorbitant start-up costs of operating a licensed online poker network in California. While card rooms and tribes have been scurrying about, partnering with software providers and preparing to launch internet poker sites, horse tracks have made no such moves.

Perhaps there is a slim margin of room for compromise after all? Maybe if the tribes who so strongly oppose horse tracks were to offer them guaranteed affiliate contracts, some form of consensus could be reached? It’s a long shot, yes, but isn’t that what drives the horse racing industry in the first place?

Mike Gatto’s online poker bill, AB 9, has an urgency clause that would allow him to return it to the legislative table in the current session, but he won’t even consider it without positive provocation from stakeholders.

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