More Obstacles Manifest in California i-Poker Hearing

Posted on by Tim Hernandez

CaliforniaYesterday´s joint “informational” hearing of California´s GO Committees only served to add further obstacles to the regulation of online poker in California.

The hearing was one of two scheduled to pad out the content of Adam Gray´s AB 431 – a “shell bill” which passed through the Assembly Governmental Organization (“GO”) Committee last month despite consisting of just two pages “intending” to authorize online poker in California.

The “Overview of Gambling in California – Legality, Authorization and Regulation” hearing was supposed to be a step forward on the path towards the regulation of online poker in California, but instead all that resulted was the emergence of more obstacles and greater divides.

The key takeaways from the hearing were that the Department of Justice and California Gambling Control Commission were pretty unhappy about being dropped in name during the massive climb down made by Gray to get his bill through the committee stage, and that the two regulatory bodies have themselves become self-interested parties – along with the tribes, the racetracks, the card clubs and PokerStars.

DoJ and CGCC Want a Slice of the Action

The tone for the hearing was set by Anita Lee – the Senior Fiscal and Policy Analyst at the Legislative Analyst´s Office. Lee told the committee that different agencies are responsible for different forms of legal gambling in California. As well as the Department of Justice´s Bureau of Gambling Control and the California Gambling Control Commission, there also exists separate regulatory bodies for tribal gaming, the State lottery and horse racing in California.

The next four witnesses were all representatives from the Department of Justice and each had a similar story to tell – that the Bureau of Gambling Control was under-funded, under-resourced and under-staffed. Committee members were told that there is already a backlog of applications for gambling licenses that the Department cannot deal with under its current funding. Stacy Luna-Baxter – the Assistant Bureau Chief – said If something such as Internet poker is approved, we will definitely need additional positions.

Next in line to ask for a share of the revenues that online poker in California would generate was Tiffany Conklin from the California Gambling Control Commission. Conklin echoed the calls from the Department of Justice for more resources and said that without them the introduction of online poker in California would likely be delayed should legislation had been passed to regulate it.

Responding to a question from Reggie Jones-Sawyer (who earlier this year introduced his own online poker Bill), Conklin sees the Commission working hand-in-hand with the Department of Justice to determine the suitability of potential stakeholders – implying that she supports the Department of Justice´s request for more funds. No doubt Ms Conklin will be top of the invite list for the Bureau of Gambling Control´s Christmas party.

Race Tracks Stick Their Oar In

Rick Baedeker – the Executive Director of the California Horse Racing Board – used the hearing as an opportunity to pitch his industry´s case for inclusion in any online poker legislation. Baedeker told the committee that horse racing was the primary form of gambling in California for forty years but, that since other forms of gambling had been allowed in California (the lottery in 1984 and tribal gaming in 2000), revenues had declined by 45% in real terms.

He went on to say that, unlike in other centers of horse racing in the United States, the Californian horse racing industry receives no subsidies from the state despite contributing $2.5 billion to the state´s economy each year and providing 50,000 jobs. He added that 26.6% of horse racing revenues come from the Internet and that the horse racing industry was the only legal gambling entity currently allowed to accept advanced deposit wagering.

Given its long history in the state, deep routes in the California greenbelt and 13 years of legal online wagering, racing should receive every consideration to participate in Internet poker if it becomes a reality here in California, he said – commenting that the industry does not want subsidies funded by online poker legislation, but wants to be part of the action.

California´s Next i-Poker Hearing should be Equally Provocative

The committee meeting wrapped up quietly following Baedeker´s performance and plans to reconvene on Wednesday 24th June to discuss “The Legality of Internet Poker – How Prepared is California to Regulate It? No doubt the hearing will provide a further opportunity for the Department of Justice and California Gambling Control Commission to put their hands out for more money but, before they get it, they may have to answer some awkward questions about their preparedness.

Just last week the Executive Director of the California Gambling Control Commission – Tina Littleton – was forced to step down from her position after being implicated in a conflict of interest allegation. Her role as top commissioner was allegedly compromised in a leak of confidential information by her live-in companion – DoJ special agent James Parker – to the Bureau of Gambling Control´s former chief – Robert Lytle – who became a consultant to a series of card rooms after his retirement.

The unusual volume of communications between the parties (the FBI has details of 180 telephone calls, text messages and emails) after his retirement led the Attorney General to accuse Lytle of obstructing an investigation into the M8trix card room in San Jose, whose owner is accused of hiding $millions in shell corporations situated in Nevada. Also since his retirement, Lytle has also purchased an ownership interest in two Sacramento area card rooms.

Would you put the future of online poker in California in these guys´ hands? wishes to acknowledge that the compilation of this article was assisted by Tweets from Chris Grove at OPReport.

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