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California’s online poker bills are dead until 2012

By Josh Richman
Monday, August 22nd, 2011 at 3:31 pm in California State Senate, Darrell Steinberg, Indian gaming.

A contentious effort to legalize and regulate online poker in California was pronounced dead for this year by state Senate President Pro Tem Darrell Steinberg today.

Steinberg, D-Sacramento, wrote a letter to stakeholders saying that although the Legislature has held several hearings with hours of testimony, “significant, unresolved issues remain, including tribal exclusivity and waiver of sovereign immunity, the types of games that would be authorized, who would be eligible to apply for gaming site licenses and potential federal constitutional questions.”

The problems aren’t insurmountable, he wrote, “but not before the end of this legislative year on September 9th, when Interim Study Recess is scheduled to begin. Rushing to meet a legislative deadline on an issue of such significance for our state and our people would be unwise.”

Steinberg said he expects a better proposal will be developed during the recess for consideration when the Legislature reconvenes in 2012, and the state Senate Governmental Organization Committee will hold a hearing in January to move that bill along. “There is time to get this right, and it is imperative that we do so.”

A million Californians per week already play online poker on sites that are operated overseas or may be run illegally, says state Sen. Lou Correa, D-Santa Ana. The sites operate despite a 2006 federal law that bars gambling businesses from taking and paying out money online, unless the bets are made and paid within a state that has laws regulating it. No state currently does.

A pending, bipartisan House bill would end that federal ban and set up an interstate licensing program giving states authority to run online sites; U.S. Senate Majority Leader Harry Reid has pledged cooperation.

And Reid’s home state of Nevada, where gaming is king, is straining at the bit to see the ban overturned: Gov. Brian Sandoval signed a law in June requiring his state to adopt its own online poker regulations by January.

California could be left behind if it doesn’t do the same, Correa has said, as Nevada and other states stand to cut into approximately $7.5 billion in annual revenues now earned by California’s brick-and-mortar card rooms and tribal casinos. He said his SB 40 instead would bring California 1,300 new jobs and — with a 10 percent take from all online poker fees — $1.4 billion in revenue for state coffers in the next decade.

But while a coalition of card rooms and Indian tribes backed Correa’s bill, some gaming tribes opposed it, claiming a $50 million “buy-in” for online poker licenses would create an unfair advantage for certain gaming interests.

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