Progress in getting online poker in California

Posted at 4:53 PM, Mar 09, 2016
and last updated 2016-03-09 19:55:02-05 sources confirm that a series of recent events have led to big steps forward in the effort to legalize online poker in California.

While significant hurdles remain, it appears the odds of success have increased from almost zero at the beginning of 2016 to possible by the end of the year. The sources indicate that for perhaps the first time in the decade-long battle to bring the popular pastime back to California, there is a potential path forward to create an industry that analysis reveals could be worth hundreds of millions of dollars to the state.

Check or Bet: The Battle to Legalize Online Poker in California

The key element seems to be an effort to tie the fate of internet poker to regulation allowing Daily Fantasy Sports (DFS). As the scandal over inside information and whether DFS should be considered illegal gambling grew in late 2015, it appeared the issue would overshadow poker and push it to the back burner.

Now the two games may be linked in order to negotiate a deal with the coalition of tribes that have resisted efforts to pass poker legislation. Often referred to as the “Pechanga Coalition,” after the successful Temecula tribal casino, the coalition also reportedly includes San Diego-area tribes such as Viejas and Barona.

Before DFS, those tribes had little incentive to reach a compromise with competitors who were interested in adding online poker to their business, including local tribes like Rincon and Pala, as well as Del Mar Race Track. But sources tell some tribes that have resisted a poker deal in the past now have interest in the DFS business. Two tribes that are considered pro-poker recently wrote a letter to State Assemblyman Adam Gray, the lawmaker spearheading both internet poker and DFS legislation, to express their concern that Daily Fantasy is illegal in California.

Several poker insiders have suggested that the letter is a public indication that those tribes intend to use DFS as leverage, hoping that by passing both poker and DFS legislation, each party will finally feel they’re getting something out of a deal.

Potentially, the biggest hurdle remains the role of California’s horse racing industry. A new law introduced by Assemblyman Gray is much more detailed than the legislation he attempted to pass in 2014 and 2015. The bill suggests that the compromise will be that instead of allowing tracks like Del Mar to launch their own poker website, the tribes will give the tracks an annual payment from poker revenues. While this has previously been a non-starter for the horse racing industry, some sources have expressed optimism that both sides might be willing to make some concessions.

Another sticking point was reiterated in recent weeks by Pechanga, which is concerned about the role of Pokerstars, the biggest internet poker company in the world. In our Special series “Check or Bet,” we revealed that Pokerstars controls about 75 percent of the world market for online poker. Pokerstars has formed a partnership with several tribes and cardrooms based in the Los Angeles area to push for legalization in California. Tribes resistant to poker have said Pokerstars should be excluded from doing business in this state because of its role in the poker world before the federal government cracked down in 2011 (it has been frequently alleged that Pokerstars continued to accept bets from American players, even after such activity was declared illegal).

However, that issue may soon become moot. Pokerstars has revealed that it is about to reenter the United States poker market by launching a site in New Jersey March 21 (New Jersey, Nevada and Delaware are the only states in which online poker is currently legal). Poker proponents argue that it will be harder for opponents to suggest that Pokerstars is a “bad actor” which should be banned from California if the company is accepted as an acceptable business in another state.

While these recent developments offer the first significant hope for poker players in California in quite some time, it remains to be seen whether the competing interests will be able to come together for a compromise any time soon.

Stay tuned to 10News and as we continue to track the latest developments and talk with the key San Diego players battling over this controversial issue.