Internet gambling “is a greater threat than an opportunity” for American Indians, Mark Macarro, chairman of the Pechanga Band of Luiseño Indians, told a legislative symposium on online poker last February in Sacramento, California.
“We are talking about possibly destabilizing the one and only thing that’s ever really worked for tribal governments,” Macarro said of a $7 billion casino industry that has generated economic and social progress for the state’s 110 indigenous communities.
But tribes need to be prepared for the rapidly advancing technology and the political impact it may have on tribal casino exclusivity in the nation’s largest gambling state, Macarro said.
“We can’t afford not to be ready,” Macarro told the first annual iGaming Legislative Symposium, sponsored by Pechanga.net and Spectrum Gaming.
California, with 38 million people, is expected to be the nation’s most lucrative online poker market, generating some $400 million in annual revenue.
Two tribal coalitions—one led by Pechanga and another by the San Manuel Band of Serrano Mission Indians—are expected to reach agreement on bill language that political insiders believe will soon make it out of the state legislature, either this year or in 2015.
Those efforts may be complicated by a coalition of Morongo Band of Mission Indians, the Commerce Club and Hawaiian Gardens card rooms and PokerStars seeking entry into the market.
The group is hoping to rid pending legislation of “bad actor” provisions that threaten to thwart efforts by the Isle of Man online giant to achieve suitability for licensing.
The Isle of Man company withdrew from the U.S. online market in April 2011 when the U.S. Justice Department indicted founder Isai Scheinberg on fraud and money laundering charges as part of a high-profile crackdown on leading poker websites.
PokerStars in 2012 settled a federal money laundering civil case by paying $731 million to rescue rival Full Tilt Poker and pay back gamblers. The agreement required fugitive Scheinberg to leave PokerStars, but the company admitted no wrongdoing.
The company has since been trying without much success to get back into the U.S. market.
Tribal lobbyists do not believe the coalition has enough political clout to get PokerStars licensed in California.
Assemblyman Isadore Hall, chairman of the Assembly Government Organization Committee, is optimistic a bill will make it to the governor’s desk before the legislature is gaveled to a close August 31.
“I believe it’s possible in 2014,” Hall says.
“Internet poker will provide the California gaming industry with an innovative option to complement their existing business model.”
Bo Mazzetti, chairman of the Rincon Band of Luiseño Indians, said the two tribal coalitions are “99 percent there” in reaching consensus on bill language.
While the legislation will be respective of tribes as governments, the online industry will be a commercial operation outside of the Indian Gaming Regulatory Act, regulated and taxed by the state of California.
“This is not Indian gaming under IGRA. It’s not Indian gaming under federal law,” Mazzetti says, but an industry comprised of both tribes and licensed card rooms.
“We’re all in the same industry,” Mazzetti says. “We need to be driving one car, going down the same road.”
Just how large that industry grows is subject to debate. Some of the more optimistic predictions have since been tempered by discouraging results in Nevada and New Jersey.
“The number thrown out there is that 750,000 to 1 million people in California play online poker every day. That’s probably accurate,” says Arthur Terzakis, director of the Senate GO committee.
“The question, is how much of those people can you capture? How many of them want to play on a regulated site?”
Ehren Richardson, an internet gaming consultant, says once California launches online poker, other states will follow.
“If California goes—this year or next year—it won’t be long before other states start ramping up,” he says.
State legislation would likely pressure tribes to take the plunge into cyberspace.
Macarro’s recommendation is that indigenous communities that rely heavily on land-based casino revenue for their government services weigh the risks of getting into iGaming.
“With card clubs, it’s about profits. It’s about business,” Macarro says.
“For tribal governments it’s about preserving our unique indigenous identity.”
