It's an old line but true: If you sit down to play poker and don't know who the sucker is, it's you.
On Tuesday, lobbyists, consultants and clients filled almost every one of the 182 seats in Room 4203 of the Capitol. It wasn't readily apparent who was getting taken to the cleaners, at least not to me.
The Senate Governmental Organization Committee convened the hearing to bring into the open the high-stakes concept of turning Internet poker, currently illegal under federal law, into a moneymaker for the state of California.
The room oozed with the promise of money. Money for lobbyists.
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Money for consultants. Money for politicians' campaign coffers.
And money for the state, maybe.
With a $20 billion deficit, lawmakers are intrigued by the notion. But if the past is any indicator, the state needs to be careful about playing with people who win bets for a living.
"It's not the wave of the future; it's the wave of the present," Lloyd Levine told me, noting that millions of Americans already wager on illegal Internet poker sites.
Levine carried Internet poker legislation that failed in 2008 when he represented the San Fernando Valley in the Assembly. Now he is a consultant for a company seeking to create Internet poker in California and in other states.
Others in the audience included leaders of major casino Indian tribes, owners of card rooms, horse racing executives and their lawyers, lobbyists and consultants. Many envisioned a whole new branch of legal gambling. Others, including some Indian casino owners, view Internet poker as an assault on their monopoly on casino gambling in California.
Internet poker has been percolating for years. In 2006, Congress made virtual poker illegal. For emphasis, federal authorities arrested executives of online gambling operations, prompting some to steer clear of the United States.
Internet entrepreneur Ruth Parasol grew up in Mill Valley and became a billionaire as co-founder of PartyPoker.com. She apparently has been living in Gibraltar. She and her husband, Russ DeLeon, paid $555,000 to Washington lobby firms to work on Internet gambling issues, presumably so that she could return to the United States, federal reports show. The lobby effort evidently didn't succeed. But the business grows. PartyPoker reported that its revenue jumped 32 percent in 2009.
"Whilst the regulatory picture in some countries remains uncertain, the momentum toward creating commercially viable and regulated markets is strong," the company said in a statement last week.
Rep. Barney Frank, D-Mass., is advocating federal legislation legalizing, regulating and taxing Internet poker. At the same time, companies are pushing legislation in New Jersey and Florida to authorize Internet poker within their state's borders.
The same is happening in California, where the Morongo Band of Mission Indians, which owns of one of the largest Southern California casinos, is urging legislators to legalize Internet poker, in collaboration with card rooms and perhaps other tribes.
There's no bill in print. But Morongo Chairman Robert Martin envisions an intrastate site where Californians would place bets against other Californians.
Morongo's involvement is significant. The tribe has spent $81 million on California campaigns since 2000, and more on lobbying than any other gambling interest in the state, $4.3 million.
No other tribe has joined Morongo. Some tribes, including some in the Sacramento area, are opposing the idea. But Richard Milanovich, chairman of another large Southern California casino tribe, Agua Caliente Band of Cahuilla Indians, submitted a letter Tuesday saying he is neutral but "intrigued with the notion of intrastate Internet poker." Martin said tribes and card rooms would establish a company that would operate Internet poker and pay tribute to the state in the form of a fee or tax. The state's take is to be determined. Experts estimate a million Californians gamble on illegal Internet sites now, and wager hundreds of millions of dollars yearly.
Whatever the state's estimated take might be, odds are it will be overstated, at least based on recent history.
Gov. Schwarzenegger took office in part by criticizing Gov. Davis' handling of Indian gambling. Once he got into office, Schwarzenegger sat across the table with the tribes and demanded that they pay more to the state.
He struck several deals including four in 2007 that authorized major expansions at Southern California tribe- owned casinos. Voters ratified those deals two years ago. Schwarzenegger was their biggest booster.
"At a time when California faces a budget crisis, these agreements will provide hundreds of millions of dollars in new revenues each year — billions in the years ahead to help pay for public safety, education and other services," the governor proclaimed in the 2008 voter pamphlet.
The recession hurt casino expansion plans. The governor got some more money from tribes, but not as much as he envisioned and certainly not enough to significantly alleviate the budget crisis.
When Schwarzenegger sat at the bargaining table, did he know who the sucker was? And will the next governor?
Contact Morain at firstname.lastname@example.org.
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