Proposed Online Poker Legislation in California Threatens US Market Viability
California is once again trying to figure out the magic recipe to regulate online poker within the state; however, special interest groups continue to erect roadblock after roadblock that tie the hands of legislators. Ironically, the greed and cronyism that plagues the hopes of online poker players in California maybe the very thing that saves us all.
The main issue that has prevented the passage of online poker legislation in California is who gets the money. It is that simple. With existing brick-and-mortar (B&M) card rooms, tribal interests and the horse racing industry trying their best to have lawmakers craft legislation in their favor, these groups have stalled all progress at a time when public perception has never been more open to the prospect of regulating online poker.
Earlier this month proposed legislation to regulate online gambling in California was tweaked yet again in an attempt to appease special interest groups that oppose the details of the bill but would approve of the bill if those details were more favorable. However, those changes were not enough to garner the support needed for The Internet Gambling Consumer Protection and Public-Private Partnership Act of 2012—commonly referred to as SB 1463. As a result the bill was dropped from the agenda of a California Senate committee hearing at the last minute.
The silver lining in an otherwise dark cloud is that if passed, the bill would have a tremendous negative impact on the online poker landscape for the rest of the country.
According to a recent study of online poker, California is the most populated state in the US and also boasts the most poker players of any state in the union. The problem with the proposed legislation in California is that it would ring-fence those players keeping them from participating in an interstate compact that would provide the liquidity necessary for the US to have a thriving online poker industry.
Sure SB 1463 contains a provision that would allow state legislators to opt in to a federal system or enter into multi-state compacts. But, think about it. These special interest groups have so much power within the state that state lawmakers cannot even get the bill passed. Now imagine how hard it would be for them to change it after the law was in place.
The powers that be know they control the largest player pool in the US and because the pool is large enough to sustain itself without the cooperation of other states, they view the prospect of interstate compacts as being something that would benefit other states much more than it would benefit them.
So while it is possible that states such as Nevada, New Jersey and Illinois could band together in hopes of getting the online poker ball rolling in the US, the fact is that the number of players in those three states combined makes up less that 75% of those in California alone. And the prospects of other states that would make a significant impact on the size of the player pool joining the party anytime soon is not exactly bright.
The bottom line is that barring any federal movement, the US online poker industry needs California. Without it the industry will likely struggle to achieve the amount of players needed to thrive and the economies of scale required to make the games beatable.
It used to be that those that stood in the way of online poker were groups that opposed it on moral grounds and those businesses that saw online poker as a threat to their profitability. Now it seems the biggest obstacle to overcome is the line of special interest groups with their hands out in hopes of cashing in on something they can no longer oppress. So instead of excluding an industry that poses a threat to their profitability, they are now trying to exclude the competition.