Casino

Online Poker Futility Serves as a Lesson to California

Failure to legalize online poker in CA is a lesson for tribes challenged by the internet and new technology
BY: DAVE PALERMO | ONLINE POKER REPORT

Online poker stall epitomizes larger threat

“The nine-year experience of trying to get internet poker legalized in California is a sad indicator of the complexity of the learning curve and competition we face in protecting and expanding our gaming status,” Steve Stallings, chairman of the California Nations Indian Gaming Association (CNIGA), told attendees of the group’s annual meeting in Banning.

“It’s also a commentary on the need to settle our differences and compromise in private, among ourselves, and unite on policies and issues,” Stallings said in reference to the failure of tribes to agree on bill language to legalize online poker in the nation’s largest gambling market.

Sacramento insiders claim consensus among about 16 of California’s politically powerful casino tribes is crucial in enacting an online poker bill requiring two-thirds vote of the state Legislature.

There are 63 casino tribes in California generating some $8 billion a year in gross revenues.

The most recent bill draft stalled in last year’s legislative session over tribal disagreement on “bad actor” provisions involving international online giant Amaya/PokerStars, which has been plagued by regulatory issues in the US and allegations of insider trading.

Little optimism for online poker, but bill could still emerge in 2017

Tribal leaders and gambling industry executives are pessimistic of success in getting online poker enacted in the two-year legislative cycle that began in January, largely because of lingering differences over the licensing suitability of PokerStars.

“There is no evidence that the tribes have reconciled that or even demonstrated a willingness to do so,” said Jim Ryan, CEO of Pala Interactive, an enterprise of the Pala Band of Mission Indians.

“Everything I’m being told is that the legislators in Sacramento have been exhausted by the issue. So in the absence of a material catalyst I think iPoker is certainly going nowhere fast.”

Chairman Robert Martin of the Morongo Band of Mission Indians, business partners with PokerStars, three card clubs and at least one other Indian band, said he plans to again press for online poker legislation in the 2017 session.

“They are evaluating,” Morongo lobbyist Scott Govenar said Friday in reference to the coalition members. “There’s plenty of time left.”

Tribes need to embrace technologies

Stallings said it is short-sighted for tribes to blame PokerStars for the failure to get online poker legislation approved in California.

“Having had the experience we had with internet poker, we have to back up and look at what happened and ask ourselves, ‘Why did we fail?’” Stalling said in an interview following his speech.

“You can blame it on PokerStars, but I think it’s bigger than that. It’s the fact tribal leaders don’t grasp the importance of technology to our business. It doesn’t necessarily mean pushing internet poker, though that was the first thing out of the gate.”

Unlike commercial casino companies and slot manufacturers, tribes have been slow in embracing new technology and emerging internet trends such as social gaming, daily fantasy sports, and esports, while keeping abreast of efforts to legalize traditional sports wagering.

Much of the slow pace can be blamed on the fact tribes as governments must navigate a complex political and regulatory landscape.

Tribes operate under the Indian Gaming Regulatory Act (IGRA), which was drafted to apply to casinos on tribal trust lands, and tribal-state regulatory agreements, or compacts, which limit the scope of Indian gambling.

For casinos, competitive parity requires embracing change

It is crucial, Stallings said, for tribes to embrace technological advancements and new forms of wagering to remain competitive with commercial casinos, lotteries, pari-mutuel racing, card rooms and other segments of the legal gambling industry.

“Commercial gaming is doing it and doing it faster,” Stallings said. “If we don’t come to this realization we’re going to be left behind.

“Sport betting is something we may want to embrace. So how do we in California position ourselves, collectively, as tribes – CNIGA members and non-members – to make sure that’s an opportunity for our industry?

“Or maybe it’s a strategy where we say we don’t want that to happen. If the tribes reach that decision, how do we collectively fight or delay implementation of sports betting until we’re ready?” Stallings said.

“It’s the same analogy for internet poker. We probably weren’t ready.”

Pala and the Mohegan Tribe of Connecticut operate websites offering real-money gambling and social gaming, where players pay for credits to play casino games that do not produce jackpots.

“In the past 3½ years many tribes have provided social gaming offerings over the internet,” Ryan said, including several California Indian bands.

Economists believe the annual North American social gambling market is approaching $4 billion in annual revenue.

In addition, social gaming, when incorporated into a casino’s player database, has proven to be a more effective tool in driving customers to the casino than mailed and emailed discounts.

Tribal unity could “turn risks into opportunity”

CNIGA, which consists of 31 tribes, including several non-casino bands and those with casinos equipped with 350 machines or less, believe the state’s gambling tribes should unite in developing strategies to help the industry “turn risks into opportunity,” Stallings said.

Many of the nation’s 243 federally recognized tribes with casinos lack the financial resources and online infrastructure to meet the technological demands of a changing gambling industry.

“The tribes have to look at where the industry is going, long-term, and how do we all get there together,” Stallings said. “I don’t mean just CNIGA, but all tribes.

“We are a trade association first. Yes, there’s a political strategy. But tribal gaming is an economic force and we need to think about it that way.”

The need to adapt becomes more urgent with the greater use of mobile devices, and millennials less interested in banks of slot machines and more inclined to seek out skilled and interactive games along with increasing entertainment offerings.

“The casino floor is going to change. The games are going to change. The people inside the casino are going to change,” Stalling says.

“Even if you don’t get into internet poker, you need to be thinking about technology and how it is going to affect your business.”


 

Click here to view the original article at Online Poker Report.