by Paul ‘Dr. Pauly’ McGuire
California is broke and struggling to pay its bills on time. Many of its politicians would rather “kick the can down the road” than risk losing their foothold on power by introducing unpopular legislation, cutting back services, or raising taxes. But right now, a few politicians are turning to gambling to help solve a colossal $9 billion budget deficit. After all, at the height of the poker boom, it was estimated that more than 2 million California residents played online poker, wagering over $13 billion annually.
In February, California State Senate President, Darrell Steinberg, introduced SB 1463, also known as The Internet Gambling Consumer Protection and Public-Private Partnership Act of 2012. The bill would permit California to issue 10-year licenses to tribal casinos, card rooms, and race tracks for the sole purpose of running an online poker room. The state would get a 10 percent cut from total gross revenue, and players would be responsible for paying taxes on their earnings. After two years, other online games—presumably table games like black jack and roulette—could be introduced.
The California Online Poker Association (COPA) is a coalition comprising 60 card rooms and tribal casinos. They banded together in a unified front to call for the legalization and regulation of online poker. COPA recently created a free online poker site called CalSharks.com.
Even though you can legally place wagers on horse racing via phone or through the internet, the once-powerful industry is struggling to attract new gamblers to their antiquated sport. Horse racing’s future looks grim, as their main audience is slowly dying off. Online poker would make up for the vast decline in horse betting revenue. However, many members of COPA don’t want the horse folks to be eligible for an online poker license. COPA and California’s other major gaming interests are also concerned about the growing power of social media gaming giant, Zynga, and their popular game, Zynga Poker, which has almost 40 million monthly users. Zygna is eying the real money market, and COPA members see them as a significant threat. Unemployment in California is hovering around 12 percent, and that doesn’t include the significant amount of citizens who are under-employed. According to COPA’s estimates, online poker will create approximately 1,300 jobs and generate $1.4 billion in revenue without raising taxes.
In addition to online poker, California is also eying the lucrative sports betting market. Senator Wright introduced SB 1390, which would allow tribal casinos, racetracks, and card rooms to accept sports bets . Sports betting is banned on the federal level under the Professional and Amateur Sports Protection Act of 1992. However, an exception exists for four states: Nevada, Delaware, Montana, and Oregon. Currently, eight other cashstrapped states are fighting the federal ban. Earlier this year, New Jersey’s Governor Chris Christie signed a bill that would allow sports betting at Atlantic City casinos and race tracks However, that is all dependent upon the ban being overturned by the feds.
Proponents of California sports betting are hoping its residents will bet locally instead of driving to Las Vegas or Reno to place wagers on big events like the Super Bowl and March Madness. Legalized sports betting could generate almost $1 billion a year in revenue. The state would finally get a cut of the billions of dollars that flows through illegal bookmaking operations and online sports books located in the Caribbean and Costa Rica.
The future is uncertain, but one thing remains constant: California is in a huge hole and it’s only getting bigger. They need to do something fast. But which short cut will they take? Online poker or sports betting? How about both?
Paul McGuire is the author of “Lost Vegas”, which you can find at www.lostvegasbook.com. You can read his poker blog, Tao of Poker, over at www.taopoker.com.