California’s economic woes are undisputed. But dire fiscal times do not justify dishonorable deeds and the breaking of commitments.
This state, its governor and this Legislature have entered into tribal-state gaming compacts with 66 California tribal governments. Each compact includes a provision clearly specifying that only federally recognized Indian tribes can offer “gaming devices” to the public.
This provision is consistent with the direction given in an overwhelming vote by Californians in 2000.
Now, however, lawmakers are talking about authorizing poker playing on Internet-connected devices in direct violation of those agreements with tribes. Their apparent rationale? A $20 billion state budget deficit and the chance to turn back the red tide with an Internet poker tax.
Lawmakers could lose far more than they gain for California by making such a move. Since 2004, tribal gaming compacts have required tribes to make hefty payments to the state general fund. Even in a down economy, tribes are pumping hundreds of millions of dollars a year into the state, and that sum is only expected to increase as the economy recovers.
All told, it means billions of dollars between now and when the compacts expire in 2030.
If the state allows a non- Indian business to offer gaming devices, the compacts spell out a clear result: The tribes will stop making those payments to the general fund. In addition, much of the money distributed through revenue-sharing payments to tribes that don’t have casinos would also be withdrawn.
Internet poker can be played by one person at home. Or it can be played on banks of Web-connected devices lined up at a downtown card club. Proponents of Internet poker may argue that these devices aren’t illegal slot machines under the Penal Code. Or they may seek a Penal Code exemption for the devices, just to make sure. They might also argue that such an operation wouldn’t violate the California Constitution.
But one thing they can’t do is alter the terms of the compacts. Those compacts very clearly define a “gaming device,” and that definition very clearly includes the play of poker on an Internet-connected electronic machine.
Let’s look more closely at that definition: A “gaming device” includes any electronic device that allows an individual to place a bet, play a game of chance or skill, and view notification of any winnings. It doesn’t matter if the game is “house banked” or whether the winnings come from the bets made by the players, as is the case with poker.
What matters when we talk about breaching the tribes’ exclusive right to offer “gaming devices” is that the electronic device permits a player to connect to a system, make a bet, play the game, and view his entitlement to any winnings.
That includes a personal computer in a private home. And it includes a bank of Internet-connected computers in a card club, which is exactly why four such clubs are behind legislation that was proposed last summer and appears to be resurfacing now.
Card clubs have been down this road before. In 2004, they asked voters to authorize 30,000 slot machines in their urban casinos. The four clubs behind last summer’s Internet poker bill spent $12 million on the 2004 initiative, but it failed when nearly 84 percent of the voters rejected the idea.
Now the card clubs are trying to use the back door to get the same slot machine deal they couldn’t get through the front door six years ago.
One California tribe, the Morongo Band of Mission Indians, has cut a deal with these card clubs, giving the tribe the sole right to operate an Internet poker site. Card clubs must be heartened by the testimony of Morongo’s tribal attorneys minimizing the extent of tribal exclusivity in the operation of gaming devices.
Card clubs, it should be noted, do not contribute anything to California’s general fund. Their payments to the state cover only the cost of regulation. Some operators are tempting lawmakers with offers of a 10 percent tax on future Internet poker winnings. Sounds nice, but why not apply that same tax to their current earnings? They grossed $889 million in 2008, a sum that would yield some handsome tax revenue for the state.
Proponents of Internet poker have made some big promises about what kind of cash such operations would cough up for our cash-hungry state. Such predictions are just that – predictions. What’s certain if the state breaks the compacts and authorizes Internet poker is the loss of hundreds of millions of dollars in annual payments from tribes.
In December and January, two more compacts were inked. Both of those compacts have exclusivity clauses. Also recently, the 9th Circuit Court of Appeal upheld the tribal exclusivity provision and dismissed a lawsuit brought by a card club challenging the 2004 tribal compacts.
Do the honorable thing, California. Don’t break your commitment with tribes that negotiated with you in good faith. Find another answer to the state’s budget dilemma. Keep your word.