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February 26, 2014
Editorial: How much money the state might get by legalizing Internet poker remains elusive

internet_poker.JPG(Feb. 26 - By the Editorial Board)

California's multibillion-dollar gambling industry could grow significantly if bills introduced last week to legalize Internet poker become law.

Neither would be an advance.

Indian tribes that own major casinos and are major forces in the Capitol are seeking to form consensus among themselves on legislation to legalize Internet poker. Some lawmakers seem willing to serve as their vessels.

Internet poker promoters point out that the industry already exists in offshore sites. The state should regulate and tax it, or so the argument goes. Adding to their contention that Internet poker is inevitable, proponents cite New Jersey, Nevada and Delaware, which have approved intrastate Internet poker.

But just as California should learn from Colorado and Washington's experiences with legalized marijuana, lawmakers would be wise to watch the impact of Internet poker in these other states.

Sen. Roderick Wright had been the most knowledgeable legislator on the issue. But Wright has taken a leave of absence to fight his conviction on perjury and voting fraud charges.

Assemblyman Reggie Jones-Sawyer, a Los Angeles-area Democrat, and Sen. Lou Correa, D-Santa Ana, have stepped into the vacuum. While Correa has carried gambling bills in the past, generally on behalf of certain tribes, Jones-Sawyer is new to the action. He has much to learn.

His bill, AB 2291, specifically calls on the state to adopt regulations in consultation with federally recognized California Indian tribes.

Several major casino owners from Southern California and Northern California last week wrote a letter citing Jones-Sawyer's bill, and saying they "are committed to moving forward with a bill that protects tribal rights and honors the commitments we have made to the people of California."

Internet poker operators no doubt see the potential to rake in large sums of money. But exactly how much money the state might get in exchange remains elusive.

Jones-Sawyer's bill sets a low bar. Internet poker sites would pay the state 5 percent of their revenue. Correa sets the state's take at 10 percent. Both percentages seem low. If the California market is $1 billion, 5 percent to 10 percent would generate $50 million to $100 million, dust in a budget in excess of $140 billion.

As New Jersey is finding, Internet poker is hardly a jackpot.

Gov. Chris Christie estimated the state would receive $200 million this year. New Jersey officials have lowered the expected revenue to $34 million.

Powerful forces oppose Internet casinos, including billionaire Sheldon Adelson, who made his fortune owning casinos in Nevada and Macao. Adelson clearly doesn't have clean hands. But he makes a point worth considering.

The Internet will make gambling ever more accessible. People could play anywhere there is an Internet connection. Most gamblers lose money. In time, gambling addicts would lose their homes.

Legalized online poker would add to problem gambling, while draining money from other segments of society. That hardly would be a boon to California's economy, its culture or its budget.