Card Rooms And Indian Casinos Prep For The Advent Of Online Poker
For years, California’s card rooms have battled it out with Indian casinos for a share of the state’s lucrative gambling business. Card rooms resented the fact that tribal casinos offer games like slot machines and roulette, moneymakers that commercial casinos can’t have because of state regulations.
But now, some fear that if they don’t make nice, the advent of online gaming could take them both out of the picture. A bill that would legalize online poker could work its way through the state legislature next session.
Of the 54 tribes that run casinos in California, more than half have formed an unlikely alliance with non-tribal, commercial card rooms in a coalition called the California Online Poker Association.
In early October, the 29 tribes and 30 card rooms launched a website called CalShark.com where visitors can register and play poker for free—no money changing hands. The idea is that if online poker were to be legalized, players would already have accounts and be familiar with playing online. All they’d have to do is switch from imaginary chips to actual bets.
Gambling online is not a new concept. The Poker Players Alliance says as many as 15 million Americans play poker online every year, and according to a 2011 Standard & Poor’s report by gaming analyst Esther Kwon, illegal online gambling revenues in the U.S. are estimated to be between $4 billon and $7 billion annually.
But the concept of tribal casinos and state-regulated card rooms banding together is indeed something novel. With online poker, old enemies are holding hands, embarking into the unknown together. Although were legalization to move forward, there could still be issues of tribal sovereignty to be worked out.
Pierre Wuu, the director of the California Online Poker Association, thinks the future of gaming operations in California depends on looking forward, even if that means acknowledging a shared fear with a former foe.
“What’s the past is the past,” Wuu said. “The tribes and card rooms in the California Online Poker Association are all on the same page. And we’re not looking back.”
But not all of California’s tribes are ready to form partnerships with their non-tribal competitors. David Quintana, political director for the California Tribal Business Alliance, points out that if online poker were legalized, the first casinos to offer affiliated gambling websites have the most to gain.
“The tribes in the California Online Poker Association are hoping to form a monopoly on online poker, so they don’t care if they have to team up with the card rooms,” Quintana said.
He sees other problems too. Although Quintana views online poker as “a game-changer for the industry,” he thinks that even if a bill were passed, based on what the timeline has looked like in other countries that have voted to legalize online poker, it would still take months to adjust a site to the state’s specifications.
Wuu thinks the turnaround can be faster than that, especially now that they’re already beta testing CalShark.com. “Technically, we’re ready. We just need to see the rules.”
In a cash-strapped state, Democratic state Senator Lou Correa believes legislators will seriously consider the revenue potential from online poker, up to $1.4 billion according to one study, when it comes time to vote on a bill that would legalize and tax online poker within the state. “It’s a matter of when, not if,” Correa said.
And that “when” may be as early as January, when the state Legislature is set to reconvene and vote on the bill Correa authored.
Correa thinks regulation is important for guaranteeing players’ deposited funds as well as preventing underage gambling online. “Players will have to make a choice: Legal and safe or illegal and risky.”
He’s counting on players being willing to see some of their bets go to taxes and fees in exchange for protection against another “Black Friday,” the day last April when the Department of Justice shut down U.S. internet gambling sites and millions of players’ dollars were lost in the process.
Quintana, however, isn’t convinced. He thinks the big players are going to go where there’s the most liquidity and the lowest fees. If someone hasn’t unfairly lost money playing online illegally, he sees no reason why a player would switch to a state-sanctioned site.
The situation of knowing new technology is coming but being unsure how to address it recalls familiar stories from the film and music industries. Wuu sees the similarities too.
“But we have to be forward-thinking,” Wuu said. “Look what happened to companies like Blockbuster and Kodak. They didn’t think ahead.”
As far as losing casino visitors to online play, Kwon said in her report for Standard & Poor’s that some players will likely move their card playing completely online, especially younger people who have grown up with online gaming. But physical casino properties still offer a sense of camaraderie—as well as other goodies like theaters and spas and restaurants—that may continue to draw crowds.
Reach Kaitlin Parker here.