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Tuesday, Jul 16, 2024
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‘NEW DEAL’

Online poker is coming to California eventually; at least, that’s the opinion among many leaders at the area’s American Indian casinos. And for one San Diego County tribe, the future is coming fast.

Fast, as in now — possibly a few days before you’re reading this.

While many other tribes are waiting for the state Legislature to pass some sort of law concerning who may offer online poker in California, the Iipay Nation of Santa Ysabel said it has a sovereign right to offer the game over the Internet.

“We’ve done our legal homework,” said David Vialpando, chairman of the Santa Ysabel Tribal Gaming Commission.

The Santa Ysabel tribe has spent “maybe as much as a million” dollars and invested a lot of time to establish a website called Private Table, which will offer online poker to Californians, Vialpando said. As of early last week, visitors to the site could play for free, but Vialpando said the tribe was plannning to convert the site to real-money gambling Aug. 1 — after this publication’s press time — or shortly thereafter.

“We want to be first to market,” he said. “We want the first-to-market advantage.”

It may be a gutsy move for Santa Ysabel, since its interpretation of the law is not the same as its neighbors’ interpretation, and there is a possibility that the government could step in to stop the online poker games.

One thing is clear. That moment will be a turning point for San Diego County’s American Indian gaming scene, which has eight successful brick-and-mortar casinos, augmented by several more in Riverside County.

Fellow Tribes Watching

There is plenty of interest among other tribes in Internet gaming, said Mission Valley accountant Bill Woodworth,

a partner in the national gaming, tribal services and hospitality practice at

McGladrey LLP.

“Tribes want to make sure they’re players,” he said.

There are two bills related to Internet poker in committee in the California Legislature. In June, the leaders of five San Diego County tribes running casinos — Barona, Pala, Rincon, Sycuan and Viejas — signed a letter to state lawmakers supporting a way to reconcile the competing measures.

Internet poker is already legal in Delaware, Nevada and New Jersey.

In California, the market opportunity for Internet poker is in the hundreds of millions of dollars. The state Legislative Analyst’s Office recently estimated that illegal online gaming sites bring in $300 million to $400 million from California customers yearly.

A different study suggests there is more demand for those services. Passing Internet poker legislation in California could bring in $729 million in gross gaming revenue in 2015, said a study produced by Capitol Matrix Consulting of Sacramento and funded by several California tribes. The study said Internet poker could generate 1,952 jobs in 2015.

That number is expected to grow. By 2019, the study said, Internet poker could bring in $1.29 billion in gross gaming revenue and support 2,657 jobs.

The same study suggests that legalized poker could create new revenue for the state. That revenue stream could begin at $121 million in 2015 and grow to $217 million in 2019.

With that much at stake, Santa Ysabel’s proposal has generated interest among its peers.

“We will be watching the legal and political implications of their operations closely,” said Daniel Tucker, chairman of the Sycuan Band of the Kumeyaay Nation, in a statement released through a spokesman. Sycuan runs a casino near El Cajon.

Possible Test Case

The Santa Ysabel band believes it has a sovereign right to offer Internet poker because it is what federal law calls a class II game. Class II games include bingo and poker, but not slot machines or house-banked games such as blackjack.

To comply with the law, the Santa Ysabel band plans to house its Internet servers on reservation land and serve Californians exclusively. Players must be state residents, be 18 or older and be physically within California to play. The business plans to use several vendors offering “know your customer” services to make sure players comply with those rules, Vialpando said.

Steve Stallings, a tribal council member with the Rincon Band of Luiseño Indians, said that is not how he interprets the law on class II gaming, adding that Santa Ysabel’s venture might end up in court as a test case. The Rincon band contracts with Las Vegas-based Caesars Entertainment Corp. (Nasdaq: CZR) to run its casino under the name Harrah’s Resort Southern California.

Little Impact on Casinos Expected

The emergence of the Private Table website comes half a year after the Santa Ysabel band shut down the brick-and-mortar casino on its reservation near Julian. The tribe was not exactly blessed with a location that attracts a large stream of visitors, since it is far from urban areas and not on a major highway. Santa Ysabel also got into the casino business late, Vialpando said, developing its own offering just as the recession of 2008 was hitting.

Vialpando said the tribe did not close the casino because of finances but rather because it has a potential tenant for the casino building; he did not say who the tenant is. Had the tenant not materialized, he said, the Iipay band would have pursued both brick-and-mortar and online offerings.

Other tribes aren’t expecting much of a financial hit — if any — from new competition.

“Even if they go live, we do not believe there will be any impact to existing brick-and-mortar operations,” said Tucker of the Sycuan band. Sycuan’s casino revenue, and that of its neighbors, is confidential.

“It’s not going to affect our business at all,” Rincon’s Stallings said.

Woodworth, the McGladrey accountant, does not foresee online poker having an effect on brick-and-mortar casinos. Putting a broader menu of legalized gambling on the Internet, however, would hurt existing casinos, he said.

He also predicted that big casino operations will get bigger with the start of Internet poker.

Poker’s Social Aspect Not Online

Internet poker does not offer everything.

For example, it doesn’t let a player look for “tells” on a fellow player’s face, said Dale Wolfe, who has overseen live poker games at Viejas Casino & Resort near Alpine for 26 years. The Viejas Band of Kumeyaay Indians operates the casino on its reservation.

Wolfe said there is quite a spirit of community among the poker players he sees every day.

“It’s almost like a social gathering,” he said, as each time of the day has its regulars, as do the weekends.

Wolfe and representatives of several other gambling establishments said casinos might eventually use online poker games to steer business back to their brick-and-mortar casinos.

The state Legislature took up two bills regarding Internet poker in February; both are still in committee. Senate Bill 1366 is being carried by state Sen. Lou Correa, D-Santa Ana, while Assembly Bill 2291 is being carried by Assemblyman Reginald Jones-Sawyer, D-Los Angeles.

The Viejas tribe, while very interested in the subject, does not seem eager to make the first move.

“Some tribes are cautious, some are a little more aggressive” about online poker, said Bob Scheid, a spokesman for the Viejas Band, who added that he was fielding questions on behalf of tribal chairman Anthony Pico. “Viejas is very cautious.”

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