California online poker informational hearings

The California legislature could hold informational hearings on Internet poker later this month. (Image: CAIB.net)

California online poker talks continue to trudge forward, but at least they are moving a bit, which is a marked and noticeable improvement over previous years.

It now appears that even the legislature might be willing to talk more about the issue in 2015, raising the prospect that this could be the first year in which hopes of passing an online poker bill in the state might be somewhat realistic.

According to a report by Dave Palermo of Online Poker Report, the California Senate and Assembly Government Organization committees are in talks to hold joint informational hearings on Internet poker, and those hearings could take place as soon as later this month.

Those hearings would be designed to take place before a May 1 deadline for “non-urgency” legislation, a category that would certainly include Internet poker bills.

While there are no guarantees that the hearing would take place by that point, or that this would even allow an online poker bill to be discussed before then, it would at least give those interested in online poker some hope in the state this year and beyond.

Hearings Would Help New Members Learn About Internet Poker

“Nothing has been finalized or approved, but the chairs of each committee are considering holding a couple of joint informational hearings on the issue so all the new members of each committee have a better understanding of the complexities of Internet gambling,” said Senate Government Organization Committee Director Art Terzakis.

That quote would suggest that these hearings may be just as much about giving legislators a grounding for future efforts as they are about getting something done in the current session.

That would make sense, as there still appears to be a few significant hurdles that would need to be overcome before online poker in California could become a reality.

Steady Progress On Issue This Year Has Improved Hopes for Online Poker

Certainly, there has been progress so far in 2015. There has been talk of more movement from some tribes about allowing PokerStars to enter the market, especially after a meeting at the National Indian Gaming Association convention in San Diego earlier this month.

In that meeting, The Pechanga Band of Luiseno Indians and other members of their coalition proposed softening bad actor clauses as part of a broad tribal alliance with PokerStars to push past opposition from California’s powerful horse racing industry.

That industry could still be a sticking point, however. Some tribes would rather work with the race tracks rather than fight against them, while others want to shut them out of online poker entirely.

Since an Internet poker bill would require a two-thirds majority in the legislature in order to pass, it is possible that the horse racing industry could muster enough opposition to scuttle a bill if they aren’t happy with it.

Right now, there are four online poker bills sitting in the California legislature. Two of them are functionally identical “shell” bills, introduced by Senator Isadore Hall (D-South Bay) and Assemblymember Adam Gray (D-Merced County), who chair their respective Government Organization committees.

These two bills only have basic outlines for online poker, and do not address many of the controversial issues that currently divide stakeholders in the state.

In addition, there are also two other bills that could be considered: one from Assemblymember Mike Gatto (D-Glendale) that only allows tribal groups and card rooms to operate online poker sites, and one from Assemblymember Reginald Jones-Sawyer (D-South Los Angeles) that would also allow tracks to obtain Internet poker licenses.

Pennsylvania three online gambling bills

Watch closely to see which of three online gambling bills will pass muster in the Pennsylvania House. (Image: goodtricks.net)

Pennsylvania has three online gambling bills on the table, but followers will have to pay close attention to pick the winner in this fast-moving game of “whose bill is going to pass the House?”

Only a year ago, Internet gambling in Pennsylvania may have seemed like a pipe dream, but today, it is looking like a possibility that is being taken seriously by many in the state.

As lawmakers find ways to increase revenues without raising taxes, expanded gambling is one of the most likely options, and the Internet may be the best untapped market left for the state.

And now there are three separate bills currently in the Pennsylvania House of Representatives, giving lawmakers plenty of options when it comes to deciding what online gambling could potentially look like in their state.

The latest bill to be tabled in the legislature is one brought forward by Representative Tina Davis (D-Bucks County) that would allow for casino games and poker to be offered over the Internet.

In her proposal, only land-based casinos operating in Pennsylvania would be eligible for online gambling licenses, and there would be a $5 million fee in order to get started. After that, the casinos could renew their licenses for three-year terms at an additional cost of $500,000.

High Tax Rate, In-Person Registration Could Hinder Davis Bill

The Davis proposal does have a couple of features that make it unique, though they may also make it unpopular in some circles. First, there’s the tax rate: at 28 percent on daily gross gaming revenues, it’s twice as high as the tax rate in the similar bill proposed by Representative John Payne (R-Dauphin County).

Davis has called that level of taxation “reasonable,” and says that money raised from online gaming could go to various funds, with about 55 percent heading towards property tax relief in the state.

Her bill would also require players to register in person at one of the state’s casinos before they would be allowed to play online.

This measure has proven unpopular when proposed in other states, with one legislator in California, Assemblyman Mike Gatto, pulling it out of his bill after it was criticized. But for Davis, the most important thing is that the bill maintains the integrity of gaming in the states and protects players, something that forcing casinos to be a part of the approval process could help achieve.

“A responsible internet gaming system must be created in order to protect Pennsylvanians and the success of the established gaming industry in the Commonwealth, which has generated more than $7 billion in state tax revenue, and created more than 16,000 jobs statewide,” Davis wrote earlier this year.

Payne’s Bill May Have Best Chance of Success

While Davis has already attracted several co-sponsors for her bill, it may be difficult for it to receive attention in the shadow of Payne’s proposal.

Payne has the advantage of being the chairman of the House Gaming Oversight Committee, which could put him in a better position to advance his bill. There’s also a third bill that has been proposed by Representative Nick Miccarelli (R-Delaware County), which could prove popular if Pennsylvania legislators want to go with a “poker-only” model similar to the one used in Nevada.

At some point, efforts to legalize online poker in the state will likely coalesce around one of the three bills, as some of the same legislators are co-sponsors of both the Davis and Payne proposals. Notably, Davis is a co-sponsor of Payne’s bill, though he hasn’t sponsored her version of the legislation.

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 Morgan Stanley Internet gambling casinos

New York-based Morgan Stanley believes online gambling in America isn’t as promising as it once forecasted, cutting its projections nearly in half. (Image: Chester Higgins Jr./The New York Times)

Morgan Stanley has reduced its initial estimate on the economic five-year potential of Internet gambling in the United States from $5 billion to $2.7 billion, a cutback accredited to disappointing revenues and lackadaisical approaches politicians on the state level have taken in passing legislation.

The financial services firm has now placed projections for 2020 at a significantly lower valuation.

“We continue to believe that there is a material runway for growth, but results have been disappointing,” the corporation wrote in its report. “Legislative processes continue to be slow as lawmakers remain unconvinced that online gaming is currently worth the hassle for limited tax revenue.”

For Now, Forecast Gloomy

In addressing its reasons for the downgrading, Morgan Stanley points to several factors hindering the capability of the market:

The poor payment processing technologies utilized by online casinos with legalized iGaming has created a difficult environment for sustainable revenue streams.

Advertising campaigns on the part of both network operators and the casinos haven’t been convincing in relaying its message. Thus, poor marketing is being blamed for less than expected participation levels.

Geolocation technologies, vital in the account creation process to assure players are residing in states with legalized online casinos, have underperformed in allowing those eligible from connecting.

Offshore sites are thriving, and with limited regulatory conditions in place, the process is much simpler and easier for US-based gamblers to join.

Additional States Coming?

One area that notably sticks out in the report is the firm’s belief that no additional states will pass Internet gambling regulations in 2015. “Legislative processes continue to be slow as lawmakers remain unconvinced that online gaming is currently worth the hassle for limited tax revenue,” the report read.

The good news is that the conglomerate does foresee California, Pennsylvania, New York, and Illinois legalizing online gaming within the next few years, with as many as 15 following suit by 2020. According to analysts, the smaller states will quickly shadow larger ones as the heavy-hitters begin to increase tax revenues from Internet casinos.

Federal Ban Looming?

With all the RAWA hoopla in recent weeks, many might believe Morgan Stanley’s dim estimates are simply a result of Las Vegas Sand’s Chairman Sheldon Adelson’s persistence in convincing congressional members to continue pushing for a total federal ban.

However, the indecision among both party’s constituents regarding restoring the Wire Act to its pre-2012 directive makes the bill doubtful.

“We believe a federal ban of online gaming is unlikely given legislators’ split views,” the company wrote. “However, a recent hearing in a House Judiciary subcommittee on US Rep. Jason Chaffetz’s proposal for a ban suggests it could be gaining momentum.”

That momentum, as various gambling outlets have predicted, won’t lead to RAWA being passed. “While the bill may advance out of committee, we believe it faces long odds of passing, especially without carve-outs for online lotteries and existing online gaming states.”

Though the overall opinion on Morgan Stanley’s dramatic diminution is certainly unwelcomed by those involved in the market, the news isn’t a total bust. The firm’s belief that online gambling will continue to expand across America and a federal ban is unlikely should only strengthen the industry’s long-term outlook.

Republican Jewish Coalition Sheldon Adelson GOP

Sheldon Adelson, Republican Jewish Coalition board member and casino mogul, could have a significant influence on the GOP’s eventual 2016 presidential nominee, not to mention federal online gambling policies. (Image: Tim Chong/Reuters)

Sheldon Adelson’s name is without question one of the most powerful on the American power grid, and with both online gaming and an approaching US presidential bid in the offing, the man who wields his strength like an axe will be having plenty of input in both categories.

Adelson’s Support Sought by Republican Candidates

It’s no news that having the backing of Sheldon Adelson for the 2016 GOP presidential nomination would be like winning the lottery, literally, for the chosen candidate.

That’s why contenders have been seeking out any and all opportunities to pay homage to the influential casino magnate and multibillionaire whose voice will no doubt have influence on the playout of American online gambling.

With the Republican Jewish Coalition (RJC) holding its Spring Leadership Meeting April 24th to 26th at the Venetian Resort and Hotel in Las Vegas, you can be sure all the annointed will be in attendance.

The annual political weekend is an opportune time for Republican Party leaders to connect with one of its wealthiest and most influential donors in Las Vegas Sands Chairman Adelson, a casino tycoon reportedly worth upwards of $30 billion.

Key Candidate for Online Gaming and Beyond

Those involved in the casino industry know Adelson’s strong opposition to Internet gambling, of course. He’s a chief proponent of the Restoration of America’s Wire Act (RAWA), a legislative measure that would ban all forms of online gaming.

But while he’s said he’ll spend whatever it takes for RAWA to pass, it isn’t actually Adelson’s main priority in deciding who he’ll back. Embracing a pro-Israel foreign policy is his foremost policy concern. As Prime Minister Benjamin Netanyahu’s polls tightened this year, Adelson stepped in to help the rightist leader win reelection by a not-so-slim margin.

Adelson was invited to a Joint Meeting of Congress in early March to denounce the Obama administration’s current US policy on the Iran-Israel conflict.

Looking for a Voice

The RJC website says its goal is to give the Jewish Republican an influential voice in Washington and across the country. It lists three basic principles of its mission: protect national security, create a smaller federal government, and support a low-tax, free-enterprise economic policy.

The organization, which is headquartered in DC, has become one of the biggest backers of the Grand Old Party. Among the notable names scheduled to attend the Spring Leadership Meeting include 43rd President George W. Bush, current Speaker of the House John Boehner (R-OH), and 2012 GOP presidential nominee Mitt Romney (who received Adelson’s beneficent support without success).

In addition to its grassroots presence around the country, the RJC Political Action Committee (PAC) supports candidates reflecting the group’s priorities and principals both politically and financially.

It’s the latter that potential candidates so desperately seek, as campaign contributions from RJC, and most notably Adelson, could play a significant role in determining which politician survives the primary and wins the Republican nomination.

Candidates Make Their Pitch

Besides Bush, Boehner, and Romney, several current and former lawmakers toying with a 2016 run will deliver speeches to the RJC audience.

One of these is former Texas Governor Rick Perry, a 2012 primary contestant who fell to Romney, who is reportedly interested in giving the White House another go. Rick PAC, Perry’s political action committee, has named roughly 80 Republican bigwigs to its advisory board, and the list features many former Romney supporters.

Fellow Texas politician Senator Ted Cruz, another possible presidential candidate, is also scheduled to speak, as is current Indiana Governor Mike Pence.

Last year’s Spring Leadership Meeting also attracted other GOP White House contenders, including former Florida Governor Jeb Bush and current Governors Scott Walker (R-WI) and Chris Christie (R-NJ).

The aspiring nominees for 1600 Pennsylvania Avenue all share a similar goal in wanting to land the backing of the RJC and Adelson. For the 2012 election season, Adelson spent nearly $100 million, first on Newt Gingrich, and then on failed Republican contender Romney.

What Does Adelson Really Want?

Israeli Prime Minister Benjamin Netanyahu’s recent speech in DC, which was well-received by Republicans and largely unattended by Democrats, helped lead him to victory earlier this week. It’s largely expected that Netanyahu will rebuild and redefine the role of government in Israel, creating a more conservative mandate for his controlling party’s leaders.

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