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    Harsh Parikh, Gaming Lawyer, Confirms New Cali Bill is in the Works

    Posted by Marco Valerio May 15, 2013

    Tribes remain concerned about cannibalization, but a poker-only provision that limits licensing eligibility may be acceptable.

    Parikh_HarshEver since Pechanga.net editor-in-chief Victor Rocha dropped us a tip about an all-new online gaming bill in California, we have wanted to know more about what the tribal community there has in mind.

    In the discussion that followed the release of that interview, Costa Mesa-based gaming attorney Harsh Parikh was among those who came forward to speak his own mind about what he believed was happening with that initiative.

    Parikh is an attorney at the prominent firm Snell & Wilmer, LLP, and as he tells it, his practice now is roughly “90% gaming related.” In fact, Parikh tweets under the handle @CAGamingLawyer (and we strongly recommend that you follow him).

    We asked Parikh if he would be willing to do an interview about what he knew about this new bill and he agreed. What follows is an abridged transcript of our conversation.

    What is some of the historical context that we need to be aware of before we talk about tribal positions on online gaming?

    Right, so first let me give you a very quick history lesson in tribal gaming law.

    In 1984, California voters legalized the lottery, but at the same time passed an amendment to its Constitution that banned casinos similar to those in New Jersey and Nevada. A couple of years later, in 1989, the U.S. Congress passed the Indian Gaming Regulatory Act (IGRA) after the Supreme Court decision in  California v. Cabazon, which  effectively overturned the existing laws restricting gambling on tribal lands. IGRA was intended to help lift some of the really impoverished conditions that existed throughout reservations through tribal economic development, tribal self-sufficiency, strong tribal governments… IGRA led to the boom in tribal Indian gaming.

    In California, however, we still had that ban on any sort of casino-style gambling. So in the late 1990’s, the voters of California decided that they wanted to allow gaming on Indian reservations, meaning Class III gaming, which includes slot machines, roulette, etc. Indian tribes in California finally started to have the right to develop casinos on their land after the voters approved Proposition 1A. California also has card clubs and race tracks, but tribes have a monopoly on casinos since the passage of Prop 1A in September 1999.

    There have been many attempts to push online gaming legislation in California for years now, and everybody agrees it would be a huge market. What’s holding back progress?

    From my understanding, there is distrust among the card clubs, the tribes and the race tracks over who should be eligible to offer what type of gaming. Yet every online gaming bill that has ever been proposed has always included card clubs and race tracks as online gaming providers. For example, the bill that was circulated last year, SB 1463, made it so that any of those entities could apply to the California Gaming Control Commission and obtain a license. A race track could therefore obtain a license to offer online poker, and if you’re a tribe or a card club, that is going to bother you. Those race tracks don’t have any experience with table games nor are they into the poker business. So why are they being included?

    Tribes also object to allowing all forms of online gaming, because right now they have an exclusive monopoly on all forms of games, at their brick-and-mortar resorts and casinos. Offering all forms of gaming through the Internet would potentially cannibalize the money that many tribes currently make through their land-based casinos. Let’s also not forget that the legality of gaming through the Internet was unclear until the 2011 Memorandum Opinion by the U.S. Department of Justice.

    But haven’t some of the tribes begun to change their minds about the effects of cannibalization?

    Yes, but only for poker. I think most tribes have come to agree that online poker probably isn’t going to keep most traditional players from coming to their resort casinos. Most tribes also realize that, generally speaking, poker isn’t the most lucrative game for a land-based casino. Most casinos make the majority of their revenue through other games, such as slot machines or roulette. That is why tribes in California will continue to oppose any bill that makes all forms of online gaming legal. Simply put, most tribes continue to see iGaming as something that is going to cannibalize tribal brick-and-mortar facilities.

    Let’s talk about this new bill that tribes are reportedly working on. I know you weighed in on the interview I did with Victor Rocha a few weeks ago. What was your response to what was discussed?

    I’m aware of the efforts that a lot of the major tribes are making to push forward a bill. My question is, how is this bill going to be introduced? February 22nd was the last day for any new bill to be introduced in the Senate.

    There are currently two bills pending in the California legislature, SB 51 (the Wright bill) and SB 678 (the Correa bill). The one that I figured was going to be amended was SB 678, but I can’t be sure.

    Overall, I’ve heard rumors of all these efforts and back room deals for a couple of months now. My question still remains, how is this going to be introduced?

    At this point in the legislative process, there are two ways in which a new bill could be introduced. One, they’d have to gut and amend an existing bill, and my guess would be SB 678, as long as Senator Correa is on board. Or two, and this is really an uphill battle, would be getting approval to introduce a new bill, which would require a Rules Committee approval and a 3/4th vote of the entire Senate, or the entire Assembly. I just don’t see how a brand new bill can be introduced.

    Is there anything you’ve heard about the nature or content of this new legislation that you feel like sharing?

    My understanding of the bill, and I’ve heard about it at various conferences as well, is that it’s going to basically eliminate the horse race tracks as eligible operators. Almost every iteration of an online gaming bill that I’ve seen the last three years has included horse racing tracks as eligible entities to be able to obtain licenses. I think that is probably going to go away in a forthcoming iteration. I think the card clubs will remain in the bill, as eligible entities. As far as taxes, I think most tribes agree that it will be like 10% or so on gross gaming revenues.

    And it will be poker-only?

    Yes, 100%. Given the history of California, I have absolutely no doubt that it will be a poker-only bill.

    Do you agree that there is reason to believe online poker in California will go farther this year than it has in the past?

    I think that we’ll see some action. Last year, SB 1463 had a hearing date set, but on the day of, the authors scrapped it. This time around, especially considering the legislative movement that we’ve seen in New Jersey, Nevada and Delaware, I think California is going to have more progress in this session than previously. Is it going to be enough to get this thing passed? I don’t know. But I do see this issue moving forward; a lot farther than it has ever gone before.

    QuadJacks – May 15, 2013

    About Marco Valerio

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