The debate in Sacramento over the legalization of online gaming, specifically Internet poker, appears to be moving forward. Resolution of the seven-year back and forth among legislators and potential operators still faces numerous political obstacles. However, missing is a discussion of risks of online poker and the conditions necessary to secure the games.
Legalization of I-poker by the state Legislature is the only way to stop illegal Internet gaming, protect consumers from fraud and stop foreign nationals from benefiting from ill-gotten wealth. Internet poker must be regulated to protect the innocent and for the taxpayers to benefit from revenues belonging to the state.
Stakeholders, like gaming tribes, card rooms and the racetracks, have voiced a desire to operate the games, thus participating in the revenues, and moving the discussion on what the legislation should contain.
However, one group of important stakeholders – the public – has yet to weigh in. This is the year for California to decide, set a precedent and prove the state is capable of meeting the political and legislative demands of the modern digital age.
The Rincon Band of Luiseño Indians, like other gaming tribes, has an investment and interest in I-Poker as a matter of constitutional exclusivity, and our continued economic survival and progress. Likewise, Californians personally at risk playing poker online, and taxpayers, collectively losing money that should go to the state, have a stake in this legislation.
The social and financial impacts of unregulated online gaming – the human casualties – are being borne by the state without a way to recoup costs. Currently, the proceeds from I-poker are going to illegal foreign online operators for whom it is difficult to confirm if the stated odds are accurate, who is operating the online site and how the profits are being used. There is little or no legal recourse for fraud or identity theft in today’s unregulated games.
Fifteen years ago, the tribes and the state created a regulatory structure for our gaming operations that has safeguarded consumers and maintained the integrity and reputation of the gaming. Our experience leads us to recommend some specific legislative conditions that will protect the consumers and California taxpayers.
First, the state needs to create a licensing and regulatory framework. California needs enforcement mechanisms that ensure I-poker games are regulated as rigorously as other federal and state gaming, and that there are sufficient resources for enforcement by establishing an enforcement fund. Someone has to pay for enforcement and social costs. It shouldn’t be the taxpayers. A mechanism for tracking winnings for taxation and other purposes is also needed. In addition, there must be a formula for sharing profits with the state’s taxpayers.
The following are requirements that we believe must be met by every licensee approved by the state.
Regulators must be able to test and audit operators’ software to ensure fair and honest games. Data security standards are necessary to prevent access of minors and persons outside California. No one wants Junior ruining the family credit, playing poker with Dad’s credit card. A player-exclusion process must also be able to prevent unauthorized use of credit and identity theft, persons with addictions, those who have self-excluded, and players who have cheated or otherwise violated the law.
The means to authorize the bet or wager and the method by which either is made is important. It’s easy to forget that real money is being bet online, so there needs to be a mechanism for limiting play and bets and ensuring appropriate funds are secured.
Licensees must have a track record of real money poker play in California, must be in good standing with regulators, regulatory practices and have no record of felony criminal activities.
To keep crooks out of the business, there must be extensive background checks, work permits and clearance on all key personnel associated with the operators and operations. This has been extremely effective at deterring illegal activity in tribal casinos and will be equally effective in curbing crime among online operators.
The fact that the technology that would allow operators to meet these conditions already exists makes it easier to understand how I-poker can be legal and safe.
If these real practices work in England, France and Italy, where online gambling is legal, and when used by nongaming organizations such as Major League Baseball, CBS and Apple, they will work in the state of California.
Mazzetti is chairman of the Rincon Band of Luiseño Indians, owners of Harrah’s Southern California Resort.