Group of card club operators to propose poker Web sites confined to California

With California facing a multibillion-dollar budget shortfall, a group of casinos is offering the state a potentially lucrative new revenue stream in the form of Internet poker.

The Los Angeles Times reports that the Morongo Band of Mission Indians has teamed up with Commerce Casino, a leading card club, to take the idea to the state Legislature next month. The two would be among the gambling interests seeking to operate poker Web sites if the proposal is approved.

A Morongo spokesman said the consortium is proposing an intranet system confined to California residents in which the state would regulate the games to ensure their legitimacy and protect players’ privacy and receive a share of the revenues.

While federal law does not explicitly prohibit U.S. citizens from playing Internet poker, there are restrictions on using financial institutions to transfer money for Internet betting, and the Justice Department has vigorously prosecuted offshore Web gambling operations and payment processors that offer their services within the United States.

Nelson Rose, a professor at California’s Whittier Law School and an expert on gambling law, has advised Commerce Casino that the plan would be exempt from federal restrictions if the businesses were operated entirely within state lines and served only Californians, according to the Times.

But there might be some disagreement about that from the Justice Department, which has stepped in to oppose efforts in Nevada and South Dakota to introduce intrastate gambling online.

There is also the fact that California law gives Indian tribes the exclusive right to operate casino-style games, and dozens do so, providing the state with $360 million a year from slot machine revenues.

Internet poker could take in $1 billion each year, Rose said. If the state took the same 25 percent cut that it takes from the tribal slots, it could mean an extra $250 million a year for government coffers.

Opponents, however, say it would cannibalize tribal revenues.

“Card game gambling on the Internet would take business away from brick and mortar casinos,” Robert Smith, chairman of the California Tribal Business Alliance, wrote in a letter to legislators. He called the proposal “a Trojan horse for the wholesale expansion of non- Indian, off-reservation gambling.”

But some lawmakers see a huge payoff for the state, which desperately needs the money.

“I think it is workable and a potential source of new revenue,” said Sen. Dean Florez (D-Shafter), a member of the Governmental Organization Committee, which reviews all gambling-related legislation in the upper house. “How you structure it is the key.”

Sen. Roderick Wright (D-Inglewood), who chairs the committee, said any bill would have to be supported by the tribes.

The committee is planning hearings on the proposal in February.