California considers legalizing Internet poker

California lawmakers are toying with the idea of legalizing Internet poker for residents as a way to raise revenue for the financially strapped state.

No formal bill has been proposed, and the concept has just been kicked around.

One gambling expert, however, doesn't believe the legalization of Internet poker in Nevada would amount to much revenue for the Silver State, where lawmakers are grappling with solutions to close an $881 million budget shortfall.

"There are not enough players in Nevada to make this more than marginally beneficial," said University of Nevada, Las Vegas professor Bill Thompson, who specializes in gaming matters. "I still believe a player in Nevada, unless you're homebound, would prefer to drive 10 miles and play with real people."

Warwick Bartlett, the founder and chief executive officer of Global Betting and Gaming Consultants, an international gambling adviser, predicted that California could capture tax revenues of $650 million over the next five years if the state were to legalize Internet poker.

In an e-mail, the Isle of Man-based Bartlett said California's share of the U.S. Internet poker market was about $448 million in 2009, with 778,000 active accounts.

"Our experience in regulated markets shows that legalization and control is a more effective government policy than prohibition because technology will always be ahead of law, which historically reacts to changing circumstances which legislators cannot predict," Bartlett said. "Ordinary people enjoy playing poker and it is better to regulate rather than criminalize what is a mainstream leisure activity."

Bartlett said he is conducting a similar study for Florida.

Thompson said there is no way Nevada would reach California's potential Internet poker player market.

"I guess it would raise a few million dollars, which would be good for my university," Thompson said.

MGM Mirage spokesman Alan Feldman said it makes more sense for Nevada to become the host regulatory location for Internet poker worldwide rather than legalizing Internet poker for its residents.

"That way, the benefit of the economic activity comes from outside of the state," Feldman said.

California Internet poker proponents found an unusual backer for their idea: the Morongo Band of Mission Indians, which operates the Morongo Casino near Cabazon, about 20 miles west of Palm Springs.

"Each week, millions of Californians are playing Internet poker," Robert Martin, Morongo's tribal council chairman, told the Desert Sun in Palm Springs. "All that money goes offshore; not one dime stays here in the state."

A California Senate committee held an informational hearing on the concept, but a formal bill hasn't been proposed. Backers believe in-state sites licensed by California could compete with the Internet gaming industry.

Bartlett warned that the tax rate would be a key issue. If the tax is too high, gamblers will be driven to current Internet gambling sites operated outside the United States, where low tax rates enable operators to offer rebates and incentives.

"However, customers will pay a premium to bet legally, so pitching the rate at the correct level is key," Bartlett said.

State Sen. Roderick Wright, D-Los Angeles, warned of one aspect if any move to legalize Internet poker passes.

"Clearly whatever we do will end up in court,'' he told the Desert Sun.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.