California Online Poker Legalization May Force Showdown With Feds

12/21/2011 09:40 pm ET | Updated Dec 22, 2011

Even though the federal government passed a bill effectively banning online poker in 2006, there was only a modicum of enforcement until earlier this year when, virtually without warning, the Justice Department shut down all of the major online poker sites.

Now that it looks like California may be poised to pass a law that would legalize online gambling in the state, a showdown with federal authorities hell bent on keeping online gambling illegal may be looming.

Starting at the beginning of next year's legislative session, it's highly likely that California legislators will introduce one or more bills legalizing various forms of online gambling in an effort to help generate the much needed tax revenue necessary to close the multi-billion dollar budget hole that's already caused the state to take extreme measures such as scheduling the closure of 70 state parks and dramatically spiking the cost of tuition at its public colleges and universities.

There are currently two different measures under consideration. The first is backed by a Southern California-based coalition of Native American tribes and card clubs called the California Online Poker Association that would solely legalize poker, while a second bill, sponsored by Democratic Los Angeles State Senator Rod Wright would also include other games in addition to poker.

The Department of Justice has remained officially silent on whether it would allow California to legalize online gambling, leaving many to wonder what would happen if one of the bills were to pass.

"At a minimum, you've got to be talking in the hundreds of millions of dollars," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said of the potential revenue he wants legalized online gambling to generate.

Steinberg, a lawyer, added that he is confident that federal law gives California the right to legalize online gambling for its residents.

Steinberg initially wanted to get a vote on the legislation this year; however, he decided postpone action until sometime in 2012.

"The fact that...Steinberg has declared his support for online poker and has called for a vote in January just goes to show that online poker is about ready to happen," said the California Online Poker Association in a statement released to the Sacramento Bee. "After eight legislative hearings involving dozens of witnesses, it makes sense that online poker's time has come."

State Senator Lou Correa told the Las Vegas Review-Journal that legalizing online poker in the state could bring in up to $1.4 billion in revenue over the next decade and create approximately 1,300 jobs.

"The recent crackdown has completely decimated the world of competitive online poker," said Houston-based professional poker player Nath Pizzolatto, who attests that, like many other pro players, he would strongly consider moving to the golden state if online gaming were legalized.

"It's been virtually wiped out in America," said Pizzolatto. "The sites that were hit by the Department of Justice seizures were the biggest sites still operating in America as well as the most reliable. Any games that are still available in America are on small sites that don't have the reputation of being secure with player money and reliable and prompt with player payment that places like PokerStars do."

If California doesn't legalize online gaming, it's likely that another state will. Massachusetts State Representative introduced a bill in September that would amend state gambling law to allow up to five online poker companies to operate in the state.

Check out this video about the politics of online poker:


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