CA to criminalize Internet poker?

That is, unless you play at one of the three state-sanctioned “hubs”.

Much like other proposals to “legalize” online poker and other Internet gambling activities, proposals to legalize on a limited basis such as the proposed SB 1485 in California, seem like a step forward to online poker players who, for many years, have wagered money on the Internet in a legal gray area.  But sometimes it is better to be uncertain of your legal standing than to know that an activity you enjoy has become a criminal offense.

After the UIGEA was passed in 2006, as I have written about in the past, it was thought that online gambling would soon be officially criminalized. But when the final rule came down and the implementation date arrived (the day when all banks and credit processing companies needed to abide by the new rules), poker players realized that not much had changed in their experience of online play.

However, during the interim between UIGEA’s passage and the implementation of it’s watered-down version, a few legislators initiated bills to legalize certain online gambling activities, both federally and locally in their home states.

Making news these days is California’s latest attempt, initiated by Sen. Rod Wright introduced SB 1485, a bill that supposedly legalizes Internet gambling for residents. What it would actually do is legalize gambling only at the three online platforms and criminalize Internet poker played anywhere else online. Currently, there are no federal laws that make online poker games a crime and the DOJ has never prosecuted individual players associated with the activity. California makes 11 names games illegal to play online, but poker is not one of them. Thus, in CA, poker is not consider an unlawful Internet gambling activity at the moment. But if a law is passed that sanctions only three online providers, chosen by the state, as SB 1485 does, then playing poker online anywhere else will be a crime. The state’s DOJ will be allowed to arrest any individual caught playing poker online at a non-sanctioned site.

Currently, California law makes 11 named games illegal to play online or any game where the operator takes a rake (a cut of the money won in each hand). Thus, online poker in the state is legal at the moment.

This type of restricted legalization is, not only offensive to defenders of individual rights, open markets, or personal privacy, but also it just will not work or do what Wright and proponents hope it will.

1. First, it will not add protections for consumers because gamblers will continue to operate at non-sanctioned sites:

The text of the proposed regulations recognize that “millions of Californians” gamble at online casinos for money. Once there are a handful of state-sanctioned casinos, Californians will continue to play at the online sites that they are familiar with or that court their business.

2. It pushes gambling further into the shadows

If the Senator is concerned about these millions of gambling Californians, he should be aware that criminalizing their chosen activity will not accomplish this goal. Rather, it simply pushes them further into the shadows. Any player who is defrauded or robbed in an online game might be too afraid to speak with authorities, lest he be charged with the misdemeanor offense of playing a game online.

3. There is no way to prevent people from continuing to gamble at the online sites they want to.

Much like UIGEA before it, this type of limited access is impossible without some other major intrusion on personal privacy (such as monitoring a person’s computer activity). Online casinos in other states or other countries will continue to serve Californians.

4. The flow of money into the state’s coffers will not increase.

Sure, criminalizing an activity adults engage in freely and that violates no other person’s rights is massive breach of regulatory authority, but it won’t even increase tax revenue for California. The gamblers who play online now will continue to play unlawfully, and have greater incentive not to report income earned online. Add in the cost of enforcement and licensing the three sanctioned hubs and the final tally may end up costing Californians more money than it brings in.

With the state’s massive deficit, the promise of millions in new revenue might convince others that this is a good idea. My advice, as it often is when it comes to the Golden State, is that gamblers or anyone else who likes to make decisions about their own life, might consider moving to Nevada.

A hearing of the proposal is scheduled today at 3:30pm PST