California’s Dependence on Gambling Grows

Like an addict, the California Legislature can't stop returning to the allure of gambling. State officials can't seem to stop seeing online gambling as an easy source of revenue for the cash-strapped general fund. But the costs of online gambling - the social costs as well as the economic ones - are too expensive for California.

In February 2008, former state Assemblyman Lloyd Levine, D-Van Nuys, proposed a feasibility study of ways for the state to regulate online poker. Turns out there's a loophole in federal law that allows states to have online gambling as long as it doesn't cross state lines.

Since the Levine study, legislators have proposed a variety of bills to bring the state into the online-gambling business, particularly Internet poker. For a variety of reasons all of these bills have stalled. But next month a group of pro-gambling organizations will ask the Legislature to resurrect the idea.

California Internet poker games could bring in at least $1 billion annually. If the state were to tax those games at the same 25 percent rate that it gets from the slot machines at Indian casinos, that would mean an extra $250 million a year. Small wonder that the chair of the Governmental Organization Committee, state Sen. Roderick Wright, D-Inglewood (Los Angeles County), said that he's planning hearings in February. So far Wright's chief concern seems to be getting a bill that would win the support of the Indian tribes (which, coincidentally, donated $50,000 to his election last year).

The tribes may be the only groups powerful enough to kill this idea for good - their tax compacts with the state are based on having a gaming monopoly, and they'd have a strong legal case for renegotiation if the Legislature throws open the state borders to online poker. The state would gain tax revenues from online poker, but could lose them from the Indian casinos.

Then there are the social costs to Internet poker. Gaming is one of the easiest ways for criminal gangs to launder money. It would be impossible for the state to prevent underage online gambling. Studies have shown that the more proximity there is to gambling opportunities, the greater the negative impact on the public (think bankrupt families).

None of this is right for California. Not even for some "easy" tax money that won't be easy at all.

Source:  San Francisco Chronicle