The battle lines between the Pechanga Coalition and both PokerStars and the horse racing industry have been clearly defined for years and there appeared little hope for a compromise between parties. That was until the informational hearing on Wednesday in the California Assembly GO Committee.
For the first time since online poker has become a topic of discussion in California, a reasonable compromise was offered to help resolve issues surrounding horse race track participation. More surprising was the author of this compromise; the Pechanga.
Pechanga Chairman Offers Two Options for Race Track Participation
During Wednesday’s hearing, Pechanga chairman Mark Macarro offered a pair of potential solutions for including the horse racing industry in California iPoker. According to Macarro, “We are realistic about the politics of this issue. That is why Pechanga is prepared to support other opportunities for the racing industry to participate and benefit from online poker. We respect the sport of horse racing and recognize the importance of the jobs that rely on the industry. That’s why Pechanga can support legislation that specifically shares revenue derived from online poker for the benefit of the racing industry.”
For those unfamiliar with revenue sharing, look at the model in play with Major League Baseball. In their revenue sharing deal, the top teams in baseball share revenue with the other clubs, leveling the playing field to a degree. While revenue sharing will never make the Marlins into the Yankees, sometimes it is enough to help a smaller team to compete.
Revenue sharing was not the only option offered during the hearing. Macarro also offered an affiliate based system. He stated that, “the racing industry also has the means to enter into private partnerships with licensed operators to participate as affiliates. Racetracks can enter into arrangements whereby they refer their web visitors and players to poker websites for a fee.”
The affiliate system is what is already used around the globe by most sites. On the surface, it would seem that the horse racing industry would only get a “finder’s fee” for new players but don’t rule out the possibility of this being expanded into a rake sharing deal where race tracks get part of the profits generated from their signups.
Racing Industry Doesn’t Appear Interested but Maybe They Should Be
Keith Brackpool, west coat chairman for the Stronach Group, was the horse racing industry rep at the hearing on Wednesday and was quick to dismiss the proposal by the Pechanga. Brackpool stated, “I appreciate the offer made by chairman Macarro, but we don’t believe at this stage that a level playing field would be the other part of the gaming community having a license and determining what morsel of that we would receive. We want a level playing field where we have the right to apply and receive a license on the same basis.”
While his position sounds valid on the surface, if one looks at how the industry has progressed in other states, the horse racing industry may want to reconsider. First, consider the fact that despite their increase population, only a handful of online poker sites will be truly viable in the state. Race tracks will have a hard time competing against established brands and could put up substantial funding towards profits they may never achieve.
Serving as an affiliate would be among the most cost effective solutions that they could employ as they could choose which online partner they want to support and then focus their marketing towards that avenue. They can also work with their partners to maximize promotions and maybe even draw business towards the tracks. PokerStars would certainly figure out a way to incorporate horse racing into their poker games and could be a match made in heaven.
The most encouraging news about this offered compromise is that it happened. It is the first time that the Pechanga have tried to move forward in any meaningful way towards a resolution of issues. Granted, there is still a long way to go towards getting a bill passed but this is actually a step forward, even if it is a baby step.