Is the Lytle Gaming Scandal an indictment of the Wild Wild West approach to Cardrooms?

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A detailed OpEd penned by long-time gaming industry observer and veteran journalist Dave Palermo underscores California’s politically bifurcated system of regulating approximately 80 card rooms and of providing oversight for 59 tribal casinos and points out that such a system is highly dysfunctional, incapable of regulating what gambling is already legal in the state, let alone Internet poker. [Read more here: http://www.sacbee.com/opinion/california-forum/article6688959.html#storylink=cpy%5D

That being said, Palermo’s piece additionally points out that Federal law gives tribal governments primacy to regulate their casinos, including those in California which many gaming experts have called the “best regulated casinos on the planet.” For example, the San Manuel Band of Mission Indians in San Bernardino County has more regulators than the California Bureau, which has some 150 employees and a $28 million budget.

But at the same time, and given the bifurcated nature of gaming control and enforcement in California, Card rooms — which have evolved from poker-only to high-stakes versions of blackjack, pai gow and baccarat requiring the use of banking firms, are another matter entirely. Some gaming industry experts contend that California’s card clubs lack internal operating controls as well as adequate surveillance.

“It’s the wild, wild west,” said independent card-cheating consultant George Joseph said.

“Internal controls are nil,” agrees Vic Taucer, an independent table games consultant.

In commenting upon the 4-member Gambling Control Commission appointed by California Governor Jerry Brown (which Mr. Palermo notes is largely inexperienced in gambling matters and struggles in particular with regulating card rooms), Commissioner Richard Schuetz  said that it was the “worse regulated segment” of the nation’s gambling industry.

While lack of resources are always an issue for cash-strapped governments, the bureaucratic culture and separation of gambling controls into separate dysfunctional State agencies exacerbates the disconnection between regulatory bodies which do not routinely or systemically communicate or coordinate with each other.

But is that more an indictment of the divergent approach to CA gaming regulation and enforcement activity for different gaming industries?  Or does it really mean only certain gaming market sectors are more prone to issues than others?

And what impact might this all have on California’s efforts to regulate online poker?  [See, e.g., Dave Palermo’s Blog at — http://www.pechanga.net/content/lytle-corruption-probe-may-hurt-i-poker-effort?utm_content=buffer13b24&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer
Additionally, the investigation by AG Kamala Harris  in the Lytle matter raises further questions about who may opine and rule upon the allegations made by the AG in her administrative complaint:  namely, is the fox watchting the hen house?

On that score, Palermo has augmented his investigative reporting to point out in another blog piece that the California gambling regulatory officials who will rule on the licensing of a former casino enforcement chief accused of jeopardizing a $119 million card room skimming investigation may themselves be faced with conflicts of interests, industry legal experts said.

Both Richard Lopes, chairman of the California Gambling Control Commission, and Tina Littleton, the commission’s executive director, have personal and professional relationships with persons connected to a licensing investigation by Attorney General Kamala Harris.  [See, Palermo Blog at — http://www.pechanga.net/content/potential-conflict-ag%E2%80%99s-lytle-licensing-investigation-0?utm_source=MailingList&utm_medium=email&utm_campaign=01%2F21%2F2015+–+Victor+Rocha%26%2338%3B%2339%3Bs+Daily+News+Digest%5D

This story sounds more like one authored by John Grisham about the fictional law firm of Lytle, Lopes & Littleton as the details about the alleged conflicts of interest raised by AG Kamala Harris unfold.
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Stay tuned…!
 –IJI

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