Corruption Allegations against Former CA Gaming Chief Could Impede Online Poker Progress

Assembly sealCalifornia authorities are investigating the former chief of the state’s gambling enforcement department on accusations that he improperly received information from current department officials. The discovery has led some to doubt whether Golden State regulators are prepared to take on the task of regulating online poker sites.

Bob Lytle left his post at the Bureau of Gambling Control in 2007 in order to take a job as compliance officer for Casino M8trix . California Attorney General Kamala Harris has accused Lytle of receiving confidential information which might have been used to thwart an investigation into his new employer.

“Lytle’s receipt of such information and documents potentially compromised the effectiveness, and undermined the integrity, of the bureau’s investigations,” Harris said in the complaint.

The accusations leveled against Lytle are not common in the regulated gambling world and have shocked industry watchers. “The legal gaming industry is as thoroughly regulated as any business in the United States,” said gambling law expert I. Nelson Rose. “It always surprises me when you get one of these scandals. They are rare.”

The incident has shone light on the state’s dysfunctional regulatory system, says gambling journalist Dave Palermo. Even though California boasts the largest gaming industry in the US, the state lacks a sophisticated regulatory system, he says.

Division of power breeds conflict

In California, power to oversee the state’s 80 cardrooms and 59 casinos is divided between Governor Jerry Brown and Attorney General Harris.

This bifurcated system, he continues, has contributed to the degradation of the Golden State’s regulatory environment. “If you get an attorney general and governor with different views on how gambling should be regulated, it does make things somewhat difficult,” said Commission Chairman Richard Lopes.

Palermo believes that to be an understatement. On one side, the Gambling Control Commission appointed by the governor lacks experience in the gambling industry. On the other, the Attorney General’s gambling agents are also an experienced and are more interested in investigating crimes, not enforcing gambling compliance.

This toxic relationship doesn’t bode well for a state looking to legalize online gambling in the near future. Some legislators have cautioned CA’s gambling industry stakeholders to rethink the bifurcated system.

“California is one of the world’s largest gaming markets,” said industry consultant Mark Lipparelli. “That it does not have a consolidated gaming regulatory body presents tough challenges and complexities.”

With many believing that the Golden State will approve legislation to legalize Internet poker inside the state this year, regulators may need to take a good look at the structure of state gambling departments in order to ensure a prosperous online gambling industry.

For his part, Lytle is looking forward to speaking at a hearing centered on the inappropriate information. “I look forward to proving that I did nothing wrong,” he said.