Published: 20 December 2011 08:48 PM

SACRAMENTO – Last summer, Senate Majority Leader Harry Reid of Nevada and Arizona Sen. Jon Kyl sent a letter to U.S. Attorney General Eric Holder.

The unlikely pair – Reid, a Democrat, is allied with gaming interests in his home state, and Kyl is a gambling critic and powerful Republican – asked that Holder “reiterate the (Department of Justice’s) longstanding position that federal law prohibits gambling over the Internet, including intra-state gambling” or else explain what the department thinks.

If there was a response, the Department of Justice isn’t saying. It declined to comment on the letter last week. Planned congressional hearings could delve into the issue in the coming months.

By then, however, California could be well on its way to authorizing one or more online games. State legislation is expected to be introduced early next year, with the main goal of generating money to help offset an estimated $13 billion deficit through June 2013.

Tribes, horse tracks, card clubs and other interests have been at odds about how to allow online gambling in California, or even whether the state should allow it. Underlying three-plus years of discussions, however, is the assumption that the federal Unlawful Internet Gambling Enforcement Act of 2006 allows California and other states to permit online gambling within their borders.

Former California lawmaker Lloyd Levine carried the first online gambling bill in 2008. He said legislative attorneys and others have consistently concluded that the proposals comply with the federal law.

“I don’t think there would be anyone risking their money if they thought there was a chance they would be shut down,” Levine said of the interests involved in the negotiations for a California online gambling bill. Levine, now a business consultant who works with Internet gaming companies, added that Nevada and Washington, D.C., have legalized their own Internet gambling systems without triggering a federal response.

To some, however, Washington’s silence is reason for concern as California edges toward the largest expansion of legal gambling in state history. In the spring, federal prosecutors indicted three illegal online poker sites.

“The Department of Justice needs to step in there and clarify this before we get too far down the road,” said David Quintana, the political director for the California Tribal Business Alliance. The alliance opposes online gambling bills introduced at the beginning of the Legislature’s 2011-12 session.

One of the measures is sponsored by a Riverside-based group of gaming tribes and card clubs called the California Online Poker Association. Its most influential members are the Morongo Band of Mission Indians near Banning and the San Manuel Band of Mission Indians near San Bernardino.

The second measure, carried by state Sen. Rod Wright, D-Los Angeles, would allow online games besides poker to be legalized.

As Senate-led negotiations continue, there is an expectation that the bill that emerges could ultimately allow more online games than just poker. Social role-playing games have been among the possibilities mentioned.

“At a minimum, you’ve got to be talking in the hundreds of millions of dollars,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, said of the potential revenue he wants legalized online gambling to generate.

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