California Legislature to Become a Battleground for Tribes and Cardrooms

Posted on: August 14, 2023, 03:04h. 

Last updated on: August 15, 2023, 09:49h.

Craig Boswell Read More
Expertise: Legislation, Politics, Mid-Atlantic, Southeast, Regulation.

California’s state legislature reconvenes Monday, and lawmakers are faced with a long-simmering dispute.

Hawaiian Gardens
The Hawaiian Gardens cardroom in LA is currently fighting against Prop. 26, which like the previously defeated California Senate Bill 549, would limit the types of games it can offer to patrons. (Image: City of Hawaiian Gardens)

The feud between Native American casinos and California cardrooms is back before the state, and both sides have deep pockets and even deeper hostilities.

A bill that would allow tribes to file civil actions against the cardrooms is expected to come up, and if you think you’ve heard this before, you’re correct.

Senate Bill 549 would allow tribes a three-month window in 2024 to take legal action against their rivals. That potential action was actually voted down by the public last year when it was on the ballot as Prop. 26.

When SB 549 passed the Senate earlier this year as an education measure, the bill’s author, Senator Josh Newman (D-Fullerton) substituted language from Prop. 26, bringing the battle between tribes and poker parlors back.

Casino-owning tribes say poker parlors, or cardrooms, as they’re otherwise known, have expanded into tribal territory with games such as blackjack.

Proposition 26, had it not been defeated, would have allowed the state attorney general to crack down on gambling law violations. But if the AG didn’t act, tribal casinos could file a civil action as a private party. Cardroom operators say that would have put them out of business.

The economic impact of California’s cardroom industry is estimated at more than $6 billion, and supports tens of thousands of jobs, according to the California Gaming Association trade group.

Big dollars are funding the war, as tribes are a major interest group with large coffers of political cash. They are pitted against what looks like a smaller cardroom in a tiny city called Hawaiian Gardens in Los Angeles County. That venue has already committed more than $5 million dollars to defeat SB 549

San Jose Officials Taking Action

Meanwhile, officials in San Jose say they won’t fold and will strongly oppose Senate Bill 549. According to city officials, allowing tribes to sue cardrooms over games offered would choke off cities from tax money and essentially outlaw the function of poker parlors.

It could “eliminate thousands of cardroom jobs and millions of dollars in municipal revenue in dozens of California cities,” wrote Sarah Zarate, the city’s policy and government relations director, in a June letter.

The California Gaming Association says San Jose’s two cardrooms employ more than 2,000 people.

Cardrooms can’t offer slot machines, while tribal casinos can. Cardrooms comply with gambling laws by letting players bet against other players, or against a third party where no “house” money is involved.

Tribes argue that allowing bets on player-dealer card games lets cardrooms get around California’s constitutionally enshrined monopoly on legal gambling. Tribes don’t have the standing to challenge the legality of cardrooms in court under current law.

Sen. Newman says his bill wouldn’t predetermine the outcome of lawsuits, if allowed. It would simply ask the courts “to resolve the longstanding dispute over whether certain controlled games operated by California card clubs are illegal banking card games and whether they infringe upon tribal gaming rights.”

California’s Governor in the Spotlight

Back in May, California Governor Gavin Newsom (D) signed legislation that established a moratorium on the state issuing new cardroom licenses for 20 years. The bill essentially restarts a moratorium that was first established by the Gambling Control Act of 1997.

The GCA prevented new cardrooms from opening and existing ones from expanding, and had expired on January 1 of this year.

Gov. Newsom is also in the spotlight and at the center of a debate over whether he is running for president. He hasn’t announced a presidential bid at this time.

Speaking of debates, Newsom’s heated rivalry with Florida Governor Ron DeSantis (R) would be on display if a debate between the two governors goes forward. DeSantis is running for president on the Republican ticket.

The Newsom vs DeSantis debate is tentatively planned for November, to be hosted by Fox News’ Sean Hannity. The two sides are at odds over the inclusion of a studio audience and are currently locked in a stalemate over the details.