Future of California Cardrooms Murky After Gov. Gavin Newsom Signs Tribal Measure

Posted on: September 30, 2024, 03:03h. 

Last updated on: September 30, 2024, 04:45h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

California is home to more than 80 cardrooms where poker and versions of other popular casino games modified to adhere to the state’s ban on commercial house-banked table games operate. The future of those privately owned commercial enterprises is in jeopardy after Gov. Gavin Newsom signed legislation to allow tribal nations to initiate legal proceedings on allegations that cardrooms are infringing on their gaming exclusivity privileges.

California cardrooms tribal nations
California Gov. Gavin Newsom speaks in Los Angeles on Wednesday, Sept. 25, 2024. Over the weekend, Newsom signed legislation to allow tribes that run casinos to challenge in state courts their contentions that commercial cardrooms are violating their gaming exclusivity rights. (Image: Getty)

California isn’t home to any commercial casinos, but has the most tribal casinos of any state in the country. The state has entered into Class III gaming compacts with 67 federally recognized tribes that provide them with exclusive rights to Las Vegas-style slot machines and live dealer table games for house-banked games like blackjack, roulette, and craps.

The compacts don’t provide the sovereign nations with exclusivity for nonhouse-banked games like poker. In a nonbanked game, the house isn’t in on the action but simply facilitates the game in exchange for a small fee or rake.

Commercial cardrooms circumvent the banking law by running “California games” where players take turns serving as the dealer. The tribes have long argued that the manipulation of the games for the rooms to offer blackjack and baccarat violates their compacts.

Now, they have legal recourse to take their fight to the courtroom. 

Tribes’ Right to Justice

Over the weekend, Newsom signed Senate Bill 549. The Tribal Nations Access to Justice Act sailed through the state legislature in late August.

SB 549 provides California tribes with the legal right to sue a cardroom. The legislation grants state judges the authority to review tribal complaints related to California’s Gambling Control Act.

The statute authorizes Indian tribes to bring legal action against licensed California cardrooms and third-party proposition player service providers to seek a declaration as to whether the room’s games constitute a banking card game in violation of state law.

Before Newsom signed the bill, tribes lacked legal recourse, as state courts had no jurisdiction over Native nations. Federal courts rarely intervene in state gaming regulatory matters.

Newsom celebrated state lawmakers for passing the Tribal Nations Access to Justice Act.

I’m proud of the progress California has made to reckon with the dark chapters of our past,” the governor said. “We’re committed to continuing this important work to promote equity, inclusion, and accountability for native peoples.”

The bill was among the most lobbied statutes in California history. Both the cardrooms and tribes spent millions of dollars on political donations and lobbyists. 

Potential Consequences 

Many cities rely heavily on their cardrooms to fund their local budgets. Some cities like San Jose have said if cardrooms shutter, their hand could be forced to make cuts to fire and police services.

Cardrooms argued SB 549 formed an unlevel legal playing field, as the statute bars the 48 commercial gambling businesses from suing the tribes in response.

The Communities for California Cardrooms said SB 549 “opens the door for foreign nations to sue Californian citizens” and undermines the state’s “autonomy and legal framework.”

The nonprofit says the law will add undue financial distress to the cardrooms now that they’ll need to hire attorneys to defend their business operations.

Cardrooms and tribes have been foes for years. The two sides have been blamed for California remaining free of legal sports betting, one of only a dozen states today that continues to outlaw sports gambling.