California Cardroom Battle Could be Headed to Court, as Bill Passes First Stage

Article ByDavid Weir

July 10, 2023

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Posted in: California Gambling News, US Gambling News

In the latest chapter of the ongoing saga of cardroom legality in California, proposed bill SB 549 sparked a fierce debate last week between representatives of the state’s Indian tribes and cardroom operators.

However, it ended in a 6-0 vote of approval for the bill from the California Assembly Judiciary Committee.

Bill SB459 was introduced by Senator Josh Newman(D-29). It aims to resolve a longstanding dispute over the legality of certain cardroom games, which tribes argue infringe upon their exclusive rights to offer banked games in the state.

Now the first committee stage of the bill that might let them take the fight to courts has been passed. It will have to pass several more committees, and both the California Senate and Assembly floors, before full approval.

Related: The best online casinos in California, rated and reviewed by our experts

Courts Rule

The proposal looks to conclude the long-running argument by giving a coalition of 21 California tribes, led by the Viejas Band of Kumeyaay Indians, the opportunity to sue the cardrooms in a one-off court case.

Currently, California’s tribes haven’t had much luck suing cardrooms, as under California law, the tribes are recognized as sovereign entities that can’t be represented in state courts.  

The controversy centers around the way cardrooms offer games traditionally banked by the house, such as blackjack. The California Constitution prohibits Nevada-style casinos, except for those run by the tribes, preventing cardrooms from offering banked games.

However, cardrooms have found a workaround to California’s gambling laws by using third-party proposition players (TPPPs), who sit next to the dealer and operate as the bank at each table.

This arrangement is entirely regulated by the California Gambling Control Commission and Bureau of Gambling Control. However, it has been a point of contention between tribes and cardrooms for over a decade.

The state has also not always been entirely supportive of the practice, even if it makes tax money from it and its regulators are involved in it. In May of this year, state Governor Gavin Newsom signed a moratorium on any new cardrooms opening in the state.

James Siva, executive director of the California Nations Indian Gaming Association (CNIGA), expressed his hope that the new SB549 would provide a platform to resolve the issue.

“Put tribes in a courtroom, acknowledge they have standing to bring this type of case, and hopefully the courts will rule on the merits,” he said.

Opposition to the Bill

However, the bill has faced significant opposition, particularly from cardroom employees, their families, and friends.

A petition on Change.org, started by one Vishal Dave, argues that SB 549 could result in job losses and threaten the survival of families dependent on cardroom employment.

“This bill would allow California Indian tribes to sue cardrooms for operating ‘banking card games’ that violate state law and tribal gaming exclusivity,” the petition said.

“This is a clear attempt to seriously hurt cardroom business, shut down cardrooms, and eliminate competition. If this bill is passed, it will put thousands of people out of work and devastate the economies of the communities where cardrooms operate.”

Kyle Kirkland, president of the California Gaming Association, echoed these sentiments, arguing that the bill sets a dangerous precedent.

“The problem is tribes just don’t like the rulings they’ve gotten, and so they’re trying to find any kind of workaround,” he said.

“I think the legislature giving up state sovereign immunity, or just saying we don’t have confidence in a state agency, is a horrible precedent.”

The Path Forward

Despite the opposition, the bill is moving forward. It needs to advance through the Assembly Judiciary and Governmental Organization committees by July 14, when the legislature enters summer recess.

If the bill passes, it could take between four to ten years to get a final court verdict on the legality of California cardroom games. With such wide ranging implications for a potentially huge California gambling market, it’s possible the case could go as far as the California Supreme Court.

California currently has more than 70 tribal casino operations, and hundreds of cardrooms.

One University of California at Los Angeles study referenced by the Change.org petition regarding the bill said California gambling venues bring in $1.5 billion in taxable revenue to the state each year.