California is an interesting state from a gaming perspective. Gamblers will find a mix of gaming options including tribal casinos, poker/card clubs, horse racing, charitable gaming, and the state lottery. Yet voters overwhelmingly rejected sports betting proposals in 2022 and online gaming is also illegal.
There has long been a simmering battle between tribal properties and the card rooms, and new legislative efforts could see that grow. A bill would allow tribal gaming groups to sue card room competitors, claiming that the venues violate state compacts giving the Indian casinos exclusive rights to Vegas-style gambling.
The possibility of the legislation has led to massive lobbying efforts on both sides. Millions of dollars could also be at stake for many local communities if the card rooms are put in jeopardy.
“If you’re going to attack us and try to take away what we’ve had for decades, then we’ve got to fight back,” Keith Sharp, general counsel for Hawaiian Gardens Casino in the Los Angeles area, told Cal Matters. “And so we’re going to spend the money that we need to spend. I mean it’s about survival at this point.”
Dispute Over What’s Legal
Hawaiian Gardens spent $9.1 million in lobbying efforts in 2023, only behind Chevron for the entire year. The state’s card rooms date back to the state penal code first being written in 1872. The government banned casinos at that time, but made an exception for poker and non-house backed games.
This meant that properties could only run these types of games. Many properties feature other similar card games that might be termed as loose variants of poker, but aren’t backed by the house.
The rule led to a proliferation of card rooms across the state and a thriving poker scene that regularly hosts major tournaments, streamed cash games, and series like the World Poker Tour (including at Hawaiian Gardens).
Cities across the state have now become dependent on the tax revenue that these properties generate. The legislation now possibly puts that in jeopardy.
“Those games, we’re very dependent on here in the city,” Commerce Mayor Hugo Argumedo told Cal Matters. “They provide many of the programs and services that we offer to the residents in our community.”
Tribes Cry Foul Over Certain Games
The state’s tribal gaming operations argue card rooms have strayed into other games that they aren’t legally allowed to offer, such as baccarat and blackjack. They argue this infringes on their own gaming offerings and deprives tribal communities of millions of dollars in potential revenue. Tribal gaming officials also say that cities can raise funds in other ways rather than relying on what they term “illegal gambling.”
However, card rooms thread the needle by not offering house-backed versions of these games. Instead, a player acts as the house and is known as a “third party provider of proposition services” under state law. The card room then takes a fee per hand dealt.
The new bill is expected to be heard by the Assembly Governmental Organization Committee in the coming months and could hand tribes a major weapon in their efforts to curtail card rooms.
Tribes have vastly outspent card rooms in terms of lobbying in recent years and card rooms produce only about one-tenth the revenue of the state’s tribal casinos. But card rooms argue that the games they offer are not only allowed, but specifically spelled out in California gaming law.
“Every game that (the tribes are) saying is illegal right now, every single one of them has been explicitly approved individually in every card room in the state of California,” card room industry lobbyist Ed Manning told legislators last year.
Sports Betting Efforts Also Nixed
In related news, a petition effort to legalize sports betting run through the state’s tribal operators recently failed. The Attorney General’s office unveiled two proposals earlier this year that backers hoped to get on the November ballot.
Kasey Thompson, a longtime gaming industry veteran and founder of All In poker magazine, hoped the effort could include online betting and send 25% of profits to non-participating tribes and up to 1% to the state.
The Attorney General’s office noted that the plan would provide “increased state revenues that could reach into the tens of millions of dollars annually, depending on how the measure is implemented and legally interpreted.”
However, Thompson admitted in late January that the petition effort was dead without tribal support. Tribal leaders said they weren’t consulted on the plan and opposed the efforts.
“The entire approach has been error from the very beginning,” California Nations Indian Gaming Association Chair James Siva said in November. “The approach of essentially holding tribes’ feet to the fire — you’re either going to get on board with this, or we’re going to do it — that’s never going to work with us.”
