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A decades-old conflict between tribal casinos and operators of cardrooms in California could be headed to a state courtroom as a bill to provide tribes standing for a one-time lawsuit moves closer to the Assembly floor.
Senate Bill 549, authored by Democratic state Senator Josh Newman, would give tribes until April 1, 2025 to seek a declaration in state court on the legality of specific games operated by licensed cardrooms. Currently, cardrooms offer blackjack or baccarat dealt by third-party proposition players.
Tribes argue the games violate their exclusivity rights to offer house-banked gaming.
“Typically, cardroom players pay a fee on a per-hand, or per-hour basis to play these games,” said Newman. “Over the course of the more than two decades since the passage of Proposition 1A, however, cardrooms have steadily added to their offerings a number of games, which are … indistinguishable form card games offer in Las Vegas and tribal casinos.”
In 2000, 64 percent of voters approved Prop. 1A allowing tribes in California to offer slot machines, lottery games, banking and percentage card games on tribal lands.
Newman said he believes those games offered by cardrooms are in violation of Prop. 1A, but because the tribes lack of standing in California courts, the court has been unable to consider that constitutional question.
As California’s tribes are considered sovereign nations, and cannot be sued or sue, the state legislature needs to clear the way for tribes to have a state court determine the legality of the games offered by the state’s 70-plus cardrooms.
“This lack of clarity for the basis for the long-standing dispute between tribes and licensed cardrooms,” Newman said. “Prior attempts to resolve this dispute through the regulatory and legislative process or by initiative have failed.”
Newman told the Assembly Governmental Organization Committee that SB 549 does not take sides and there is no guarantee how the court might rule. The committee approved the bill by a 15-1 vote, with six members not voting, on Tuesday (July 2), sending the measure to the House Appropriations Committee.
“If the legislature refuses to grant the legal standing needed for the courts to weigh in, we remain no closer to a resolution on this long-standing issue,” Newman said.
Should SB 549 pass the legislature and be signed into law by Democratic Governor Gavin Newsom, California’s gaming industry could look quite different as some cardrooms would offer new types of games, while other cardrooms may close their doors.
Previously, SB 549 passed the Senate by a 37-0 vote, with three senators not voting, in May 2023, before it passed the Assembly Judiciary Committee in July 2023.
“It was disappointing that the Assembly Governmental Organization Committee chose politics, Californians, jobs, and local communities,” the California Gaming Association (CGA), which represents cardrooms in the state, said in a post on X, formerly Twitter, after the committee vote.
The CGA estimates that SB 549 puts $500m in tax dollars at risk.
Ed Manning, a partner with Sacramento-based KP Public Affairs who represents Hawaiian Gardens Casino, testified Tuesday that the bill was about “shutting down cardrooms.”
“That’s unfortunate because card clubs have been around since the 1800s,” said Manning. “The games we currently play, we’ve played since at least the 1980s, maybe longer, and we are regulated by the California gaming statutes.”
Manning reminded lawmakers that every single game offered by cardrooms has been authorized by the Bureau of Gambling Control, a regulatory agency within the California Department of Justice. The California Gambling Control Commission licenses cardrooms and third-party proposition players (TPPPs).
Lawmakers approved the use of TPPPs in 2000 with the passage of Assembly Bill 1416. Then in 2001 lawmakers passed Assembly Bill 54, described as a “clean up” measure that affirmed that a banked game was not a controlled game with a player-dealer position that rotates continuously.
Manning also warned the committee that the measure sets a dangerous precedent and ignores the will of the voters who rejected Proposition 26 overwhelmingly in 2022.
Proposition 26 would have legalized retail sports betting at tribal casinos, while also allowing them to offer craps and roulette. The initiative also included a provision allowing individuals to bring civil lawsuits against card clubs over disputes in state gaming law.
“This would be the first time in the history of California that we are giving access to the courts for a sovereign entity to sue individual companies … who are legally operating and have no recourse because they would not be able to sue the sovereign entity in court.”
“That’s not justice,” Manning said.
Both Newman and James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), testified that SB 549 represented a fair and reasonable pathway to allow an impartial court to decide whether the games offered by cardrooms violate tribal exclusivity and state law.
The bill also consolidates multiple lawsuits into one filing and does not permit any claims for money damages, penalties, or attorney’s fees.
“This is good public policy,” Siva said. “If cardrooms are confident in the legality of the games they operate, they should welcome the chance to prove it in a court of law.”
Siva assured lawmakers that cardrooms will continue to exist after this legislation passes.
“SB 549, nor a decision by an independent judge, can invalidate any cardroom games that are found to be legal under California law; those games will continue,” Siva said.
