In summary
A judge’s temporary ruling in a costly battle between gambling halls and casino-owning tribes is likely not the end of the dispute. California politicians are likely the biggest winners of a prolonged gambling stalemate.
In the latest battle over the future of gambling in California, privately run cardrooms notched a temporary victory over tribal casinos when a judge blocked state regulators from banning blackjack at the gambling halls.
The regulations from Attorney General Rob Bonta’s Bureau of Gambling Control threaten to wipe out taxes on table games on which many local governments across California rely.
But whether the state’s 80 or so private poker rooms can keep their lucrative business model — and keep pulling gamblers away from tribal casinos — was hardly settled by San Francisco Superior Court Judge Richard Darwin’s preliminary injunction last month.
At least one former lawmaker says that’s cynically good news for the state’s politicians.
Democrats and Republicans have accepted millions of dollars in campaign donations from the rival gaming factions, as tribes have sought to use the state’s political system to put cardrooms out of the blackjack business.
“It keeps the fight going; it keeps the two very powerful interests caring about what goes on at the Legislature, and therefore it keeps the campaign contributions moving as well,” said Mike Gatto, a former Democratic lawmaker from Los Angeles.
Twenty-seven of the state’s casino-owning tribes have donated at least $15.8 million to current members of state Legislature, according to the CalMatters Digital Democracy database.
Twenty-six of the cardrooms and affiliated companies have given them at least $2.8 million, according to Digital Democracy. Cardrooms are private businesses that host poker and other card games.
Bonta, too, has benefited from the dispute. He is up for reelection this year. Cardrooms have donated at least $244,000 to Bonta since 2012, according to Digital Democracy, compared to $531,000 from tribes.
The lopsided donations from the tribes did not affect the attorney general’s decision to pursue the regulations that were set to take effect this week, said Bonta’s campaign spokesperson, Jonathan Underland. The Attorney General’s Office referred an interview request about the campaign donations to Underland.
Bonta stopped accepting campaign donations from the gambling factions before he began implementing the regulations, Underland said.
“Contributions have never impacted the Attorney General’s decision-making process,” Underland said in a text message.
Dispute over ‘house-banked’ games
Underland cited ballot initiatives that gave tribes the right to negotiate compacts with the state to host Las Vegas-style casino games. The tribes have fiercely defended their exclusive gambling rights ever since. They argue gaming is a lifeline that has helped their historically disenfranchised communities out of poverty.
“California voters made their decision on tribal gaming in 1998, and reaffirmed it two years later,” Underland said. “The constitution is a hard line, and Rob Bonta is committed to enforcing it.”
The tribes contend cardrooms have unscrupulously violated the rules prohibiting anyone but tribes from offering “house-banked” table games including blackjack, the most lucrative.
The card clubs get around the prohibition by contracting with third-party companies that serve the role as the “house” or the “bank.”
These third-party employees typically sit at tables next to the cardroom dealers. The third-party employee plays no part in the game except to collect players’ bets and pay out winnings. The dealers must periodically offer the opportunity for the players to act as the bank. Almost every customer declines. The card clubs collect fees from each game.
Bonta agreed with the tribes that the cardrooms were violating the rules and issued regulations his attorney general predecessors, Kamala Harris and Xavier Becerra, started to implement, but never finished.
Darwin’s preliminary injunction found that Bonta’s office likely exceeded its authority by banning the cardrooms’ most popular table games. The ruling is in effect for 45 days. The Attorney General’s Office will argue its case in court on June 30.
A spokesperson for the California Nations Indian Gaming Association didn’t return an interview request.
Kyle Kirkland, a Fresno cardroom owner and president of the California Gaming Association, applauded the temporary ruling and believes his industry will prevail.
“We are a legitimate industry, we have had decades of lawful operation,” Kirkland said. “We operate legally; we provide incredible support to our employees and our host communities.”
Should the cardrooms win, it would be the tribes’ second legal defeat in less than a year.
Political cash flows in
In October, a Sacramento judge threw out a lawsuit the tribes had filed against cardrooms. It was a test of a 2024 law Gov. Gavin Newsom signed that empowered tribes to sue their rivals. To that point, the tribes had been unable to sue the private cardroom companies for unfair business practices. The tribes are sovereign governments so they lacked legal standing in state courts.
Senate Bill 549 gave the tribes one shot to resolve their dispute in Sacramento County Superior Court. The judge found federal law superseded the one Newsom signed.
The stakes are high outside of casinos since some cities receive nearly half their budgets from cardroom taxes, so a tribal victory would jeopardize money for police, firefighters and other local services.
San Jose officials say that city alone receives $30 million each year from cardrooms, enough to fund 150 police officers or 133 firefighters.
The fight over SB 549 was one of the most costly political battles of the two-year legislative session that concluded in 2024, and gambling entities poured cash into legislative campaigns.
A bipartisan coalition of lawmakers, many of them with large tribal casinos in their districts, pushed for the gambling measure, while a smaller group of lawmakers with cardrooms in their districts opposed it.
The opposing gambling interests donated at least $4.3 million to the Legislature during that two-year session, according to the Digital Democracy database.
The tribes pushed for the bill after spending millions on a failed 2022 sports betting initiative that similarly would have let the tribes sue cardrooms.
Facing what they saw as an existential threat, cardrooms responded to the bill’s introduction with a massive lobbying blitz. In 2023, Hawaiian Gardens Casino spent $9.1 million on lobbying, the second most any company reported to state regulators. Only the international oil giant, Chevron Corp., spent more that year.
After Newsom signed the law, the cardroom industry spent more than $3 million that fall in retaliation against four lawmakers who played key roles in passing the bill.
Three of the targeted candidates lost their re-election, including the bill’s author, Democratic Sen. Josh Newman of Fullerton.
Digital Democracy engineer Alexis Ramirez contributed to this story.
