New California Law Enables Tribes to Sue Card Rooms
California Governor Gavin Newsom signed a bill into law this month that could change the entire poker ecosystem in the state. The Tribal Nations Access to Justice Act, which was known as SB.549, is now a part of California’s gambling laws, and it gives the state’s Indian tribes the ability to bring legal action against California card clubs and prop player service providers with regard to banked card games that violate the Gambling Control Act.
Let’s take a step back and see how this happened and what it means.
California Card Rooms
In the 1930s, according to Capitol Weekly, card rooms in places like Los Angeles operated in the shadows. The first two card rooms that operated in Southern California with licenses were the Western Club and Monterey Club. Those city-issued licenses were valid until it went to court, but even then, the California District Court of Appeals upheld the legality of poker in the state in the early 1940s. The city of Gardena continued to issue licenses, and poker clubs then expanded to six located throughout Los Angeles County.
When California needed more revenue to fight inflation in the 1970s and 1980s, more clubs opened in Southern California, including Commerce Casino in 1983 and the Bicycle Club in 1984. In 1984, the state legislature passed the Gaming Registration Act, followed by the Gambling Control Act in 1998, both of which put the state government in control of licensing. The consolidation of power created the California Gambling Control Commission (CGCC), a combination of representatives of the California Department of Justice’s Bureau of Gambling Control and gubernatorial appointees.
By 1999, there were 150 commercial card rooms across California. However, moratoriums on new card club licenses began to shrink the industry, and by 2014, fewer than 100 card rooms were in operation.
California Tribal Gaming
At the same time, Native American tribes in California wanted to expand from its bingo roots to full-blown casinos, as other tribes had done in states like Florida. When the United States Congress passed the 1988 Indian Gaming Regulatory Act (IGRA), it standardized gambling regulations for federally-recognized tribes on their own lands.
Slowly, tribes like San Manuel expanded bingo halls into casinos, but the games were limited. It wasn’t until California voters passed a constitutional amendment in 2000 to allow the state to negotiate gaming compacts with tribes under IGRA. This allowed them to add slot machines, lottery-style games, table games like blackjack and baccarat, craps, and video poker.
Initially, there were 61 compacts. By 2024, there were 76 Indian-run casinos in operation throughout California operated by 73 tribes. (There are 109 federally-recognized tribes in California.)
Contentious Relationship
There was overlap. The state law in California that gave tribes the right to offer Class III gambling – slot machines, table games, etc. – did so on an exclusive basis. This set the tribal casinos apart from card rooms. However, there were varying interpretations of house-banked games versus player-banked games.
Per the law, card rooms were restricted to allowing only player-banked games. This meant that even card games like blackjack were not played as traditionally house-banked games, as that would have given the card rooms an edge and infringed upon Class III gaming restrictions. By making them player-banked games, which meant that players acted as the bank instead of the dealer, it created enough of a difference to keep card rooms and tribal casinos on separate sides of the gaming laws. (This is where the term “California blackjack” came from, as it was player-banked instead of traditional casino blackjack.)
The problem for card rooms was that it was difficult to find players with the resources to bank the games. And without willing players, the games couldn’t – technically – operate. So, card rooms began to employ third-party proposition player (TPPP) services.
Another problem for the card clubs was the requirement to rotate the player who acted as the bank. Many clubs solved this problem by not enforcing the rule or using more TPPPs to handle the responsibilities.
Tribes felt that card rooms were skirting the laws.
Enough is Enough
In 2018, tribes like the Rincon Band of Luiseno Indians had enough. A group of tribal leaders took their concerns to the CGCC and Bureau of Gambling Control, and the regulators promised action. In return, the tribes promised to sue if they didn’t see results.
Later that year, Rincon teamed up with the Santa Ynez Band of Chumash Mission Indians to file a lawsuit. The list of casinos named as defendants included Hustler Casino, Commerce, Bicycle Casino, Hawaiian Gardens, Hollywood Park, and Oceans 11, to name a few. However, years of court battles based on arguments of standing and detailed readings of the letter of the law. Subsequent and similar lawsuits were dismissed for similar reasons.
Tribal leaders were not ready to concede. They decided to try something different.
Senate Bill 549
At the start of 2023, California State Senator Josh Newman introduced SB.549 as a bill pertaining to education, but it quickly transformed into a gambling bill for the tribal nations. Throughout hearing after hearing in 2023 and into 2024, the bill took on amendments and changes to become the Tribal Nations Access to Justice Act.
- “The purpose and intent of the Tribal Nations Access to Justice Act is to authorize a limited declaratory and injunctive relief action before the California courts, filed solely against licensed California card clubs and third-party proposition player services providers, to determine whether certain controlled games operated by California card clubs are illegal banking card games or legal controlled games, thereby resolving a decade-long dispute between California tribes and California card clubs concerning the legality of those controlled games and whether they violate state law, including tribal gaming rights under Section 19 of Article IV of the California Constitution.
At the end of August 2024, the final version passed the Senate unanimously and then passed the Assembly by a vote of 32-2. Governor Newsom received the bill on September 11 and signed it on September 28.
Buying a Bill
According to the reporting of nonprofit news organization Cal Matters, both the tribes and card clubs tried to buy the lawmakers’ support regarding SB.549. This is par for the course in most of today’s political realm, so this is not particularly unusual, but it is worth noting.
Reportedly, donations from tribal casinos to the Governmental Organization Committee exceeded $1M since just before SB.549 was introduced. And nearly $100K of that went to members of said committee in the weeks leading up to the vote.
Card rooms, on the other hand, donated nearly $400K to members of the same committee, the largest amount to the committee’s chairperson, who did vote on the clubs’ behalf.
Of course, lawmakers told the media that those contributions had nothing to do with their ultimate votes.
Pros and Cons
California tribes are satisfied with the bill, as it gives them the authority to defend their gaming rights as they see necessary. As Chairman James Siva of the California Nations Indian Gaming Association (CNIGA) said in a press release, “We are incredibly pleased that the California legislature and Governor Newsom have turned good legislation into law. This law simply provides a reasonable solution to a decade old dispute and provides clarity to tribes, the state, and commercial card rooms. This is good and fair public policy for all parties concerned.”
Card room operators, on the other hand, are not so pleased. They fear that the crackdown on TPPPs and constant threat of lawsuits will force smaller facilities to close and will cut into profits of all.
Poker players, in particular, may lose some of their poker rooms throughout the state. They may have to relocate their games to larger facilities that are able to withstand the legal scrutiny or encourage more tribes to implement poker rooms into their casinos.
The full repercussions of the new law may not be realized for months or years.
