California Attorney General Xavier Becerra issued an emergency order on January 6 closing the Magnolia House Casino, a 10-table card room in Rancho Cordova.
The AG, who oversees the Bureau of Gambling Control, issued his order through that agency, citing the casino for “failing to meet its obligations under the California Gambling Control Act of 1998, which requires all gambling establishments to operate in a manner suitable to protect public health, safety, and general welfare.”
Becerra said the Magnolia House didn’t act on “numerous warnings” and “failed to take corrective actions or respond adequately to requests for information.”
The main problem appears to be that the casino doesn’t have enough cash reserves. According to Becerra, “The California Department of Justice’s Bureau of Gambling Control issued the emergency order to close the card room after multiple reviews of its finances revealed that it was seriously underfunded, threatening significant losses to patrons and players.”
The emergency order came on the heels of an accusation the bureau filed with the Gambling Control Commission against the Magnolia House alleging that the casino wasn’t keeping enough reserves to cover the cost of patrons cashing out, and that it failed to deposit funds from “third-party providers into separate, specifically-designated, and insured accounts in accordance with the Gambling Control Act.”
Becerra alleged that the casino also illegally used money from trust funds to cover operational expenses and then resisted requests for information regarding deposits from undisclosed sources. He said regulators have been warning the casino about this issue since June.
The card room will remain closed until it demonstrates it is in compliance with funding requirements, he said.
It’s the second high-profile enforcement against a California cardroom in recent months. In December, Becerra secured a $3.1 million settlement against the Hawaiian Gardens Casino for misleading gaming regulators and violating federal money laundering laws.
