For years, California’s gaming tribes have complained about the use of house-banked games at California’s card rooms, which the tribes say violated the state constitution and their own monopoly over such games in the state. While players are technically offered the chance to deal (and be the banker for the games), few actually take advantage of the option.
Last week, California Bureau of Gambling Control (CBGC) sent a letter to the card rooms saying it would no longer accept applications for new games that did not require players to accept the deal. A 2007
decision by Robert Lytle, former chief of the CBGC, that the players need only be offered the deal led to the rise of the “third-party proposition player” (TPPP), which has turned out to be a very lucrative business. Lytle immediately left the regulatory body and began working for the card clubs. In 2013, California Attorney General Kamala Harris sought a revocation of Lytle’s license to work in the industry.
The tribes have complained for years that the card rooms are violating state and local laws by not rotating the deal.
“Card rooms no longer rotate the bank in the playing of their games and allow so-called third-party proposition players, essentially a partner of the card rooms, to maintain that bank,” Leland Kinter, chairman of the Yocha Dehe Wintum Nation, told a state Assembly committee, as conveyed by Online Poker Report.
Tribes contend that the TPPPs, which have evolved from poker “shills” to elaborate banking systems allied with the card rooms, violate a law that prohibits card rooms from having any interest in funds wagered, lost or won. Because of that interest, card rooms are often waiving rakes or seat rentals, traditionally the main source of revenue for card rooms.
The card rooms are also offering such games as blackjack and baccarat in violation of state law, say the tribes.
While the letter does not prohibit existing card games to be shuttered, the CBGC is formulating new regulations that could the regulations on card rooms and require in-depth reporting by the TPPPs.
OPR reported that CBGC’s director of the TPPP unit said, “Because a card room establishment cannot bank its own games, it contracts with a third party to act as an independent contractor to provide the service,” a clear acknowledgement that the practice is deeply engrained.
A lawsuit brought by four players—and bankrolled by the United Auburn Indian Community—accuses the Casino Royale in Sacrament of not rotating the deal as required by law, and may turn out to be the straw that broke the camels back.
Since the Lytle decision, California card rooms have grown quickly. A group representing the card rooms estimates the economic impact of the industry at $1.8 billion.
