A former member of the California Gambling Control Commission, Richard Schuetz, recently noted that there were more raids by federal law enforcement against California card rooms since 2011 than in the combined commercial casinos in the rest of the U.S.
In a report by CDC Gaming Reports, we learn that the activities federal agents busted Golden State card rooms included violations of the Bank Secrecy Act, insufficient protections against money laundering, racketeering, prostitution and loan sharking.
Some say California’s card rooms are the worst regulated in the entire U.S. gaming industry, says the report.
The California Gaming Association, whose members are card rooms, seemingly recognized this problem last year when at its annual meeting in October it sponsored a workshop on the need for casinos to build a “culture of compliance” with federal and state regulations.
A month later Artichoke Joe’s was fined $8 million by the Financial Crimes Enforcement Network (FinCEN) for failing to comply with money laundering compliance requirements and allowing other criminal activities to flourish on its property.
The CDC report explores the extent to which these widespread abuses are a result of the pressure the state’s 150 card rooms have experienced from the growth of tribal gaming since 2000—a pressure that cut that number by half— and a lack of attention paid to issues of compliance by the state agencies charged with enforcing the laws.
The report notes that California’s current Attorney General, Xavier Becerra, and particularly his predecessor, Kamala Harris, now a U.S. Senator, were more interested in politics than in enforcing the law against the politically well-connected card rooms, many of which are located in the deepest blue cities of one of the most deeply blue states, and include a constituency that public officials tread carefully around.
The report concludes by saying that the great majority of the state’s card rooms comply with federal laws, but that those who don’t are coming close to tainting the entire industry.
