New card club regulations recently introduced, along with lawsuits recently filed by gaming tribes against several California card clubs have owners of the clubs and their employees worried that they might not stay in business.
Currently the Bureau of Gambling Control, which has jurisdiction over the state’s 66 card rooms is holding public workshops on new regulations, although it has not revealed details yet.
The clubs have a major economic footprint in the Golden State, employing 23,000 and generating $300 million in local, state and federal taxes. They claim the new regulations could end the games that make up more than two-thirds of their profits.
One major casino, Commerce Casino, employs 2,500 workers.
Uncertainty plays a part in their worries. About the only thing they are certain of is that the state plans to adopt new rules for third-party businesses that function as “the bank” and the dealers at card games.
No decisions have been made yet, says Bureau of Gambling Control Director Stephanie Shimazu who told the Los Angeles Times: “We are in the very early stages. We haven’t drafted anything.”
Earlier this year Shimazu announced that the bureau “plans to rescind game rules approvals for games too similar to 21/blackjack that are prohibited by state law.” She added, “We will notify cardrooms and defer enforcement for a specified period of time to enable cardrooms to prepare for this action.” Regulations will “promulgate regulations to address rotation of the player- dealer” and examine card room contracts with TPPP firms that the card clubs hire to provide dealer services.
California law prevents card clubs from having a financial stake in a card game that happens in their facility. So, they employ third parties, known as “third-party providers of proposition players” to act as dealers. These persons are licensed by the state. Indian casinos, on the other hand, are allowed to offer banked games.
In non-poker games such as blackjack, the players bet against the third-party banker, who pays out winners and collects from losers. This person is not a representative of the card club, which make their money from fees charged each player for each hand.
Hence the Indian casinos’ keen interest in preventing card clubs from finding ways around those rules.
Up until now the Bureau has allowed third-party bankers as long as the role of banker is offered to each player after two hands are dealt. This kabuki theater offering is routinely turned down. Card clubs worry that this may end. That is certainly the goal of lawsuits that were filed recently by several gaming tribes.
At the Gardens Casino, around 40 percent of revenue derives from games that use a third-party banker. Other casinos have games where 70 percent rely on third-party bankers. Note: traditional poker, where players compete against one another, does not involve a third-party banker. Card clubs make their money with per game fees.
“We are not challenging the right of a business to operate, but rather the non-compliance with California law,” Rincon Chairman Bo Mazzetti stated when his tribe filed suit in San Diego Superior Court against several Los Angeles area casinos. “If state regulators enforced the current laws that exist, we would not have taken this action.”
The other tribe in that suit is the Santa Barbara-based Santa Ynez Band of Chumash Indians. The lawsuits allege that the cardrooms and player-banking firms are violating state law and the constitution by offering banking and percentage card games.
Named in the lawsuits are Hustler Casino, Commerce Casino, Bicycle Casino, Hawaiian Garden Casino, Hollywood Park Casino, Oceans 11 Casino, Players Poker Club, Celebrity Casinos and Sahara Dunes Casino. Also cited but not named are third-party proposition player firms.
The tribes seek an injunction and damages. They claim tribes lose $18 million annually to cardrooms because players go there instead of to Indian casinos.
Two other gaming tribes, The Yocha Dehe Wintun Nation in Yolo County and Viejas Band of Kumeyaay Indians of San Diego County have now entered the fray by claiming that the state has violated their tribal state gaming compacts by allowing the state law to be continuously violated.
Both tribes have reportedly filed notice with the state that they are triggering a 40-day “meet and confer” provision of their compacts that they are required by the compacts to initiative before their can sue in federal court of an alleged breach of compact.
All four tribes mentioned above belong to a coalition that have contended for six years that the card rooms are violating state laws and have repeatedly told the bureau of their allegations.
One reason for the secrecy involved in whether the tribes have actually triggered the “meet and confer” provisions is that it could be considered bad faith by the state government side if the word got out officially.
The Yocha Deha and Viejas tribes are happy to admit that they are furious with the state government over the issue.
Viejas Attorney General Tuari Bigknife told CDC Gaming Reports, “For over six years, Viejas has been engaged in efforts to secure state enforcement of California law and banked card game exclusivity guaranteed to the tribes under the constitution and executed compacts against illegal gaming operated by the cardrooms.” He added, “Those efforts continue in earnest on many fronts. At this time, I am not authorized to provide further details on Viejas’ efforts.”
When question about the same issue, Yocha Dehe Chairman Anthony Roberts issued this statement: “The Yocha Dehe Wintun Nation has consistently objected to the illegal operation and advertisement of house-banked card games … in California cardrooms. These activities blatantly violate state law, the state constitution and the state’s legal commitment to tribal nations under mutually beneficial gaming compacts.”
Roberts added, “For six years Yocha Dehe and other tribes have, to no avail, repeatedly called on the state to enforce the clear laws the California voters and our legislature have put in place. After all these years, the cardrooms continue, with the state’s sanction, to break those laws.”
Governor Jerry Brown’s office has declined to comment on this issue, as it has consistently for some time.
For their part, card rooms claim they are following the rules established by the two agencies that oversee gaming in the Golden State, the Bureau of Gambling Control and the Gambling Control Commission. The first is under the separately elected attorney general, Xavier Becerra, while the second serves the governor.
A card room owner, Kyle Kirkland, told the Union Tribune: “Both player-dealer games and blackjack-style games have been approved by the California Department of Justice and played at California cardrooms without harm to or complaint from the public for decades.”
