California card rooms secured a temporary victory against new state regulations on blackjack-style games, pausing rules that threatened their operations.
Key Takeaways
* A preliminary injunction temporarily halts new California gambling regulations impacting card rooms.
* The ruling cites the Bureau of Gambling Control’s overreach of its statutory authority.
* This legal battle carries significant implications for card room operations and local economies across California.
California card rooms received a temporary reprieve after a San Francisco Superior Court judge granted a preliminary injunction against the state’s attorney general’s office. This ruling temporarily pauses two new sets of regulations concerning blackjack-style games and player-dealers from taking effect. The injunction, set for 45 days, was issued by Judge Richard Darwin, who indicated that the petitioners, the card rooms, are likely to prevail in their argument that the Bureau of Gambling Control (BGC) exceeded its jurisdiction. The next hearing in this case is scheduled for June 30.
Judge Darwin stated, “I find that petitioners are very likely to prevail on their argument that in issuing the new regulations, the [Bureau of Gambling Control] acted in excess of its jurisdiction.” He further clarified that an agency like the BGC possesses only powers granted by statute, rendering unauthorized acts void.
The Long-Standing Conflict in California Gaming
This legal challenge is part of an ongoing regulatory dispute between California card rooms and state gaming tribes. Tribal casinos hold exclusivity for Class III gaming in California and have consistently argued that card rooms are illegally offering banked games, rather than adhering to their allotted parimutuel framework. Card rooms, conversely, maintain that blackjack-style games and player-dealers had been approved and regulated by state authorities for years before these new rules were introduced.
The Attorney General’s office acknowledged the injunction, stating it “will respond appropriately in court.” The California Nations Indian Gaming Association (CNIGA) did not provide a comment on the ruling.
Industry Impact and Economic Concerns
Kyle Kirkland, president of the California Gaming Association (CGA) and owner of Club One Casino, expressed satisfaction with the ruling but noted the sector remains vigilant. Kirkland stated the ruling “reinforces what we’ve said all along, that the Bureau of Gambling Control is overstepping its authority, and that these regulations would bring irreparable harm to these communities.” He described these rule changes and subsequent litigation as “the most critical issue that’s faced the card room industry” during his tenure. Card rooms currently operate in a state of uncertainty, fighting the changes in court while preparing for potential implementation.
The state itself has acknowledged the potential harm. The Department of Justice (DOJ) estimated in its rulemaking proposal that card rooms “would be directly affected by the proposed regulations,” projecting a 50% loss of existing blackjack revenue. The DOJ contended the changes were primarily clarifying, aimed at ensuring compliance with state law regarding prohibited gambling games.
Details of the Proposed Regulations
The two sets of rule changes, approved on February 9 and effective April 1, would significantly alter gameplay. For blackjack-style games, the new rules would eliminate the “bust” feature and the target point of 21, among other modifications. Player-dealer changes would strengthen existing requirements, mandating periodic rotation of the dealer role to keep a game active.
State attorneys argued at the recent hearing that the BGC and DOJ hold exclusive jurisdiction to enact such changes, not the Gambling Control Commission, which handles daily regulatory duties. Deputy Attorney General Sharon O’Grady asserted, “We decide what is a controlled game, and our regulations enable us to enforce our statutory role.”
Financial and Political Dimensions
The state’s acknowledgment that these rules would reduce local tax revenue for several California cities highlights the financial stakes. Cities like Commerce and Bell Gardens, which host some of the state’s largest card rooms, declared fiscal emergencies following the new rules. Tax revenues from Parkwest Bicycle Casino, for instance, comprise approximately 40% of Bell Gardens’ general fund. Both cities had placed sales tax increases on the June ballot to address anticipated shortfalls.
Card rooms suggest that Attorney General Rob Bonta, who is up for reelection, is advancing the tribes’ agenda. Tribes, in turn, maintain the state is upholding their exclusivity by enforcing regulations. Both sectors are politically active and have contributed to Bonta’s campaigns. CNIGA Chairman James Siva previously commented in April, “We were excited about the decision [to implement the rules]. It’s something that tribes have been advocating for the last 10 years.” He added, “We firmly believe that the games they’re offering were illegal house-banked games, which is in violation of our exclusivity, our sovereignty.”
I remember the first time I saw Kai Tak, Hong Kong’s gambling city, I thought I was in a fairy tale. All the lights blinking, the music and the monumental buildings, what 9-year-old wouldn’t think they’ve come to a magical place? It was my father who brought me, dragging me along and when inside I was hit by the smell of frying duck. As soon as I hit 21 I returned to Kai Tak, A bit nervous to see if my mind had embellished the memory, but it hadn’t. Kai Tak was still a magical place. I decided I wanted to spend as much time as I could at this place, so I did.
