Tribes And Card Rooms Waging War Over Table Games

Baccarat hand

California is unlikely to tackle the polarizing issue of online poker in 2017. However, an even more contentious gaming issue appears to be coming to a boil–the matter of house-banked games being offered in card rooms.

According to veteran California gaming reporter Dave Palermo, the longstanding feud between card rooms and the state’s tribal gaming entities could be headed towards litigation.

Card rooms offering table games using loophole

In California, tribal casinos have exclusive rights to offer casino-style games. Card rooms get around this restriction by offering the “deal” to each player at the table, in turn. By doing so, just as it does for its poker tables, the card room rakes each hand (or used to). Therefore, it has no vested interest in the outcome.

At issue is the rotation of the deal in games like blackjack, baccarat, three card poker, and pai gow poker, as well as the existence of third-party companies that act as the de facto house in many instances.

Few players want to act as the house at these tables. Most are there simply to play blackjack or pai gow. In addition to a lack of desire to act as the house, anyone that does accept the deal would need to be able to cover all bets in play, including bonus bets. If the player accepting the deal cannot cover all wagers they can assume whatever liability they wish and a third-party bank covers the remainder of the wagers in play.

As California Gaming Association President and California card room owner, Kyle Kirkland explained the issue in a past interview:

“This so-called player-dealer position has favorable economic advantages… but many recreational players decline the option because they don’t understand it, don’t want added risk or simply just want to play the games in the manner to which they’ve become accustomed in other jurisdictions.”

What happens instead is the third party company on hand takes over the deal for prolonged periods of time. As a result, the experience of the players is basically the same as it would be in a typical casino.

Tribes argue this constitutes house-banked games, and therefore, violates their exclusivity agreement.

The 2016 solution that solved nothing

In 2016 California Bureau of Gambling Control head Wayne Quint issued a notice that sought to clarify the rules regarding house-banked games at card rooms. Unfortunately, Quint’s attempt at a compromise ended up adding fuel to the fire. Card rooms and tribes found the new rules anathema.

The changes Quint proposed were as follows:

  • Provide that no one person or entity may hold or otherwise be involved in the player-dealer position continuously for 60 minutes. The player-dealer position must rotate completely away from a person or entity within a 60-minute period to a different person or entity from the one who occupied the position during the hand immediately preceding the rotation. The 60-minute period commences upon acceptance of the player-dealer position.
  • Provide that, upon failure of fulfillment of any of the requirements of play identified in paragraph 2, the game must end. Then, a new game cannot begin for at least two minutes.
  • Provide for immediate notification to all players that the game has ended, cards or tiles cannot be dealt, and wagers are not available. The dealer tray must be covered during this time to indicate the game is over.
  • Provide for the shuffling of all cards or tiles upon the opening of a new game.

The notice added a few new restrictions to the way card rooms offer traditional house-banked games. However, from the tribal point of view, the restrictions didn’t go far enough.

The tribes’ argument against card rooms

With the CBG’s notice falling flat, the next step appears to be litigation.

How this will end up is anyone’s guess. Both sides believe they’re in the right.

“Tribes aren’t interested in putting the card rooms out of business. That’s not the point here,” Steve Stallings, chairman of the California Nations Indian Gaming Association, told Palermo. “But, clearly, when the type of games and practices regarding banked games infringe on tribal exclusivity, card rooms are crossing the line.”

Or, as Leland Kinter, chairman of the Yocha Dehe Wintun Nation, told Palermo:

“The California penal code expressly bars the playing of blackjack as a prohibited game. Yet you can drive down streets and highways in our state and see billboards on which card rooms boldly advertise that they play Las Vegas-style blackjack.

“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.”

The card rooms’ defense

Card rooms disagree. Kirkland told Palermo “The card rooms feel very strongly about our position. We feel like we operate lawfully.”

In a 2015 interview, gaming attorney David Fried explained how card rooms view this issue:

“At first, the Attorney General opposed these businesses.  But following a successful court ruling for the companies, the Legislature adopted a law to regulate these third party players.  These third party players are now common and contracts between the card rooms and third party players have to be approved by regulators.”

“… the Legislature required a systematic and continuous rotation, without defining those terms, and with the Attorney General’s office to review each set of game rules for compliance.  There are many different ways to “continuously and systematically rotate” the player-dealer position.

“The Attorney General issued a letter December 20, 2007 specifying acceptable game procedures.  Tribal advocates want to attack this letter by noting that Bob Lytle signed it, but the fact is Mr. Lytle was not a lawyer and would not write a letter of this kind.  Such a letter would have been written by the Attorney General’s legal staff and signed by Mr. Lytle is his capacity as Bureau chief.  The legal reasoning in the letter is sound and consistent with the laws and court decisions.”

*This article has been updated to reflect players accepting the dealer position do not have to cover all wagers in play. 

Steve Ruddock

About

Steve Ruddock is a longtime member of the online gambling industry. He covers the regulated US online casino and poker industries for variety of publications, including OnlinePokerReport.com, PlayNJ.com, USPoker.com, and USA Today.