3 CA Card Rooms Have To Sell After Repeated Legal Violations

Posted on June 8, 2020 - Last Updated on June 2, 2020

Three California casinos, Paso Robles Central Coast Casino, Magnolia House Casino in Rancho Cordova, and Casino Marysville, will have to pay $165,000 in recovery and fines and must be sold thanks to “an inability or unwillingness to comply with California law,” California Attorney General Xavier Becerra announced.

The settlement is a result of the casinos’ failure to meet their obligations under the California Gambling Control Act of 1998. It requires all gambling establishments to operate in a manner suitable to protect public health, safety, and general welfare.

State orders all three CA card rooms sold

“You either play by the rules or you can expect to pay the price,” Becerra said. “Gambling regulations are about protecting the public and making sure the wrong people don’t put their thumb on the scale. If card rooms can’t hold up their end of the bargain, then we’ll take action — and these settlements are proof of that. At the California Department of Justice, our special agents and legal team stand ready to uphold our state’s gaming laws.”

Though all three will have to sell, the settlement permits the casinos to resume operations in the interim once Gov. Gavin Newsom allows card rooms to reopen. All 70 in California are currently shut down because of COVID-19 and Newsom hasn’t said when the card rooms can reopen. The trio involved in the settlement must straighten out their cash management and provide weekly accounting to state regulators in order to do so.

The findings for each casino vary slightly, but there are common themes. Among them:

  • Failure to maintain adequate financing
  • Improper use of third-party funds
  • Failure to disclose full information to regulators

Here’s a quick look at each card room and what the California Department of Justice found.

Magnolia House Casino

  • Card room unable to maintain sufficient funds to cover the cost of patrons cashing out their chips
  • Card room operated at a dangerously low level of funding
  • Improperly used third-party funds for its own benefit
  • Failed to disclose full and true information regarding its operations to regulators
  • Failed to take corrective action despite numerous warnings from regulators

The settlement also prohibits majority stakeholder Thomas B. Sheridan from operating a gambling establishment under the California Gaming Control Commission’s jurisdiction for life. He’ll also have to pay $50,000 toward costs associated with the investigation and prosecution.

In an interview in January, Sheridan said he had fixed the “deficiency on the cash” and was anxious to reopen, according to the Sacramento Bee.

Paso Robles Central Coast Casino

  • Card room failed to maintain adequate financing
  • Card room ignored notifications to correct non-compliance issues
  • Impeded regulators by failing to provide requested surveillance footage
  • Improperly used third-party funds for its own benefit

In addition to selling, owner and sole shareholder Donald Ezzell will have to operate under additional oversight conditions in the interim. He’ll also pay $65,000 toward costs associated with the investigation and prosecution.

The CGCC approved the stipulated settlement on May 28, the last of the three casinos.

Casino Marysville

  • Card room violated state and local laws governing the manner in which controlled games must be conducted
  • Demonstrated a pattern and practice of an unwillingness or inability to comply with the law

Owner and sole shareholder Sau Phong will have to pay $50,000 in fines.

Newsom will issue reopening guidance for card rooms on June 8. Many tribal California casinos are already open, putting card rooms in a tough position.

It will be fascinating to monitor the buying process. We’ll keep you posted with the latest developments.

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