A bill introduced in the California Senate would allow tribes to sue cardrooms in California. They are currently barred from suing cardroom operators over what they claim is illegal practices.
Senate Bill 549, known as the Tribal Declaratory Relief Act of 2023, represents a new manifestation of the rivalry between the state’s tribal casinos and the state’s cardrooms.
Tribes say the legislation is necessary to protect their exclusive rights to offer table games in California. City officials strongly oppose the measure, saying it would shutter cardrooms in their cities. That would eliminate thousands of jobs and deprive cities of millions of dollars in tax revenue.
Tribes argue that cardrooms’ use of third-party vendors violates the law
There are nearly 100 California cardrooms. They provide an estimated half a billion dollars in revenue annually to cities and towns throughout the state.
Federally recognized tribes are free to offer lottery games, slot games and “banked” card games at their California casinos. These games, like traditional blackjack, are games in which the casino acts as the “bank” and handles wagers. On the other hand, California cardrooms are only allowed to offer “player-dealer” games, like poker.
Tribal casinos claim cardrooms are violating this law by utilizing third-party player proposition services to act as the bank in modified table games, such as blackjack. However, tribes cannot file civil lawsuits against cardrooms because tribes are sovereign nations, lacking the legal standing to sue in US courts.
SB 549 would change that. If passed, it would undoubtedly spur multiple lawsuits across the state.
Cardrooms pay millions of dollars in revenue to cities every year
Cardrooms claim those lawsuits would exert major financial stress on them, and by extension, on the cities the cardrooms operate in. The numbers back up that argument.
Shavon Moore-Cage, executive assistant to the city manager of Hawaiian Gardens, told the Los Angeles Daily News in 2023 that cardroom tax revenue accounts for 68% of the city’s general fund.
This is far from an isolated case. In Oceanside, the Ocean’s Eleven Casino cardroom brings in gross revenue of more than $55 million. It represents 347 total (direct, indirect, and induced) jobs that total almost $15 million in wages, according to data provided by the California Gaming Association, an organization that supports the cardroom industry.
In a larger city like San Jose, the numbers are even bigger. San Jose cardrooms’ gross revenue is more than $300 million. They represent 1,768 jobs totaling over $82 million in wages, per CGA data.
Los Angeles’ cardroom gross revenue is over $422 million. It represents 2,300 total jobs that account for more than $150 million in total wages. Statewide, total cardroom tax revenue is roughly $500 million.
City officials strongly opposed to legislation
With those factors in mind, it’s hardly surprising that local officials are against the bill. They say the bill is simply another attempt by tribal casinos to shut down competition.
Kia Xiong, San Jose’s deputy public information officer, told PlayCA the bill would expose cardrooms and third-party vendors to expensive litigation.
“The city of San José, in collaboration with local businesses, opposes Senate Bill 549. This legislation would grant supporters of the bill the ability to legally challenge licensed card clubs and third-party proposition player services providers under certain conditions. These conditions would focus on determining whether certain games operated by card clubs, with the support of third-party providers, violate state law and encroach upon exclusivity rights as outlined in Section 19 of Article IV of the California Constitution. The city is engaged in joint advocacy efforts alongside the San José delegation in Sacramento.”
Terry Brown, a senior management analyst in the Oceanside City Manager’s Office, told PlayCA that his city opposes the bill because of its risk to the city’s sole operating cardroom, Ocean’s Eleven Casino.
“The [cardroom] has been a great employer. It employs a lot of Oceansiders and provides tax money that we use to do a lot of improvements here, and to keep our parks and roads clean. … They’ve been a good partner through the years.”
What’s next?
There is no hearing date currently scheduled on SB 549. It currently sits in the Committee on Governmental Organization. Xiong anticipates the measure will be reviewed later in the spring.
State Sen. Josh Newman, who proposed the bill, told the Los Angeles Daily News in 2023 that he anticipates this issue won’t be decided by lawmakers.
“It will be in the hands of California courts.”
