The future of California’s cardrooms is officially ‘to be determined’ after a collective of casino-owning California Native American tribes initiated their lawsuit against the state’s cardroom operators on Jan. 2. If the tribes have their way, the cardrooms might no longer be able to offer blackjack, baccarat and other casino-style games other than poker.
The outcome of said case could carry significant residual effects for cardroom visitors across The Golden State.
Tribal gaming operators have long accused cardroom operators of illegally dealing Las Vegas-style card games, including blackjack and baccarat. The coalition also contends that cardrooms are infringing on their exclusive right to operate house-banked casino games.
The cardrooms offer what are known as “California Games,” which are special player-banked versions of those casino classics designed to comply with state law. In practice, however, the players banking the games are often not regular patrons of the cardrooms but third parties paid by the casino to be there.
The tribes made their stance on that strategy crystal clear in their complaint:
“Defendants brazenly profit from illegal gambling,” reads the opening line of the suit’s introduction. “California law prohibits cardrooms from offering ‘banked’ casino games — such as blackjack, baccarat, and pai gow — where an entity with an odds-based advantage takes on all comers, pays all winners, and collects from all losers.”
However, the cardrooms and the California Gaming Association have vehemently and confidently denied any wrongdoing. CGA President Kyle Kirkland expressed his group’s convictions in a statement decreeing its members are operating within the law, just as they have for decades.
As both sides prepare for an arduous legal battle, California cardroom regulars must also brace for the possibility of change.
What might happen to non-poker games in California cardrooms?
Depending on the verdict, it’s possible that California cardroom visitors will have to look elsewhere for non-poker games, be it at California tribal casinos or a trip to Las Vegas.
Should the Sacramento County judge determine these games do not belong in California’s 84 licensed cardrooms, the tribal coalition will have successfully defended its monopoly on house-banked card games. California voters gave tribes the exclusive right to offer Las Vegas-style table games in 2000.
It is also plausible that these games will still be legal for cardrooms but with the condition that actual players, not third parties, take turns banking them. However, in that scenario, many of the games are likely to disappear regardless—specifically, those with high-payout side bets that average players would be uncomfortable banking.
That scenario would come about if the court determines that the issue lies with the use of third-party bankers, not the games themselves. As it turns out, the fate of non-poker games in cardrooms largely depends on the role of third-party bankers.
Third-party bankers at the core of ‘banked’ games dispute
Cardrooms, which can offer player-banked and peer-to-peer games like poker, gradually began introducing other games, such as baccarat and blackjack, with players at the table rotating the role of banker.
This further evolved into the crux of the contention between cardrooms and tribal gaming operators: third-party bankers. Cardrooms pay these contractors to sit in on those table games and essentially act as the house. This is a naturally volatile position to voluntarily assume because the player-banker is up against every hand at the table.
Even though the player-banker stands to win more often, it remains an unenviable position for the casual player due to the high volatility and potential to absorb substantial losses if another player scores a jackpot. In certain games, for example, No Bust 21st Century Blackjack, bonus jackpots reach 200-1.
In Three-Card Poker, the top jackpot payout is 1000-1.
Cardrooms pay third parties to play in the games, especially the most volatile ones, and volunteer for the player-banker role because regular players typically won’t consent to it. Without a player-banker, the games don’t run.
The tribal coalition, however, doesn’t believe cardrooms and third-party bankers are operating in good faith.
Lawsuit alleges cardrooms and third parties are circumventing gaming law
As alluded to in the lawsuit snippet, the tribal coalition maintains that cardrooms and third-party bankers are sidestepping state legislation. In particular, the suit insists that the two have formulated schemes that allow third-party bankers to serve as the standalone bank for all hands played in said games.
California law requires the banking position to be “continuously and systemically rotated” between players throughout the game. As such, the tribes argue that cardrooms and third-party contractors are contradicting state law.
Adding another layer to the already complex situation is that tribes didn’t have the green light to take legal action until Gov. Gavin Newsom signed SB 549 into law. The statute, deemed the “Tribal Nations Access to Justice Act,” came into effect on Jan. 1 – one day before the lawsuit – and gave tribes the authority to sue cardrooms over alleged illegal games.
But, once again, the CGA adamantly opposes the validity of the tribes’ suit.
“Cardrooms offer tens of thousands of good-paying jobs, pay hundreds of millions in taxes, support local communities, are licensed by the state, subject to extensive regulatory oversight, and offer legal games that have been reviewed and approved by the California Department of Justice,” continued Kirkland.
“This attempt by tribal casinos to shut down lawful competition by tax-paying California businesses will fail.”
As per SB 549, any legal action related to the statute must be filed in Sacramento Superior Court by Apr. 1. That deadline didn’t come into play as the tribes were ready to file their suit on Jan. 1, the first possible day.
