Deputy Editor
The California cardroom industry can breathe a collective sigh of relief for now. California cardrooms are in the clear to continue dealing blackjack after prevailing in a high-stakes court case.
California Attorney General Rob Bonta issued a bevy of new rules governing the cardrooms in February. These effectively banned blackjack, along with making traditional house-banked card games in general a major headache. For decades, cardrooms had used third-party proposition player services (TPPPS) to work around regulations that made house-banked games the exclusive province of the state’s tribal casinos.
California’s tribal gaming interests had railed against this practice for years.
The possible loss of millions of dollars in cardrooms taxes had sent some local communities into a panic. Solutions such as increased sales taxes were proposed in some cardroom-dependent communities.
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Preliminary Injunction Leads to Victory for California Cardrooms
In the meantime, the cardrooms mounted a legal defense in hopes of preserving the status quo. The cardrooms argued that Bonta’s office had exceeded its authority in handing down the new regulations. They held that the Bureau of Gambling Control, from which Bonta issued his regulations, had authority only to enforce the laws, not draft them.
Led by the California Gaming Association, which represents the state’s 66 cardrooms, the industry won a promising early victory, securing a preliminary injunction to keep the cardrooms operating until the court rendered a decision.
That was a promising development because the granting of a preliminary injunction indicated that the presiding judge believed the cardrooms had a “likelihood of success” in legal terms. Judge Richard Darwin wrote in his initial decision granting the injunction that he agreed that the Bureau had exceeded its authority.
Sure enough, the final decision on Tuesday granted victory to the cardrooms.
Poker Rooms Could Have Been Collateral Damage
The ruling preserves the cardrooms’ ability to deal blackjack and other traditionally house-banked games. It’s unclear what the effect would have been on California poker rooms if the new regulations had been allowed to stand.
On the one hand, poker rooms could have been collateral damage. While poker used to power many of California’s cardrooms before the use of TPPPS, it accounts for a fraction of their income these days, as games like blackjack, baccarat, and Pai Gow are far more lucrative.
If cardrooms had lost their ability to deal these money-making games, some may have closed up shop, reducing the number of live poker outlets for California players.
On the other hand, the loss of these games may have forced the cardrooms that did stay afloat to double down on poker.
For now, the industry will move forward with business as usual. But it’s worth noting that the California poker rooms, many of which are struggling, narrowly dodged a major inflection point.
Cardrooms Take Victory Lap, But Fight May Continue
CGA President Kyle Kirkland released a statement on social media in support of the ruling.
“The Court’s ruling is a lifeline for communities across California,” he said. “If these regulations had been allowed to stand, the consequences would have been devastating for working families, local businesses, and the cities that rely on cardroom revenues to fund police, parks, libraries, youth programs, and other essential services.”
Kirkland also fired shots at Bonta and the state’s gaming tribes.
“These regulations were never about protecting the public,” he said. “They were designed to advance the interests of a handful of powerful gaming tribes.”
While the cardrooms can breathe a sigh of relief for the moment, history says this fight will continue. The tribes and commercial cardrooms have been battling over TPPPS for years. The state has cranked up the heat on the cardrooms recently and appears set on supporting the tribes.
However, efforts there have continued to fall short. In addition to this court-ordered dead end, the tribes also found no success after the state cleared the way for a one-time lawsuit against the cardrooms. A judge threw out that case last August, declaring it a federal matter.
The smart money is on the state and the tribes finding some new avenue to come after the cardrooms in the coming months or years, at least as long as the current powers that be remain in office.
Image credit: DarkNight0917/Wikimedia Commons (license)
