The stage is set for another showdown in California’s state legislature as lawmakers reconvene this Monday, reigniting a longstanding feud that has been simmering beneath the surface. The clash between Native American casinos and California cardrooms is back in the spotlight, and both sides are armed with significant resources and lingering animosities. The focal point of this legislative face-off is Senate Bill 549, a measure that would grant tribes the ability to initiate legal actions against cardrooms. If this situation feels familiar, you’re not mistaken.
What the bill holds for now
Senate Bill 549 would provide tribes a limited three-month window in 2024 to pursue legal action against their cardroom counterparts. Interestingly, this prospect had been brought before the public last year as Proposition 26, but it was voted down.
Earlier this year, Senator Josh Newman (D-Fullerton), the author of SB 549, incorporated elements from Prop. 26 into his education-focused bill. This move has reignited the clash between tribes and poker parlors.
Tribes that own casinos contend that cardrooms have encroached on tribal territory by offering games like blackjack.
Had Proposition 26 not been defeated, it would have empowered the state attorney general to address violations of gambling laws. However, in cases where the AG did not intervene, tribal casinos could have taken legal action independently. Cardroom operators argue that this could have driven them out of business.
California’s cardroom industry carries an economic impact of over $6 billion and sustains tens of thousands of jobs, according to the California Gaming Association trade group.
As this battle wages on, considerable financial resources are being funneled into the fray. On one side, tribes wield significant political influence and substantial financial backing. On the other side stands a seemingly smaller opponent: Hawaiian Gardens, a city in Los Angeles County. This locale has already committed over $5 million to thwart SB 549.
San Jose’s resolute stand
Across the state, San Jose officials are making their stance clear: they are determined to oppose Senate Bill 549 with all their might. According to city representatives, permitting tribes to sue cardrooms over their offered games would deprive cities of tax revenue and essentially render poker parlors illegal.
Sarah Zarate, the city’s policy and government relations director, expressed in a June letter that such a move could “eliminate thousands of cardroom jobs and millions of dollars in municipal revenue in dozens of California cities.“
The California Gaming Association notes that San Jose’s two cardrooms collectively employ over 2,000 individuals.
Cardrooms are not authorized to offer slot machines, a privilege reserved for tribal casinos. To comply with gambling regulations, cardrooms structure their games as player-versus-player or involve a third party, avoiding the use of “house” money.
Tribes contend that allowing cardrooms to feature player-dealer card games is a circumvention of California’s constitutionally established monopoly on legal gambling. Under current laws, tribes lack the standing to legally challenge the legitimacy of cardrooms.
Senator Newman underscores that his bill does not preordain the outcome of lawsuits, if they were to occur. Instead, it seeks to prompt the courts to address the ongoing dispute over whether specific controlled games offered by California card clubs are illegal banking card games and whether they infringe upon tribal gaming rights.
Governor Newsom’s role
In May, Governor Gavin Newsom signed a bill that imposed a 20-year moratorium on the issuance of new cardroom licenses in California. This move essentially revives a moratorium that was initially instituted by the Gambling Control Act of 1997.
This latter act had barred the opening of new cardrooms and the expansion of existing ones and had lapsed on January 1 of this year.
Newsom’s actions have thrust him into the spotlight, raising questions about a potential presidential run. Although he has not officially announced such intentions, speculation continues.
Additionally, Newsom’s rivalry with Florida Governor Ron DeSantis has taken center stage. If a debate between the two governors materializes, it promises to be fiery. Tentatively scheduled for November and potentially hosted by Fox News’ Sean Hannity, the debate has hit a roadblock due to disagreements over details, such as the inclusion of a studio audience.
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