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California Committee Considers Lawsuit Best Way To Resolve Tribal-Cardroom Dispute

Written By Matthew Kredell | Updated:
California Bill Allows Tribes To Sue Cardrooms

The California Assembly Judiciary Committee advanced a bill allowing Indian tribes to sue cardrooms to defend their exclusive gaming rights.

Members of the Judiciary Committee voted 6-0 “do pass” on SB 549, buying into the tribal argument that providing tribes standing for a one-time lawsuit is the best way to resolve their longstanding dispute with cardrooms.

Asm. Brian Maienschein, chair of the Judiciary Committee, compared the debate around the legality of how cardrooms offer traditionally house-banked games such as blackjack and baccarat to the movie Groundhog Day. It keeps coming up in front of the legislature.

“For me, what pulled me over to being in favor of this bill are the issues in front of this committee, and will this perhaps help the process that may put an end to this issue? … Maybe this does end it. Speaking for myself and maybe others, that would sort of be the hope.”

Judiciary referred the bill to Rules but discussed that it would need to go through the Governmental Organization Committee before reaching the Assembly floor. It also needs to return to the Senate, which passed a much different bill related to education, for concurrence.

Senator and tribal chair introduce bill

Prop 1A (2000) amended the California Constitution to grant tribes an exclusive right to operate banked card games.

Card clubs have operated in California since the gold rush. They originally offered card games such as poker where players bet against other players. In recent decades, they developed a system in which they contract with third party proposition players (TPPP) to serve as the bank for traditionally house-banked games.

The house technically isn’t banking the games, but it’s working with the people who are. Tribes have tried several lawsuits questioning this practice. But as sovereign governments, tribes generally can’t sue or be sued in the state.

Sen. Josh Newman wants to provide a one-time exception granting tribes legal standing to seek a declaratory judgment on whether the disputed card games constitute a violation of the California Constitution.

Tribes get a three-month window beginning Jan. 1 for one lawsuit only against cardrooms and TPPPs in Sacramento County Superior Court.

“To be clear, SB 549 does not take a side in this dispute,” Newman said. “Its passage would neither vindicate nor amplify the arguments of the tribes. And its passage will not declare or imply the cardrooms are in violation of the law. Moreover, if and when the matter comes before a court, there is no guarantee as to how a court may rule.”

The Viejas Band of Kumeyaay Indians leads 21 tribes and the California Nations Indian Gaming Association in supporting the bill.

Viejas tribal chairman John Christman said it was a reasonable and impartial measure.

“We believe that California card clubs have been violating tribal exclusive gaming rights for more than a decade by illegally operating banked games, which continues today. Economic studies and data revealed during the COVID pandemic outbreak that these illegal banked card games are taking away from gaming tribes over $100 million each year that could have been used for essential services.”

Lawyers debate merits of legislation

The hearing became a debate between two attorneys, Ed Manning, representing the cardrooms, and Tuari Bigknife (attorney general for Viejas), representing the tribes. Each answered questions from committee members on Wednesday.

Tribal arguments in favor of SB 549 include:

  • It’s the court’s place to decide if these games violate the state constitution.
  • Only a court decision will settle this question of the legality of the card games once and for all.

“So ultimately what we have is procedural hurdles that have prevented tribes from being able to have this issue heard in courts,” Bigknife said. “And, really, if the cardrooms are so confident in their position, they should be eager to go to court and prove it.”

The main cardroom arguments against SB 549 are:

  • It’s not fair to allow tribes to sue them when cardrooms don’t have the ability to countersue tribes due to their sovereign immunity.
  • The attorney general, through the Bureau of Gambling Control, approved these games and is better suited than the courts to make this decision. Allowing the lawsuit encroaches upon the right of the state to interpret, apply and enforce the law.

“Every game that they’re saying is illegal, every single one of them has been explicitly approved individually in every cardroom in the state of California,” Manning said. “… We’re driving within the speed limit but they want to sue us despite that. They’re not saying we’re not complying with the attorney general’s decision. They are saying we are complying with the attorney general’s decision and they don’t like it. And they want to sue us and not give us the ability to sue them.”

Proposed amendments to SB 549

The committee discussed several author amendments but did not officially add them to the bill.

One of the arguments cardroom representatives made against the bill to PlayUSA previously was that the state was setting a bad precedent by waiving its sovereign immunity to being sued by tribes.

Proposed amendments clarify that the bill does not authorize any action to be taken against the State of California by a tribal government. And that the court would not review the Bureau of Gambling Control’s decision-making. Both amendments aim to preserve the state’s sovereign immunity.

Manning questioned the fairness of not allowing in court the record of the attorney general’s actions in this area.

“I don’t know of another example where a regulatory agency makes a regulatory determination on the legality of what the third party banker’s role is, what we play and how we do it, and have that record not be in front of the court. I haven’t heard a single example of the regulatory history of 25 years not given deference before the court.”

Bigknife countered that, although the attorney general won’t be a party to the action, cardrooms can bring up the regulatory history.

“There is nothing in the bill preventing the cardrooms from introducing whatever evidence they have to support their position. So the evidence you just identified, presumably they would offer into the record for the court to consider for purposes of the decision.”

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Matthew Kredell

Matthew Kredell serves as senior lead writer of legislative affairs involving online gambling at PlayUSA. He began covering efforts to legalize and regulate online gambling in 2007 after federal passage of the Unlawful Internet Gambling Enforcement Act disrupted his hobby of playing small-stakes online poker. He has since interviewed more than 300 lawmakers around the country and written extensively about online gambling legislation. He has led coverage of bills to legalize online gambling in most states. A lifelong Angeleno and USC journalism alum, Matthew started his career working as a sportswriter for a decade at the Los Angeles Daily News. He has written on a variety of topics for Playboy Magazine, Men’s Journal, Los Angeles magazine, LA Weekly and ESPN.com.

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