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California gaming tribes have been given an unprecedented opportunity to litigate against their main rivals, the state’s commercial card rooms. There’s a chance that many of the card rooms’ gaming activities, or even the establishments themselves, might become a thing of the past in California. The tribes imagine that their own casinos would receive any business lost by the card rooms, but they aren’t the only ones competing with the card rooms.
One of the biggest questions surrounding a hypothetical clampdown on card room activities is what other entertainment options stand to benefit. Tribal casinos have long faced competition from gaming establishments in adjacent states, most notably Nevada. However, the rise of online gambling has also changed the situation dramatically since the feud between the tribes and card rooms began.
Important statutory development in California
Thanks to a recently enacted law in California, the Tribal Nations Access to Justice Act, the operators of tribal casinos have standing to sue the operators of card rooms in California for what they perceive to be violations of a California constitutional amendment that gives tribal casinos exclusive rights to offer certain games. The amendment at the heart of the argument was approved by California voters in 2000.
The dispute over whether gaming halls in California can offer games like baccarat and blackjack legally in the state is nothing new. However, until the passage of the Tribal Nations Access to Justice Act, the tribal casino operators could not sue the card room operators directly because as they are properties of sovereign nations. California’s court system had no jurisdiction over the affairs of tribal casinos.
The Tribal Nations Access to Justice Act changes that distinction in this regard. That creates an inevitable confrontation.
Days in court are coming
The Tribal Nations Access to Justice Act not only gave tribal casino operators standing to file lawsuits in California’s court system but also prescribed some parameters for that activity. Although over 70 different sovereign bodies operate casinos within the borders of California, the Act mandates that the parties consolidate the dispute over card room operators into one complaint.
The Act also sets a deadline for the initiation of the litigation process for April 1, 2025. Furthermore, the Act states that court agents cannot take action against card rooms until a final judgment appears.
In addition to protecting the state from liability, the Act does not allow tribal casino operators to claim monetary damages or force card room operators to pay their legal fees. Finally, the Act requires the courts to review the situation without reliance on any precedent on the subject.
Due to that last instruction, California courts will be on the most basic level simply interpreting the state’s Constitution. That is in order to determine exactly which games tribal casino operators have exclusive rights over, and which, if any, games are open to other parties. That’s where opinions begin to diverge.
Murky future for California card rooms
While there are varying opinions about the application of California’s constitution on gaming rights, legal scholars analyzing the current situation agree on two points. Those are:
- The California Supreme Court will ultimately decide this matter
- Litigation will take years to reach a final ruling
In that space and time, there is a multiverse of possibilities. One of them is a broad and thorough ruling in favor of the claimants. Essentially that would shutter all gaming activity at commercial facilities throughout California.
Should that be the ultimate result, another multitude of hypotheticals gain tangibility in terms of what might fill that void.
Will tribal casinos see a bump in activity?
There is some data, however unverified, to suggest that tribal casinos in California might be in prime position to benefit if card rooms in the state become insolvent. State tribal leaders assert that when card rooms were shut down, but their facilities were open during the COVID-19 pandemic, they saw a boost in table games revenue around $100 million.
It’s unclear how much of that came from people who otherwise would have played at card rooms had they been operational at the time. The methods utilized to reach that figure are also not publicly available.
Furthermore, there’s no guarantee that Californians accustomed to playing at commercial gaming facilities would exclusively venture to the nearest tribal casinos to play there. Some of the tribal casinos would have the advantage of proximity. It’s also likely that the pandemic boom in table games revenue could motivate tribal casinos to target marketing toward card room visitors suddenly lacking their usual spots.
However, this might be more of an “and” than an “or” situation. New marketing efforts by tribal casino operators within California might be counteracted by similar initiatives outside of the state.
California card rooms closing a win for Las Vegas?
Years of data suggest that California is a cash cow for casinos in Las Vegas. Data reported by Bryan Horvath of the Las Vegas Sun from the Las Vegas Convention and Visitors Authority in March 2022 suggest that almost a third of visitors to Las Vegas in 2021 came from California.
In July 2023, the same body claimed that almost 48% of people flying into Las Vegas’ Harry Reid International Airport in 2022 did so from California airports, according to Richard N. Velotta of the Las Vegas Review-Journal. The Las Vegas Convention and Visitors Authority is as self-interested as tribal casino operators. So, it’s fair to view these data with the same skepticism.
Regardless, Dr. Marla Stafford, Professor of Marketing at the University of Nevada Las Vegas, believes that Nevada’s casinos stand a chance to fill the potential void. Stafford said:
“Any time offerings are reduced by companies, competitors are ready to snatch up consumers who no longer have access to the products they want. Indeed, this suggests that Californians may move to Nevada for some of their gaming activities if the choices become limited in California. But Nevada does not have card rooms like the card rooms in California. So if card room gambling is what the gambler wants specifically, they may try to find it in states where it is legal or possibly an illegal location. But if the individual is happy to gamble in other more traditional ways, they can visit tribal casinos in California or they may indeed flock to Nevada which has more opportunities to gamble. So yes, Nevada’s gaming industry has significant potential to benefit from the possible changes in California.”
Other potential benefactors within the realm of regulated gaming could be tribal casinos in Arizona and/or Oregon. That depends on consumer behavior. As Stafford alluded to, there are also considerations outside of the regulated market for gaming.
An opening for online and unregulated gaming in California?
In California, there are currently few regulated opportunities for online gambling. The state does have a regulated system for wagering on horse races, including online platforms. FanDuel Racing and TVG, among others, currently accept deposits and paid wagers from people in California.
Outside of that, California tolerates, but does not regulate, daily fantasy sports apps and websites. Otherwise, playing online casino games, buying lottery tickets online, and online wagering on human sports for real money remains unregulated.
That status quo seems unlikely to change any time soon. So, regulated online gambling is probably the most unlikely benefactor of a possible shuttering of card rooms. Unregulated websites may experience a bump from players in the state, but it’s hard to quantify exactly how much.
It’s difficult to estimate how many opportunities to gamble in unlicensed physical spaces exist within the state. It’s possible that such situations could increase if card rooms cease operating throughout California.
In such a conversation, it’s important to remember that players are individuals. Behavior could be as unpredictable as the result of the forthcoming litigation.
Predicting future consumer trends is difficult
Numerous studies have examined the power of habits in consumer choices. For example, Verplanken and Wood in 2006 looked at the use of interventions to change consumer behavior for the Journal of Public Policy & Marketing.
It’s difficult to predict how an interruption in routines for people who frequent card rooms in California may change the behavior of those people. To some degree, as Stafford explains, that depends on an individual’s relationship with gaming.
“I don’t know if the issue would be as problematic for ‘regular’ gamblers as compared to ‘non-regular’ gamblers, as compared to those who have some form of disordered gambling. Indeed, those who are regular players but gamble responsibly would not be happy if their favorite place shut down. But those who have some sort of problem would likely behave differently, because their addiction is not being fueled. This would likely lead to some unique behaviors, as people with an addiction or a disorder need to fulfill their desire, and that desire will lead to a certain type of response when they can’t get to their ‘favorite place.’”
One thing’s for sure: tighter limits on the games they can offer will be bad for card rooms. However, if the tribes hope that all the business their casinos lost will come back with a win in court, they may be disappointed. California’s gambling landscape has become very complicated in recent years, and there’s no telling where gamblers will take their business next.
