California Gov. Gavin Newsom signed into law Monday legislation to reinstate a moratorium on cardroom expansion in the Golden State.
As a result of AB 341, no new cardrooms will be allowed in the state for 20 years. But small existing cardrooms can increase table games modestly over time.
A cardroom moratorium, in place for 25 years, was allowed to expire at the beginning of this year. The new law is retroactive to Jan. 1, squashing any plans to take advantage of the opening for cardroom expansion.
The agreement is a rare example of California Indian tribes and cardrooms working together
Asm. James Ramos, the only Native American in the California legislature, sponsored the bill, which received near-unanimous support in the legislature (Assembly 68-1, Senate 32-0).
Ramos said in a statement:
“I am happy to have brought the tribes and cardrooms together in a historic consensus that has resulted in the bipartisan AB 341 becoming law. I deeply appreciate Gov. Newsom’s support for AB 341, which will help ensure the vitality of the gaming industry by allowing for measured cardroom growth without overexpansion over the next 20 years.”
History of California cardroom moratorium
The California cardroom industry dates back to the 1800s with card clubs operating through local ordinances. In 1998, the state began overseeing the industry with the Gambling Control Act.
In addition to establishing a regulatory framework with creation of the California Gambling Control Commission and Bureau of Gambling Control, the act set a 10-year moratorium on cardroom expansion.
The moratorium prohibited both new cardroom developments and any increase in tables beyond what was already permitted on the floor. Whenever the moratorium ended, the legislature expanded it.
A movement developed of small card clubs asking to add more table games. But California tribes opposed adding any tables. The tribes contend that many games offered at these tables, particularly blackjack and baccarat, violate their exclusivity on house-banked games.
Frustrated with the lack of progress on allowing small cardroom expansion, Sen. Bill Dodd, chairman of the Senate Governmental Organization Committee that handles gaming issues, made a stand last year.
The committee rejected a bill passed unanimously by the Assembly to extend the moratorium another year. Dodd told stakeholders that if they wanted to get the moratorium back in place, they needed to reach a compromise on expanding small cardrooms.
Details of compromise
Ramos led a workgroup with tribal and cardroom interests that met for more than a year to develop the language of AB 341. Here are the main details:
- Reinstates the moratorium on cardroom expansion until Jan. 1, 2043.
- Invalidates any application for a new gambling license submitted in 2023.
- Allows cardrooms with fewer than 20 to add two additional tables the first year, then two more tables every four years until they reach a maximum of 10 additional tables.
- Includes a carveout for two San Jose cardrooms to expand by 30 tables. Voters approved the expansion in 2020.
A late amendment was added at the request of the Sycuan Band of the Kumeyaay Nation to make it so cardrooms with exactly 20 tables couldn’t expand. Multiple cardrooms in the San Diego area around the Sycuan Casino have 20 tables.
Most existing California cardrooms supported a moratorium. Kyle Kirkland, president of the California Gaming Association, told PlayUSA that the cardroom industry appreciates the structure of the moratorium and found the bill to be a reasonable compromise for all stakeholders.
“The California Gaming Association commends the leadership and support of the state legislative leaders and Gov. Newsom in signing into law AB 341 that recognizes California cardrooms are critical to many local economies across the state as it preserves the good-paying jobs cardrooms provide and the tax revenues relied on by many cities. This legislation allows for an increase in tables for existing small cardrooms while reinstating a license moratorium that has helped provide stability in the industry for decades.”
James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), remarked to PlayUSA that it is rare to see gaming legislation in California receive such strong support with little dissent.
“This was definitely a very unique situation for tribes and cardrooms to agree to come together and work on this. I think for a bill of this magnitude that touches so many different pieces of the gaming industry to go through with that kind of majority shows the work of those groups and that this bill really is a good piece of legislation.”
CA tribes and cardrooms peace unlikely to continue
Now that the cardroom moratorium is back in place, California tribes and cardrooms can return to being bitter enemies.
“I think one of the things that made this work is that the tribes involved in the discussions early decided that they would focus on re-establishing the moratorium and leave out the issues of the games cardrooms are currently offering,” Siva said.
Siva added that the agreement doesn’t change the tribal point of view about how cardrooms offer traditionally house-banked games. The Bureau of Gambling Control released draft regulations in 2021 to address the issue but did not take it any further.
“Tribes continue to believe that these are illegal games being offered in violation of the exclusivity granted to us by California voters. That issue is not done and we will continue pushing Attorney General [Rob] Bonta to enforce those rules. We’re not asking for something to change. We’re just asking for the letter of the law to be followed.”
Tribes were in an awkward position of allowing the expansion of games they claim are illegal. The Pechanga Band of Indians remained neutral on the bill and submitted a letter to Ramos documenting their concerns.
In the letter, Chairman Mark Macarro said the tribe supported restoring the moratorium but not expanding games they assert are unlawful.
“Our opposition to an expansion in the number of tables is rooted in the state’s inability to effectively regulate and stop cardrooms from playing table games that violate existing California law. The State’s complicity with the cardrooms’ conduct is having a detrimental impact on lawful gaming operations statewide. The lack of enforcement of clear violations of our gaming agreements is tantamount to another broken promise by the State of California.”