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California Gaming Committee Advances Bill Allowing Tribes To Sue Cardrooms

A California Assembly Committee approves giving tribes recourse to defend gaming exclusivity.

California Right To Sue
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Matthew Kredell Avatar
8 mins read

After almost exactly one year between committee meetings, California legislation allowing tribes to defend their exclusive gaming rights through a lawsuit against cardrooms is on the move once again.

The Assembly Governmental Organization Committee, which handles gaming issues, voted 15-1 Tuesday to pass the legislation providing tribes standing to get a California court to resolve their longstanding dispute with cardrooms over house-banked games such as blackjack and baccarat.

Sponsored by Sen. Josh Newman, SB549 had a new name — the Tribal Nations Access to Justice Act — but the same supporters, opponents and arguments as when it passed the Assembly Judiciary Committee on July 7 last year.

“Nobody knows how the courts will rule,” Newman told colleagues. “… What you are doing today is not making a decision that favors one side or another. You’re simply allowing for the tribes to have standing to go to a court of law in California to ask that court to rule on this question. And that ruling will be final, that process will be consolidated so it doesn’t expose cardrooms to endless litigation. At the end of this we’ll have clarity, and that clarity is desperately needed to solve a decades-long dispute.”

History of California tribal-cardroom dispute

Although card clubs have existed in California since the 1800s, California Penal Code 330 has long prohibited “twenty-one” and other banking or percentage games played with cards, dice or any device.

As a result of the California State Lottery Act of 1984, the California Constitution also prohibits Nevada- and New Jersey-style casino gaming.

In 2000, Prop 1A provided Indian tribes in California an exception to offer slot machines and conduct lottery games, banking and percentage card games on tribal lands.

In 2001, the California legislature amended the California Penal Code with AB54, which noted that a banked game did not include a controlled game with a player-dealer position that rotates continuously and systematically.

Cardrooms use third-party proposition players, authorized by the legislature through AB1416 in 2000, to fill the player-dealer position. The California Gambling Control Commission licenses TPPPs.

The Bureau of Gambling Control, under the attorney general, issued game approvals to the cardroom industry allowing the player-dealer position.

Tribes have tried multiple lawsuit attempts against cardrooms and the state to defend their tribal exclusivity. But because of their tribal sovereignty, Indian tribes typically can’t sue or face lawsuits in state or federal court. So, courts threw out the lawsuits based on lack of standing without a decision on the merits of the case.

Details of proposed solution from tribes

SB549 would authorize a limited declaratory and relief action before the California courts to determine whether certain games operated by California card clubs are illegal banking card games in violation of tribal exclusivity or legal controlled games.

Key details of SB 549 include:

  • Tribes must file the case in the Superior Court of California, County of Sacramento.
  • If the bill passes this year, tribes must file their case no later than April 1.
  • Consolidates multiple actions filed into one lawsuit.
  • Does not permit any claims for money damages, penalties or attorney’s fees.

“The central question of this bill is actually not about which games cardrooms are or should be allowed to offer,” Newman said. “Rather, the central question of this bill is simply whether to allow the opportunity for a court of law to address this now decades-old question purely on its merits.”

Arguments for California SB549

California Nations Indian Gaming Chairman James Siva, who also serves as vice chairman of the Morongo Band of Mission Indians, and Catalina Chacon, a Pechanga Band of Indians tribal council member who serves as vice chair for the Tribal Alliance of Sovereign Indian Nations, spoke at the committee for tribes in support of SB549.

Siva said that tribes merely wanted clear guidance from the courts on cardroom games allowed. He pointed out that cardrooms did the same previously by challenging the validity of Prop 1A. While the cardrooms lost, they got a decision on the merits.

“We tried initiation of federal and state lawsuits,” Siva said. “Unfortunately, each of those lawsuits were dismissed solely on procedural grounds without addressing the merits, therefore denying tribal access to justice. SB549 is a straightforward measure that provides a fair and reasonable pathway to allow an impartial court to decide once and for all whether certain games operated by cardrooms constitute banked card games that violate California law and tribal gaming exclusivity.”

Chacon compared the issue to the theft of tribal lands by the state in the 1800s.

“Back then, the laws of California prohibited our ancestors from accessing state courts. Therefore, they were unable to protect our land rights and we forever lost thousands of square miles. Today we are in the position to protect our gaming rights and, today, California has a different set of values with tribes. We refuse to allow injustices to be repeated. We have a fundamental obligation to honor and protect our rights for our children and for our future generations to come.”

Many other tribal leaders voiced their support for the bill at the hearing.

Arguments against California SB549

Prior to the hearing’s start, mayors from California cities with cardrooms joined more than 100 cardroom employees to rally against the bill. Many employees wore shirts reading, “Bad Bet for California.”

At the hearing, attorney Ed Manning and San Jose City Councilmember Sergio Jimenez spoke for the opposition.

Manning stressed that the Bureau of Gambling Control authorizes every game cardrooms play.

“This would be the first time in the history of the state of California you would be giving access to the courts for a sovereign entity to sue individual companies in California who are legally operating and have no recourse because they would not be able to sue the sovereign entity in court. That is not justice.”

Jimenez said that San Jose’s two cardrooms, Bay 101 Casino and Casino Matrix, provide about $30 million in tax revenue annually for the city. The city assumes that money in its budget forecasts and its loss would have ongoing impacts to basic city operations. He added that the litigation costs alone would jeopardize the economic viability of the card clubs.

“This bill would inject uncertainty into city budgets across the state at times when revenue levels and economic activity are just beginning to stabilize after the COVID-19 pandemic,” Jimenez said. “To protect city revenues, honor the will of voters in California and to protect thousands of jobs statewide, I respectfully ask for your opposition to SB549.”

Starbucks versus medical device argument

Manning brought up Starbucks in arguing that tribes should be looking to sue the state for approving games rather than suing cardrooms for offering approved games.

“This is sort of the equivalent of a local government giving a land-use permit to Starbucks, Starbucks opens up and operates, but the coffee shop down the street doesn’t like it. And so they want to sue Starbucks instead of the city government that gave them the permit. … If someone has a complaint about the fact that we operate games approved by the attorney general, you would sue the attorney general. You don’t sue the Starbucks because the local government allowed them to open and gave them a permit.”

Newman responded that he didn’t think coffee was the best example. He centered his analogy around medical devices.

“The company sets up shop and is making medical devices. Nobody argues with their ability to do that business, but if that device infringes upon the patent of another company, that would be totally appropriate for civil action. That’s what we’re discussing here. The tribes have no issue with cardrooms engaging in their business or their historical business practices. It’s the infringement upon the exclusive franchise granted to them by a proposition that was passed by the voters.”

Legislators call out attorney general for inaction

Several committee members ripped the states’ attorneys general for not doing enough to resolve this dispute between tribes and cardrooms over the years.

“Ultimately, I do believe that we need the attorney general to step up and not only do a better job enforcing our existing gaming laws but provide better guidance and clarity to cardrooms about which of their games are allowable under the law,” Asm. Sabrina Cervantes said. “Until the AG’s office does that, I believe the tribes must be allowed to seek recourse in the courts to protect their rights.”

The California Bureau of Gambling Control did restart the process last year by releasing draft regulations that included prohibiting blackjack at cardrooms. But the Bureau has given no timetable on continuing or finalizing the regulations.

After saying the legislature wouldn’t accept such behavior from other state agencies and shouldn’t from the Bureau, Asm. Jasmeet Bains said that sovereignty shouldn’t stop tribes from defending their exclusive rights.

“I do not believe that your sovereignty should be weaponized and used to treat you like second-class citizens. You are the descendants of people who were intentionally pushed aside and excluded from American society. Providing every other business owner the right to protect their business interest in court while denying you the same right perpetuates that historical exclusion.”

Asm. Tina McKinnor, the only no vote, said that cardrooms saved the city of Inglewood, which she represents. So she was voting what is best for her district, which also includes Gardena.

“For many, many years, Inglewood would have gone into bankruptcy if we did not have those cardrooms in our district. They literally saved our city.”

Limited time for tribal bill to reach finish line

Even though California cardrooms lost the vote Tuesday, they had already won by delaying the Assembly GO hearing until July.

Cardrooms mobilized against the bill in January when there was talk of a hearing by the end of the month.

Following Wednesday’s session, the Assembly is taking a summer break and not returning until Aug. 5. That leaves less than a month before the California legislature adjourns Aug. 31.

During that time, SB549 would need to get through the Assembly Appropriations Committee, the Assembly floor, then likely the Senate GO Committee before concurrence on the Senate floor.

The legislation wasn’t heard from again last year after advancing from committee right before the summer recess.

Viejas Band of Kumeyaay Indians Attorney General Tuari Bigknife told PlayUSA following the hearing he’s optimistic this year will go differently.

“We think today was a strong signal that we’re garnering legislative support. We feel like we have the momentum. There’s work to be done, no doubt. But this hearing showed that legislators understand the importance of tribes having access to the court to protect their rights.”

California online casinos and sports betting are not legal, but recent discussions in the state have been positive about the future.

Matthew Kredell Avatar
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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 and has interviewed more than 300 state lawmakers around the country.

View all posts by 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 and has interviewed more than 300 state lawmakers around the country.

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