California Cardrooms Score A Victory In Ongoing Fight With Gaming Tribes

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US District Court Judge John Menendez handed California cardrooms a significant win in their ongoing fight with the state’s tribal casinos.

On June 18, the US District Court for the Eastern District of California dismissed a lawsuit filed by three California Tribes (Yocha Dehe Wintun Nation, the Viejas Band of Kumeyaay Indians and the Sycuan Band of the Kumeyaay Nation) against the State of California and Governor Gavin Newsom.

At issue is California’s cardrooms offering traditionally house-banked card games like blackjack and baccarat. The cardrooms argue that because the games are player-dealt and because they have no stake in the outcome (the house simply collects a fee per hand as it does at poker tables), these aren’t house-banked games.

The state’s gaming tribes have long objected.

California’s gaming tribes have pointed to several aspects of the arrangement they believe violates the exclusivity clauses of their compacts with the state (you can read up on that here and here).

Two interpretations of the same decision

The ruling isn’t the end (the tribes indicated in a press release they’re “considering” an appeal) but any way you slice it, it’s a serious blow to California’s tribes.

The key point is the judge’s opinion on the three tribes’ exclusivity clauses from their compacts:

“Plaintiffs (Tribes) argue the most-recently entered Compacts guarantee the same right of exclusivity that was bargained for in the 1999 agreements. The Court disagrees. The Compacts, although recognizing the right of exclusivity provided by the California Constitution, do not include any express terms regarding Defendants’ obligation to preserve that right. In fact, the Compacts contemplate the abrogation of that right, providing the Tribes limited recourse in the event their rights of exclusivity lapse.”

The cardroom POV

Based on the judge’s ruling, cardrooms are claiming victory.

In a press release following the ruling, California Gaming Association President Kyle Kirkland said:

“We are pleased that the Court dismissed this lawsuit by these California tribes against the State of California over alleged violations of their tribal gaming compacts.  The Federal Court ruled that the compacts do not give the tribes exclusivity over gaming in California. This litigation was an attempt to eliminate competition from local cardrooms, threatening thousands of California families and dozens of communities statewide.

“We will continue to oppose specious tribal attacks on our industry, employees and communities. Tens of thousands of Californians count on cardroom living wage jobs to support their families, and dozens of communities rely on the tax revenue we generate to support vital public services.  We will not stand by quietly while wealthy tribes try to misuse court resources to hurt our employees, their families and our communities.”

The tribal perspective

Tribes believe that far from being earned on merit, the victory was merely won on procedural grounds. Specifically that the three tribes that filed suit had looser exclusivity language in their compacts (negotiated in 2015 and 2016) than the original tribal compacts from 1999.

In addition to bringing up a possible appeal, the joint press release from the three tribes reads in part:

“While the court expressly acknowledged the exclusive right of tribes to conduct banked card games, the ruling constituted a procedural finding by the court that it lacked the power to require the State to enforce the law under the tribes’ compacts… the court found the compacts are not the vehicle under which the tribes can force the State to enforce the law, and protect their exclusive right to offer house-banked card games.”

“[…]

“Notably, the State does not dispute the merits of the case. To the contrary, as detailed in the tribes’ complaint, various high-ranking representatives from the CA Department of Justice, the Bureau of Gambling Control and the Attorney General’s office have acknowledged California cardrooms are playing unlawful house-banked card games, and are also playing blackjack, which is illegal under the Penal Code. But, the State is doing either little or nothing to stop the cardrooms’ unlawful conduct.”

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What happens next in cardrooms vs tribal casinos?

One possibility is another tribe (likely a tribe whose compact was established in 1999) bringing a similar suit in a different district. It should be noted that tribes are batting .000 in California courts thus far.

Tribes could also continue to push the state to take action.

Tribes won a small victory following a 2016 review of games that use the player-dealer position. The review, carried out by then-Attorney General Kamala Harris‘s office did set stricter rules on these games. Tribes were unimpressed and looked at the new enforcement guidelines as little more than a slap on the wrist.

The other option is for the tribes to acquiesce and accept the decision… That’s not likely to happen.

Steve Ruddock

About

Steve Ruddock is an avid poker player and a veteran member of the gaming media. His primary focus is on the regulated US online casino and poker markets. He writes for numerous online and print publications, including OnlinePokerReport.com, USPoker.com, and USA Today.

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