California Stakeholders Respond To Effort To Ban Blackjack At CA Cardrooms

California cardrooms responded to an attempt to prohibit blackjack-style games by stating the games are played legally because they differ greatly from the game of “twenty-one” prohibited in 1885.

Last month, the Bureau of Gambling Control introduced concept language to prohibit blackjack-style games and provide tighter restrictions on player-dealer rotations for games offered by California cardrooms.

The BGC asked for comments and suggested changes by Thursday. Although the bureau has not publicly posted the comments, PlayUSA received several submissions directly from stakeholders.

Three cardroom groups — the California Gaming Association, Communities for California Cardrooms and California Cardroom Alliance — jointly filed two letters, one addressing each possible regulation.

Cardrooms assert that the proposals conflict with hundreds of game approvals issued by the Department of Justice since the Gambling Control Act passed in 1997.

The cardroom groups added that the bureau hasn’t identified any grounds for dramatic regulatory changes. And they say the proposal lacks the necessity, authority, clarity and consistency required for adoption under the Administrative Procedure Act.

“If the Department intends to engage in a meaningful discussion regarding the new Blackjack Proposal, the Department must provide actual reasoning and analysis to support the proposed changes in the manner in which it has approved games since the adoption of the Gambling Control Act.”

California Indian tribes, which have asked the attorney general to address what they see as illegal cardroom games since 2012, wrote letters in support of the concept regulations and suggested improvements.

Cardrooms say blackjack games not prohibited

Concept language from the BGC prohibiting blackjack focused on Penal Code section 330 of California law that prohibits the game of “twenty-one.”

But cardrooms argued that the game “twenty-one” prohibited in 1885 radically differs from modern-day blackjack. The letter cites several legal decisions that section 330 does not apply to games with a different set of rules, even if those games evolved from a prohibited game.

Cardrooms provided 30 pages of attachments with examples from old texts on the rules of “twenty-one” in 1885 and how they differ from modern-day blackjack. These include players getting a card before making their first wager and both dealer cards remaining hidden from players.

The letter contends that many blackjack-style games played in cardrooms today also differ from traditional blackjack offered at tribal casinos. Some are even patented, which requires a game to be sufficiently different from preexisting games.

“Considering their different (and often incompatible) rules, the variations of modern blackjack set forth in the Proposal are plainly distinct from the historical game of twenty-one. These games are not prohibited—or even contemplated—by Penal Code section 330, and the Department has no other basis for banning them.”

Cardrooms also questioned the department’s authority to define games listed in section 330 or unilaterally revoke the approval of a previously authorized game. Revoking a game approval, the letter states, requires a formal accusation and proving that the game violates federal, state or local law.

The letter concluded:

“The Department has for many years approved blackjack-style games for play in licensed cardrooms because those games are legal under California law. Nothing in the Proposal offers any reason to believe otherwise. To the contrary, the Proposal plainly conflicts with settled judicial precedent and the Department’s own interpretation of section 330, dating back 120 years.”

Cardroom comments on player-dealer rotation

Penal Code section 330 clearly prohibits cardrooms from offering banked games.

Blackjack is traditionally a banked game. In Las Vegas casinos, players face off against the house, represented by the dealer.

Cardrooms currently contract with third-party proposition players (TPPPS) that take the player-dealer position and operate as the bank. Regular players are offered the opportunity to take the player-dealer position after every two hands but typically decline because they don’t want to take on the added risk.

The house doesn’t bank the game. Instead, TPPPS do and pay the house for the privilege.

Concept regulations require the player-dealer position rotation to be offered after each hand and transfer to a regular player at least twice every 40 minutes or the game ends.

The cardroom groups note that, in 2000, the state legislature adopted Penal Code section 330.11, creating a safe harbor for player-dealer games with continuous and systematic rotation of the player-dealer position. And in enacting the Business and Professions Code section 19980 providing for the licensing of TPPPS, the legislature determined that having those services occupy the player-dealer position didn’t create a banked game.

In addition, cardrooms say legislative history shows lawmakers considered mandating player-dealer rotation at a fixed point but rejected doing so in favor of the current version of the statute.

Stated in the letter:

“Over the last 25 years, hundreds of such player-dealer games have been approved and are
currently offered for play across the State without complaint from or harm to the public. The Department’s consistent interpretation for the last two decades has engendered industry-wide reliance on that interpretation, creating a strong presumption against this Proposal.”

Cardrooms pointed out that Government Code section 11346.3 mandates that the Department summarize the economic and fiscal impact on local and state governments and analyze if the impact is $50 million or more.

“The regulation will be lethal for the majority of California cardrooms and extremely detrimental to the fiscal integrity of dozens of California communities and the livelihoods of tens of thousands of working families that the cardroom industry supports.”

Tribal comments on proposed cardroom regulations

Tribal comments were led by the California Nations Indian Gaming Association (CNIGA) and Tribal Alliance of Sovereign Indian Nations (TASIN), which submitted a joint letter from the more than 50 tribes in their memberships.

“CNIGA and TASIN appreciate and view the proposals as a good first step in providing much-needed clarity on the types of card games permitted at California’s state-licensed cardrooms. For nearly a decade, we and many tribal governments throughout California have been seeking relief from what we believe to be unlawful games at cardrooms.”

Although these draft regulations are intended to help bring those games into compliance with California law, we recognize both proposals require work to achieve necessary clarity and ensure all interested parties have a clear understanding regarding games offered at card rooms versus banked games authorized solely to Indian tribes pursuant to voter-approved amendments to the California Constitution.”

CNIGA and TASIN provided the following suggestions for player-dealer rotation:

• Make clear that ending a game does not restart the 40-minute clock. The game cannot restart unless two players take the player-dealer position.
• Prohibit cardrooms from limiting which players are permitted to serve as player-dealer by imposing a minimum cash balance to take the position.
• Do not allow a cardroom owner, licensee or employee to qualify as one of the player-dealers.
• Prohibit zero-collection games. Requiring collection from all players distinguishes legal card games from illegal banked card games. Prohibit TPPPS from playing the collection fees for other players.
• Adopt more stringent regulations for TPPPS and review who receives the funds generated by a TPPP.
• Impose significant and mandatory penalties for violations of the regulations and posted rules.

The tribal organizations also have concerns about complicated prohibitions of blackjack-style games.

“We believe that a better approach would be to clearly define the rules for a game that is allowed, with all modifications prohibited. Such an approach would provide clarity to both cardrooms and the public. It also would make enforcement by the State significantly easier.”

Some individual tribes also submitted comments. The Morongo Band of Mission Indians suggested that the player-dealer position rotate twice every 15 minutes or play stops for at least 60 minutes.

Yocha Dehe Wintun Nation joined Morongo in suggesting that cardrooms be given 60 days rather than one year to bring their games into compliance.

“Will the Bureau allow the cardrooms to continue playing illegal blackjack games until the current regulatory process ends, which could be years from now?” Yocha Dehe Chairman Anthony Roberts wrote. “The answer to this question should be an automatic – and emphatic – ‘no.’”

AG pledged to complete regulatory process

The Bureau of Gambling Control hasn’t provided any timeline to take their concept language into full-fledged regulations. And past precedent casts doubt that will ever happen.

The Bureau issued similar concept language twice previously that went nowhere.

In 2019, the Bureau offered even stricter proposed cardroom regulations under then-California Attorney General Xavier Beccera. But when the pandemic hit and Beccera left to become US Secretary of Health and Human Services, the proposal fell by the wayside.

However, this effort appears different.

Yocha Dehe’s letter references that in a May 15 meeting with tribal leaders, California Attorney General Rob Bonta committed to seeing the regulatory process through to the finish.