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A new but expected lawsuit targets dozens of card rooms in California with the goal of tightening the casino gaming monopoly of tribal casinos within the state’s borders. A favorable decision for the tribes could limit card rooms’ operations, potentially even making their current business model obsolete.
A further ramification of a win for the claimants is that tribal casino operators would solidify their position as the gatekeepers for any potential effort to bring regulated online gambling to California. After the high-profile failure of 2023’s sports betting initiative, online gaming companies seem to have accepted the need for tribal participation in any repeat attempt.
Tribes, as sovereign entities, would not ordinarily be able to file suit in state court. However, a bill that passed late last year granted them one-time permission to challenge the legality of the card rooms’ offerings.
Lawsuit comes to fruition
Since California Gov. Gavin Newsom signed the Tribal Nations Access to Justice Act, the stage has been set for the lawsuit that dropped on Jan. 2, 2025. Agua Caliente Band of Cahuilla Indians, et al. v. Parkwest Bicycle Casino, et al., could represent the culmination of years of debate in California over the legality of the card games that establishments like Parkwest Bicycle Casino offer.
At issue is the claimants’ argument that California law gives them exclusive rights to offer house-banked card games within the state. The complaint alleges that defendants’ games violate that exclusivity.
While the lawsuit was filed in the Sacramento Superior Court, the California Supreme Court will likely have the final word on this complaint. Due to the language of the Tribal Nations Access to Justice Act, that opinion will carry a lot of weight in terms of what games card rooms will be able to offer in what ways going forward.
If the court agrees with the complainants, it could mean significant changes for California’s commercial gaming industry.
The action behind the tribes’ complaint
Throughout the controversy, operators of California card rooms have argued that their games are legal because they are player-banked. The logic is that card rooms only take a cut of the action for facilitating the games between individuals, rather than competing against the players as a casino would.
What muddies the waters, however, is the use of third-party proposition players, who often take on the “player-dealer” role when regular players don’t want to. These proposition players are paid by the card rooms to play in the games, which the complaint argues makes them representatives of the card rooms’ interests and makes the games effectively house-banked.
Furthermore, the lawsuit alleges that the third-party proposition players provide other services to the card rooms like security and capital for advertising. Depending on the language the court issues, use of these third-party proposition players could at least see significant alterations if not become illegal.
Card rooms would need to adapt and the new limits may challenge their viability. That could mean that tribal casinos would truly be the only places in California where people can play a legal game of baccarat, blackjack, and table poker variants.
For commercial gaming companies, that situation would bear some similarities to what has already played out in California.
Tribal casino operators have flexed their muscles before
Success in the card room lawsuit would not represent the first time that tribal casino operators have shown their ability to shut down attempts at their control over gaming in California. In 2022, tribal casino operators opposed a referendum on online sports betting and their campaign to defeat it was wildly successful.
The initiative to wield control over online gambling in California continues, as evidenced by a lawsuit against social sportsbook operator Fliff. With each event protecting tribal exclusivity over gambling in California, the more necessary it becomes for any companies eyeing expansion into the state to broker terms with tribal casino operators.
Online gambling companies have taken some steps toward that end already.
Online casino operators may be ahead of the curve
After bankrolling the failed sports betting referendum in 2022, companies like FanDuel have tried to form working relationships with tribal casino operators in California. In February 2024, California Nations Indian Gaming Association Chairman James Siva told PlayUSA that FanDuel has reached “out to a number of tribes.”
It’s possible that enterprises like FanDuel could take on a business-to-business model in California for online gambling. They could provide tribal casino operators all the necessary infrastructure to offer online casino play in exchange for licensing fees.
Card room operators may need to take a similar approach to preserve their businesses, although it’s questionable how open tribal casinos will be to reaching a settlement given the years of litigation over card games in California. For now, the courts will decide the future of California card rooms.
Likewise, the courts could also cement the path to legal online gambling in California as going through tribal casinos.
