Judge Rejects California Restrictions on Cardroom Table Games

SAN FRANCISCO: California cardrooms can continue offering blackjack-style games after a judge blocked state restrictions backed by tribal casino interests.

The ruling protects a major revenue source for cardrooms and cities that rely on gambling tax income to help fund local services.

San Francisco Superior Court Judge Richard Darwin ruled that the Bureau of Gambling Control lacked authority to impose statewide rules severely restricting blackjack-style games at cardrooms. The bureau operates within the office of California Attorney General Rob Bonta.

Related: California Tribes Face Off over Federal Casino Approval

Judge Says Legislature Must Decide

The ruling followed a temporary order issued in May that had already halted the regulations from taking effect. Darwin ruled from the bench, with a written decision expected July 10.

The restrictions would have limited cardrooms from offering blackjack-style games in which the target is a hand of 21. They also would have imposed new limits on third-party player-dealers, which are used by cardrooms to host banked-style games without having players wager directly against the house.

The California Gaming Association sued in March to block the rules. The group argued that the attorney general’s office and gaming regulators were attempting to rewrite long-established gambling policy without approval from state lawmakers.

Kyle Kirkland, a Fresno cardroom owner and president of the California Gaming Association, said the case was about more than gaming. He said the court made clear that regulators cannot bypass the Legislature and unilaterally rewrite decades of established law.

Tribal Casino Dispute Continues

The ruling is another setback for California tribes that operate casinos and have long argued that cardrooms are offering games that should be reserved for tribal gaming properties. Tribal casino groups say state law gives them exclusive rights to offer house-banked table games such as blackjack.

Cardroom operators argue their games are legal because of the use of player-dealer structures. Under that model, cardrooms do not act as the house, while third-party providers or players take turns covering the banked position.

The dispute has continued for years through courts, ballot fights, legislative efforts and regulatory proceedings. Tribal casino interests have argued that enforcing exclusivity is important because casino revenue supports housing, education, health care and other tribal government services.

A spokesperson for the California Nations Indian Gaming Association did not respond to a media request cited in reports on the ruling. Bonta’s office said it was disappointed and reviewing its options.

San Jose Budget Impact Avoided

The decision also matters for local governments that receive tax revenue from cardrooms. San Jose officials had warned that the restrictions could cost the city tens of millions of dollars.

San Jose is home to Casino M8trix and Bay 101. Mayor Matt Mahan said cardroom tax revenue accounts for about $25 million of the city’s $1.7 billion general fund budget, supporting police, parks, housing programs and other services.

The city recently approved budget cuts to address a $50 million annual shortfall and still faces projected deficits in future years. Mahan said the court decision protects residents, the local economy and essential public services.

Other Bay Area cities also host cardrooms, including Hayward, Emeryville, Livermore, Colma, San Bruno, Petaluma and San Rafael. The potential budget impact varies by city, but smaller jurisdictions with cardrooms had also warned that the proposed rules could affect local finances.

The case may not be over. Bonta’s office can still appeal, and the broader fight between tribal casinos and cardrooms over blackjack-style games is likely to continue through legal and political channels.

RELATED TOPICS: Regulation