California Approves Regulations Damaging To Cardrooms, Hands Gaming Tribes Major Win

California quietly approved last Friday new regulations that will limit cardrooms’ ability to offer their most popular table games, which are the target of a special lawsuit filed by the state’s gaming tribes.

The new regulations, while clearly a win for the tribes in their ongoing battle with cardrooms, don’t address all of the core issues raised in the high-profile litigation. The tribes will continue to pursue the case, which is on appeal, Casino Reports has learned.

In the meantime, the cardrooms are reeling from the approval of regulations that they say threaten their businesses and the cities they inhabit.

On Monday, California Attorney General Rob Bonta announced that on the previous Friday, Feb. 6, the state’s Office of Administrative Law had signed off on two pending cardroom regulations from the California Department of Justice. Bonta provided no quotes to go along with the 252-word press release.

The regulations, in the works since 2023, both limit the type of blackjack-style games cardrooms may offer and amend the operations of third-party proposition players (TPPPs), which are special, licensed businesses that help cardrooms offer alternate versions of games that traditionally pit gamblers against the house, otherwise known as banked games.

Taken together, the new regulations dramatically change the way cardrooms may offer their most profitable and popular games, which the state’s gaming tribes have long maintained are run illegally.

These changes are expected to not only take a significant bite out of California’s cardroom/TPPP sector but also the economic health of California cities like Bell Gardens, Commerce, Compton, Gardena, and Hawaiian Gardens, which depend upon the cardrooms within their jurisdictions for budget revenue.

Indeed, the state’s own economic assessment of the regulations found that the regs could result in the loss of hundreds of millions of dollars in revenue for cities as well as hundreds of jobs in California’s cardroom/TPPP sector, which was estimated in 2019 to have a total annual economic impact of $5.6 billion annually.

Bitter rivals

The cardroom industry argued emphatically that the California DOJ’s Bureau of Gaming Control should not proceed with either regulation because it had allowed cardrooms to offer blackjack-style, TPPP-facilitated “player-dealer” games for years.

But the tribes argued with equal force that the games’ previous approvals were a mistake while also seeking to settle the matter in court with a specially permitted lawsuit.

The tribes’ view appears to have won out, with Bonta reporting that the Office of Administrative Law approved the regulations “without substantive comment and without requiring another public comment period or resubmittal of an amended rulemaking package.”

The cardroom industry is incensed by the decision.

“Attorney General Bonta and the Bureau have unilaterally implemented extreme regulatory changes that will harm thousands of working families and the dozens of California communities that depend on cardroom taxes,” said Kyle Kirkland, president of the California Gaming Association, in a statement. “By the Bureau’s own simplistic economic assessment, these unnecessary regulations will eliminate over half of all cardroom jobs and force many communities to cut police, fire, parks, senior, and food programs when the long-standing tax base disappears.

“With other stakeholders, we documented serious legal and economic concerns in these flawed regulations, yet AG Bonta refused to identify a single threat to public safety, refused to engage with the communities, working families, and long-standing businesses that the regulations would devastate, and advanced the regulations without good faith discussion or lawful disclosure. Given the Bureau’s failure to follow the laws they are bound to follow, our industry intends to pursue legal remedies to preserve our lawful, legitimate businesses and defend the livelihood of the working families and the communities who depend on us but have been dismissed as politically irrelevant by Attorney General Bonta.”

Regulatory changes

Casino Reports sought comment from the California Nations Indian Gaming Association and the Tribal Alliance of Sovereign Indian Nations, an association of federally recognized tribal governments in Southern California, but didn’t get a response from either organization.

The bureau originally posted the proposed regulations in February of last year, withdrew them, then reposted them on April 11, 2025, starting the clock on the formal rulemaking process after a lengthy discussion when the proposals were in the draft phase two years prior. The bureau held hearings on the two proposed regulations in late May, when it also closed the window for receiving written comments on the plans.

The new regulations remove busting from blackjack-style games. In fact, the regulations bar cardrooms from offering any blackjack-style game where the target points equal 21. Under the new rules, cardroom games can’t include the words “21” or “blackjack” in their names.

The new TPPP regulation, meanwhile, calls for the role of the house or bank to be offered to every player at a quasi-banked table game before every hand and stipulates that “[t]he player-dealer position shall rotate to at least two players other than the TPPPs every 40 minutes or the game shall end.”

Both regulations will take effect on April 1 of this year. As specified within the new rules, however, the cardrooms don’t have to submit their plans for compliance until 60 days later, on May 31.

Bonta’s press release noted “DOJ received 876 comments on the proposed Player-Dealer regulations, and 888 comments for the Blackjack regulations. After careful review and consideration of the comments, DOJ did not make any substantive changes to the proposed regulations.”

Special legislation

California’s gaming tribes have been feuding with the cardrooms over the games they offer for years but didn’t have a clear path forward to adjudicate the issue until recently.

SB 549, sponsored by former state Sen. Josh Newman and signed by Gov. Gavin Newsom in September 2024 sought to settle the long-running dispute once and for all by giving California’s gaming tribes special standing in court to sue cardrooms over the games they offer.

Proposition 1A, the ballot measure approved by voters in 2000 authorizing tribal gaming in California, gives Native American casinos the exclusive right in the Golden State to offer banked games like blackjack and baccarat, where gamblers wager against the house.

State law also explicitly bans cardrooms from offering banked games in a throwback to the Gold Rush era when legislators were worried miners on the frontier would get hustled. While cardrooms evolved from saloons to glitzy casinos, they long were restricted to offering games like poker, where gamblers wager against each other.

Symbiotic relationship

In late 2007, however, an obscure state official named Bob Lytle reinterpreted state law, opening the door for cardrooms to offer variations of traditionally banked games. Today, thanks to both repeated approvals by state regulators and the TPPP that work symbiotically with cardrooms, alternate versions of banked games like blackjack and baccarat are offered off reservation in California cardrooms.

The tribes say this blatantly flies in the face of the will of the people and tried to stop the cardrooms in court. But judges ruled that as sovereign nations they lacked standing to bring a lawsuit. SB 549 tried to rectify that by granting the tribes special, one-time access to state court to sue over just this specific issue.

The bill’s passage was both a testament to the political power of the tribes, who stymied in dramatic fashion a well-funded attempt by major sportsbooks to legalize sports gambling in California in 2022, and state politicians’ apparent reluctance to choose a side in the dispute.

Cardrooms support several communities across the state. If they lose the ability to offer their popular variations of banked games, they may go out of business, which may in turn send those communities into economic distress.

The tribes, meanwhile, are deeply skeptical of state gaming regulators, in part because immediately after Lytle offered his reinterpretation of the law he went to work for cardrooms, then got into so much trouble with state regulators he relinquished his state gaming license and agreed to a lifetime ban from California gaming activities.  There is no debate that the alternate games the tribes question have been approved by state regulators, a point that the cardrooms insist makes the whole dispute moot.

A courtroom battle

For both parties, the fight is personal and existential. The tribes feel disrespected and believe they must defend their dominion over the California gaming market to ensure the survival of their communities. The cardrooms, likewise, believe their survival is on the line, too.

In October 2025, Sacramento Superior Court Judge Lauri Damrell dismissed the tribes’ suit against the cardrooms, arguing that the federal Indian Gaming Regulatory Act (IGRA) preempted the intentions of the legislature and governor. At the time, she acknowledged her ruling “may be wrong,” reflecting the maddening complexity of the legal issues involved.

From the moment Damrell announced her decision, the tribes were expected to appeal. Notices of appeal and notices of the filing of notices of appeal were filed the final week of November in Sacramento Superior Court. The Third District Court of Appeal in California reported receiving the notices on Dec. 4, formally paving the way for the gaming tribes to continue their legal battle with the cardrooms.

Briefs in the case, which were not expected to be filed until this year, are pending the release of a briefing schedule by the court, Casino Reports has learned. Their filing will once again put cardrooms under the microscope in court, but this time they’ll also be battling new state regulations that deal with the same issues.