New Cardroom Regulations Are A Crisis For Some California Cities — But Not All

While the narrative has long been that restrictions on cardrooms would devastate city budgets up and down the Golden State, only some California cardroom cities are currently treating controversial new state regulations as a financial crisis. 

The Los Angeles County cities of Commerce and Bell Gardens recently made headlines after they declared fiscal emergencies in response to the regulations, which would dramatically change the way cardrooms may offer their most profitable and popular games.

The small cities are home to two of the three largest cardrooms in California: Commerce Casino, which is authorized for 374 tables, and the Parkwest Bicycle Casino, authorized for 250. Both have put on the June 2026 ballot measures asking residents to approve a quarter-cent sales tax to offset projected budget shortfalls.

But there are 76 more cardrooms authorized in 62 other cities in California, and not all of them are as reliant on their cardrooms for revenue as Commerce and Bell Gardens.

Hundreds of millions of dollars

California Attorney General Rob Bonta announced the new regulations in February. The rules support California gaming tribes’ long-held assertion that the state’s cardrooms have been offering blackjack-style games in violation of state law. The law gives Native American casinos the exclusive right to offer banked games in which players bet against the house.

In a throwback to the Gold Rush era, cardrooms historically were restricted to offering games like poker, where gamblers wager against each other. In late 2007, however, an obscure state official, Bob Lytle, reinterpreted state law and opened the door for cardrooms to offer variations of traditionally banked games. 

Thanks to repeated approvals by state regulators and the participation of third-party proposition players (TPPPs) who work symbiotically with cardrooms, alternate versions of banked games like blackjack and baccarat became offered off reservation in California cardrooms for nearly two decades.

In 2024, Gov. Gavin Newsom signed legislation to give tribes special standing in court to sue cardrooms over the games they offer in seeking to shut them down. That lawsuit was dismissed and is now on appeal.

Bonta’s new regulations, however, would themselves put an end to the games by both restricting blackjack-style games and the operations of TPPPs.

The state’s own economic assessment of the regulations found that they 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. The sector was estimated in 2019 to have a total annual economic impact of $5.6 billion annually, per a report commissioned by the California Gaming Association.

Tribes move to intervene

“Attorney General Bonta’s regulations threaten to eliminate more than half of California’s cardroom jobs and wipe out a critical source of revenue for dozens of cities,” Kyle Kirkland, president of the CGA, which represents California cardrooms, said in a March press release announcing two lawsuits to challenge the new regulations.

The cardrooms have since filed motions for preliminary injunctions to stop the implementation of the regulations. The new rules took effect on April 1 but cardrooms don’t have to submit their plans for compliance until 60 days later, May 31.

This month, seven California tribes filed motions to intervene in the cardrooms’ lawsuits.

“Cardroom casinos are not above the law,” said Adam Lauridsen, attorney for the intervenor tribes, in a statement. “The Bureau of Gambling Control’s regulations are a positive step towards ensuring that cardrooms operate within legal limits. The last three Attorneys General have proposed these type of rules, but the cardrooms have obstructed and sued to block the regulations and meaningful oversight. My clients are intervening in the cardrooms’ lawsuits to ensure that California’s gaming laws are properly interpreted and applied to stop illegal cardroom gaming.”

The fight over the regulations and cardroom games in general will play out in court while the impacted cities watch from the sidelines. 

Some cities aren’t concerned

Folsom, northeast of Sacramento, and Madera in the Central Valley are two of 17 cities with one or more authorized cardrooms, but no operating ones. Representatives of both cities say they are not projecting any budget cuts due to the new regulations.

Michelle Mingay, the assistant director of administrative services-finance for Rancho Cordova, west of Folsom, said her city is “closely monitoring the potential fiscal impacts of the new state cardroom regulations” and “evaluating potential impacts to ensure any changes are appropriately reflected in future revenue projections.”

But she added that “(w)hile cardroom activity does generate revenue through the City’s cardroom tax structure, it is not a significant source of General Fund revenue,” so Rancho Cordova leaders have “not identified any specific budget cuts tied to the regulations.”

State gaming regulators have authorized two cardrooms in the small Sacramento County city: Parkwest Casino Cordova, a sister property of the one in Bell Gardens and which is authorized for 11 tables, and the Epoch Casino, authorized for 10 but closed since 2024.

Representatives of three Bay Area cities with active cardrooms — Gilroy, Hayward, and Napa — all said they aren’t expecting any budget cuts in response to the new regulations. Hayward spokesperson Chuck Finnie said city leaders “aren’t anticipating any budget impacts at this time because we are not aware of how pending regulatory or legislative changes would impact cardrooms in Hayward.”

All three Bay Area cities have mid-sized cardrooms: the Garlic City Club in Gilroy, authorized for 12 tables; the Palace Poker Casino, authorized for 13; and the Napa Valley Casino, authorized for 16. Finnie said the city receives a total of $405,620 annually from Palace Poker Casino in business license tax revenue, card club permit revenue, and mitigation fees.

City leaders in Stockton are also unsure what impact the regulations may have.

Others expect problems

East of Hayward, representatives of the Northern California cities of Livermore and Lodi said officials are still assessing the potential impact of the new state regulations. Nancy Sarieh, a spokesperson for Lodi, just north of Stockton, said that its cardroom, another one of the Parkwest properties, Parkwest Casino Lodi, generates revenue for the city’s General Fund.

“Like many local jurisdictions, we are experiencing fiscal pressures due to rising costs and increased service demands,” Sarieh said. “While no specific reductions have been identified, adjustments will likely be needed to align revenues with expenditures.”

To the west, in San Jose, city leaders have three times asked the California Department of Justice to pull back the new regulations since they were announced. They did so in a Feb. 18 meeting with Newsom’s representatives and state legislators and in letters sent in February and March. San Jose is the third-biggest city in California with a population approaching 1 million, and it has an annual budget of $3 billion.

“A substantial loss of revenue and economic activity for the City’s cardrooms would jeopardize thousands of jobs across the state and necessitate painful cuts to the City’s budget, thereby reducing our capacity to fulfill the Governor’s priorities in homelessness, housing, and public safety, among other core public services,” wrote Emily Lam, director of the San Jose City Manager’s Office of Administration, Policy, and Intergovernmental Relations, in the first letter, dated Feb. 19.

A rainy day in San Jose?

“If enacted, these regulations will inflict a direct and devastating financial blow to the City of San José — an estimated $32 million annual hit to our General Fund,” wrote Mayor Matt Mahan and four city councilmembers in the second letter, dated March 3. (Mahan is running for California governor.)

San Jose is projected to make about $31 million in taxes this fiscal year from its two cardrooms, which are two of the state’s largest. Bay 101 and Casino M8trix are tied for 11th largest in the state, with both authorized for 49 tables.

The San Jose General Fund forecast said, “If the regulations are implemented as currently outlined and the cardrooms and/or customers do not transition to other gameplay, according to cardroom representatives, the Cardroom Business Tax revenue could potentially decrease up to 85% ($25 million) beginning in 2026-2027.”

And if that happens, San Jose will have to use money from its rainy day fund to balance its budget.

‘Immediate consequences’

It’s not just large California cities like San Jose, however, that are fighting in support of cardrooms. The town of Colma just south of San Francisco, population of about 1,700, is among the jurisdictions fighting the hardest for the embattled card clubs.

Colma is the home of Lucky Chances Casino, the sixth-largest cardroom in the state, with 60 authorized tables. Vice Mayor Helen Fisicaro said Lucky Chances, which employs nearly 600 people, opened a few years after she first joined the Colma City Council in 1994.

“Lucky Chances has become a fixture in our community,” Fisicaro said, praising the cardroom for donating to local charities and providing economic aid to students and adults. “They’re really a good community corporation,” she said.

Fisicaro said she doesn’t know if the new regulations could cause Lucky Chances to go out of business, but she thinks a significant change in its operations would have “immediate consequences” for Colma. She said tax revenue from the cardroom generates more than 15 percent of Colma’s annual budget.

“Why can’t we all just operate?” Fisicaro asked, noting that Colma has no tribal casinos nearby. “Let’s share. Let’s not be hogging what’s out there.”

Joint advocacy

Colma belongs to one of two joint-powers authorities in California established to advocate for cities with cardrooms. Joint-powers authorities, or JPAs, are legal entities formed when two or more existing public agencies — like cities or school districts — agree to jointly use their common powers for a particular purpose.

Colma’s JPA, the California Cities Gaming Authority, also represents Gardena and Inglewood, which are home to three other major cardrooms.

Hustler Casino and Larry Flynt’s Lucky Lady Casino, both in Gardena, are authorized for 91 and 50 tables, respectively, while the Hollywood Park Casino in Inglewood is authorized for 75.

The other cardroom JPA, California Cities for Self-Reliance, represents Commerce, Bell Gardens, and Hawaiian Gardens, the cities with the three largest cardrooms in California, as well as Compton.

The Gardens Casino is tied with Commerce Casino for the largest in California by authorized tables; Compton’s Crystal Casino is the state’s 14th-largest cardroom with 42 authorized.

Both JPAs are working to defend the cardrooms in their member cities.

“The impact it would have on community is just devastating,” said Juan Garza, executive director of California Cities for Self-Reliance.

65% of the General Fund

Hawaiian Gardens is one of the cities that has the most to lose. City Manager Ernesto Marquez said nearly 65% of the city’s General Fund comes from revenue generated by the Gardens Casino.

But unlike the cardrooms in Commerce and Bell Gardens, he said, Gardens Casino relies less on blackjack-style games. Hawaiian Gardens also has a $20 million emergency reserve.

That’s why Marquez said Hawaiian Gardens has held off on declaring a fiscal emergency and instead has adopted a wait-and-see approach. He said the city could seek a tax increase like Commerce and Bell Gardens in two years if the regulations prove devastating.

In the meantime, he said the city will refrain from filling open positions and closely watch developments involving the cardrooms.

“We have alerts for anything on the news daily,” Marquez said.