Cardrooms Sue To Block New California Regulations They Say Threaten To Upend Their Industry And Surrounding Cities

A group of California cardrooms Monday filed two lawsuits challenging new state regulations that would limit their ability to offer their most popular table games, which are also the target of a special lawsuit filed by the state’s gaming tribes.

The two lawsuits, both filed in San Francisco Superior Court by the California Gaming Association (CGA) and several California cardrooms and third-party proposition players (TPPPs), seek to separately block two regulations from taking effect: One to limit the type blackjack-style games cardrooms may offer and one to amend the operations of the 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.

Announced by California Attorney General Rob Bonta early last month, 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.

The 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.

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.

“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,” said Kyle Kirkland, president of the California Gaming Association, which represents California cardrooms, in a press release announcing the lawsuits. “These games have operated legally for decades under multiple Attorneys General, yet one public official is now moving to shut them down without identifying a single public safety concern or addressing the 1,764 public comments about these regulations.

“Our industry repeatedly raised legal and economic concerns throughout the rulemaking process, but the Attorney General refused to engage with the communities and working families who will be harmed. We are asking the court to stop these unlawful regulations before they wipe out thousands of jobs and put many local economies into fiscal distress across California.”

Late last month, the city council for the City of Commerce in Los Angeles County voted unanimously to put a ¼-cent sales tax on the June 2026 ballot specifically in response to the new cardroom regulations, which the city says could reduce Commerce Casino revenue to the city by as much as 60%.

“The Commerce Casino is a major taxpayer in the City that generates over $30,000,000 a year in revenues for the City, or over 40% of the City General Fund budget of approximately $80,000,000,” the city’s website says in a post about the new regulations. “The General Fund provides the resources that support parks and recreation programming, the public safety budget and the budget for library operations. Casino Revenues provide a significant additional boost to the City’s budget, enabling the City to offer extensive programming. Unfortunately, the Attorney General for the State of California has ruled that significant operations at the Commerce Casino are no longer allowed.”

The cardrooms said in the press release that “(o)ther cities are considering similar emergency measures.”

Big changes

The cardroom industry argued that the California Department of Justice’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 cardrooms said in the press release that the regulations represent “an unprecedented power grab by the Attorney General that contradict state law in multiple ways. The rules reverse decades of settled law and practice under which these games were approved as lawful by multiple Attorneys General, including former Governor Jerry Brown and former Vice President Kamala Harris.”

California’s cardroom/TPPP sector say the new regulations “lack any legal or factual basis and were adopted despite overwhelming opposition from cities, workers, and community leaders.”

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 are set to 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.

A bitter legal fight

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.

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 in state court. 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.

Complex issue

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, proponents of cardrooms say.

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 that 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.

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 intention 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 still pending the release of a briefing schedule by the court. The appeals court recently decided the case does not need to go through a mediation program, so a briefing schedule is expected soon, Casino Reports has learned.

When that is filed, California cardrooms will be fighting for their lives on two fronts in court.