Tribal Lawyer: California Attorney General Needs To Pick A Side

For decades, California Indian Country has claimed cardrooms violate tribes’ exclusivity to offer house-banked card games. In late 2024, Gov. Gavin Newsom signed SB 549, which allowed the tribes one chance to sue the cardrooms and settle the issue. The tribes did, but a district court judge dismissed the case last October, saying that federal law preempts the new state law.

The tribes plan to take their case to the Third District Court of Appeals.

Score one for the cardrooms.

But this February, Attorney General Rob Bonta released new cardroom regulations that appeared to favor Indian Country. The regulations limit the type of blackjack-style and other card games cardrooms may offer and changes the way third-party proposition players (TPPPs) can operate. TPPPs, or player-dealers, are licensed businesses that seemingly allow cardrooms to offer the games by acting as “players” who can be the bank rather than the house.

Cardrooms have long operated using what they call player-banked games, in which players at the table may act as the bank. But many players don’t want the risk, so player-dealers — who are paid and sometimes work for companies owned by the cardrooms — fill the void.

Score one for the tribes.

The cardrooms took Bonta and the state’s Bureau of Gambling Control (BGC), which is tasked with enforcing the rules, to court. In the last five months, the cardrooms have protested and won a preliminary injunction to keep the new regulations from going into effect. Last Tuesday, San Francisco Superior Court Judge Richard Darwin’s decision that the BGC is not the proper enforcement authority means the cardrooms can continue their player-banked games.

The new regulations were initially set to go into effect April 1.

Score one for the cardrooms.

One decision complicates another

Tribal attorney Scott Crowell said the ruling was "a troubling, but not unexpected development.” The decision makes Indian Country’s pursuit of an appeal over SB 549 more difficult, he said, as “we can now expect the cardrooms to argue that the California Appeals Courts should punt the SB 549 litigation and say this is an issue for the legislature to decide, but hopefully this brings an end to the preoccupation by the state with trying to manufacture a middle ground,” Crowell told Casino Reports via email last week.

Crowell called out Bonta and the BGC, saying that “the regulations were (pun intended) built with a house of cards — suggesting that there is some type of banked card game similar to blackjack that is allowed under California’s law — suggesting there is some environment where a person or entity can bank a game so long as the dealer position rotates.”

Crowell cited the 1999 H.E.R.E. vs. Davis case as evidence that California’s constitution does not allow for any type of banked card game, no matter the dealer. Under the Indian Gaming Regulatory Act, and via compacts with the state, Indian Country has that exclusive right. Other than parimutuel wagering, traditional gambling is illegal in California, where there are about 70 tribal casinos.

Judge didn’t mention this …

Of note, Darwin did not address “the constitutionality of the games, the definition of a banked card game, or the relevance of a player-dealer.” Those omissions, Crowell said, could play in the tribes’ favor in the SB 549 fight. The lawsuit that was dismissed focused on those issues, meaning that the latest decision doesn’t impact the core Indian Country argument that they are illegal.

So what happens now? Bonta’s Department of Justice could appeal. Or perhaps there is an argument that the California Gambling Control Commission (CGCC) is the proper entity to take the lead in this instance. The CGCC, jointly overseen by the governor’s and AG’s office, is the main regulator. It regulates tribal gaming, card rooms, and TPPPs and makes licensing and policy decisions.The BGC, which falls under the AG’s purview, is tasked with investigations and enforcement.

No matter how things play out, Crowell says the latest decision exposes Bonta as continuing to try to play in the middle ground.

“It shows the flaws in staking out a position that appeared to support the tribes, while undermining the legal position taken by the tribes,” he said. “For years, the BGC in the DOJ Office tried to placate the tribes by proposing such a false set of regulations.”

In this instance, that attempt at diplomacy could backfire.