Showdown in the Golden State: California Cardrooms Face New Legal Challenge from Tribal Coalition

In the ever-evolving drama of California’s gaming landscape, a fresh chapter unfolds. The state’s cardrooms once again find themselves in the crosshairs of a faction of the tribal gaming sector, with their right to offer certain “third-party proposition player” (TPPP) card games under the spotlight.

The latest episode involves California Senate Bill 549. Should it gain approval, the bill would empower any tribal nation within California to take legal action against cardrooms that offer these TPPP games. At its core, this legislation seeks to challenge the existing verdicts of the California Gambling Control Commission (CGCC). The commission has, over the years, maintained that the way cardrooms present TPPP games is within the boundaries of California’s legal framework.

While the state wouldn’t face any consequences, cardrooms could potentially be hit with heavy financial repercussions. If any verdict goes against these cardrooms, it would effectively overturn the CGCC’s prior decisions on this subject.

Interestingly, the origins of SB 549 can be traced back to last year’s notorious Proposition 26. This proposition sought to provide tribal nations exclusive rights to offer sports betting within the state. However, despite a monumental campaign backed by around $600 million in tribal funding, it was shot down by voters in a resounding 2:1 ratio.

Yet, the determined coalition from Proposition 26 found a new avenue to push their agenda. Initially introduced by State Sen. Josh Newman (D-Fullerton) as an educational bill, SB 549 underwent a significant transformation in June. Most of its original content was replaced, laying the foundation for what’s now known as the “Tribal Declaratory Relief Act of 2023.” This change mirrors the TPPP-targeting section of the ill-fated Prop 26.

Cardrooms are gearing up to resist this new challenge, leaning on familiar arguments from 2022. They emphasize that the CGCC has consistently backed them in previous judgments. Moreover, by allowing tribal casinos to sue directly, cardrooms could be forced to shell out hefty amounts for legal defenses against the deep-pocketed tribal entities. Cardroom advocates argue that this move is essentially an attempt by the tribal coalition to financially overpower them, even though the matter has previously been settled in the cardrooms’ favor.

As for SB 549’s trajectory, there’s a sense of urgency from its supporters, especially with the proposed early-2024 litigation window. While there have been some preliminary approvals, intense debates are yet to come. The bill’s most recent move was to the Assembly Judiciary Committee in July, where it garnered an unusual 6-0-5 approval and then shifted to the Assembly’s Committee on Rules. As of now, no further actions on SB 549 have been reported.