California Tribes Ring in New Year with Lawsuit Targeting Cardrooms

^{California's commercial card rooms currently offer a variation of table games like blackjack where a poker-like dealer button moves around the table. (Image: courtesy of CalMatters)}

Seven major California-based Native American tribes have joined together in a lawsuit aiming to prevent cardrooms in the state from continuing to offer banked card games to customers.

The lawsuit, filed on Thursday in California Superior Court, comes as a result of SB 549, also known as the Tribal Nations Access to Justice Act, which Gov. Gavin Newsom signed into law in September.

Banked Table Games at Center of Lawsuit 

That law gave California’s tribal gaming interests standing to sue commercial cardrooms beginning on January 1. Tribes have until April 1 to engage in such legal action, leaving open the possibility of more lawsuits to come in the following months.

But Thursday’s lawsuit covers the main issue that most observers expected to be the point of contention between the tribes and the cardrooms. 

In 2000, California voters approved Proposition 1A, which gave tribal casinos the exclusive right to offer banked card games in the state. A “banked” game is one in which gamblers are pitted against the house, which solely has the right to take bets from visitors. 

However, cardrooms in the state have worked around that law by offering versions of games like blackjack and baccarat in which players also have the option to bank hands and play against the rest of the table, acting as the dealer for betting purposes. 

In practice, typical players are rarely willing or able to take all of the action from their peers. Instead, the cardrooms use third-party proposition players (TPP), who volunteer to bank games at every table. TPP workers are part of licensed businesses and must wear badges that identify them as not being employees of the cardrooms themselves.

TPPs Not Enough to Satisfy Law, Tribes Say

California’s tribes say this workaround doesn’t change the fact that the cardrooms are making money off of games that are meant to be the exclusive property of Native American casinos in the state.

“Defendants brazenly profit from illegal gambling,” the introduction to the lawsuit states. “California law prohibits card rooms from offering “banked” casino games – such as blackjack, baccarat, and pai gow – where an entity with an odds-based advantage takes on all comers, pays all winners, and collects from all losers.”

The lawsuit claims that cardrooms fail to rotate the banking player in practice, thus making TPPs insufficient to avoid violating state law.

“Although use of TPPs is not per se illegal under California law, when combined with the card rooms’ refusal and failure to rotate the bank from player-to-player, the TPP becomes a de facto house bank,” the lawsuit reads. “In contrast to the players, who wager a fixed amount, TPPs typically do not make wagers at all, but rather take on the role of paying out all the wins and losses, whatever they may be – in other words, taking on the traditional role of the bank found in a Nevada or New Jersey casino.”

The California Cardroom Alliance (CCA) opposed SB 549, and say that their card games have been approved by the California Department of Justice. Games of this type have been offered legally since 1983, according to the organization. 

“The California Cardroom Alliance opposes challenges to these games, which would imperil thousands of living wage jobs around the state and create deep deficits in municipal government budgets that depend upon cardroom revenue to fund essential public services,” the CCA says on its website. 

The tribes listed as plaintiffs in the lawsuit include the Agua Caliente Band of Cahuilla Indians, the Barona Band of Mission Indians, the Pechanga Band of Indians, the Sycuan Band of Kumeyaay Nation, the Viejas Band of Kumeyaay Indians, the Yocha Dehe Wintun Nation, and the Yuhaaviatam of San Manuel Nation. 

Defendants appear to include all or nearly all cardrooms in California, including notable organizations such as Hawaiian Gardens Casino, Hollywood Park Casino, Pinnacle Casino, and dozens of other venues and operators.