Two California cardrooms announced today that they have filed a lawsuit in Los Angeles Superior Court challenging the legality of a November 2022 ballot initiative promoted by nine California Indian Tribes – an initiative which would legalize sports wagering, allow roulette and craps at Indian casinos, and grant one-way permission for tribal casinos to sue their card-room competitors.
The cardrooms, Hollywood Park Casino and Cal-Pac Rancho Cordova, are asking the court to bar the California Sports Wagering Regulation and Unlawful Gambling Enforcement Act from the November ballot because it violates California’s constitutional rule that ballot initiatives can involve only a single subject. Hollywood Park operates in Inglewood; Cal-Pac Rancho Cordova operates the Parkwest Casino Cordova in Sacramento County.
Several of the largest California cardrooms are in urban areas with very diverse populations (such as Inglewood, Bell Gardens, City of Commerce) and contribute a large percentage of those cities’ annual tax revenue. Overall, California’s 85 cardrooms pay nearly $500 million a year in local taxes and employ about 18,000 people. They range in size from one table to 270 tables. If passed, the gaming tribes will simply use the hidden provisions in the controversial initiative to attempt to put their business competitors, the cardrooms, out of business. And of course, unlike the cardrooms, the California tribes will pay no taxes into those urban areas, instead keeping that money for themselves.
“What this sports-wagering ballot initiative really does is to surreptitiously destroy competition with California’s cardrooms by granting more rights to Tribal casinos, including the right to file a stream of lawsuits against card rooms,” said Deven Kumar, General Manager of Hollywood Park. “This is not what the initiative process was designed to do, and certainly not what this initiative is advertised to do.”
The nine tribes funding and backing the initiative already have raised and spent $12.5 million on their campaign. The tribes are the Pechanga Band of Luiseño Mission Indians, the Barona Band of Mission Indians, the Yocha Dehe Wintun Nation, the Agua Caliente Band of Cahuilla Indians, the Rincon Bank of Luiseño Mission Indians, the Santa Ynez Band of Chumash Mission Indians, the Sycuan Bank of the Kumeyaay Nation, the Soboba Band of Luiseño Indians and the San Manuel Band of Mission Indians.
Under California’s Constitution, federally recognized tribes can enter into agreements with the Governor that allow them to offer slot machines, lottery games and banked card games on their lands. However, the constitution prevents “casinos of the type operating in Nevada and New Jersey.” As a result, no business in California is allowed to to offer roulette or dice games, such as craps. However, the controversial initiative would create a special carve-out for the tribal casinos – and only the tribal casinos – to offer those games.
California separately allows cardrooms, which offer “player-dealer” games such as poker and pai gow. At California cardrooms, the cardroom does not serve as the “bank” handling wagers. Instead, every player has the opportunity, but not the obligation, to take the “bank” position, as it rotates among all of the players. If any player declines to serve as the bank, the card room can allow a third party to step in as the bank, in order to let the game continue.
Cardrooms have successfully operated these rules under the regulatory scrutiny and approval by the California Attorney General since the time of the creation of the California Bureau of Gambling Control. The California cardrooms unsuccessfully petitioned the state Supreme Court to stop the initiative on an emergency basis, but the Supreme Court decided not to hear the case at this time.
