California Cardrooms Challenge Tribal Sports-Betting Initiative

December 23, 2021
Two California cardrooms have filed a lawsuit seeking to invalidate a sports-betting initiative on next year’s ballot to legalize retail wagering at Indian casinos and four racetracks, which they argue violates the state constitution.


Two California cardrooms have filed a lawsuit seeking to invalidate a sports-betting initiative on next year’s ballot to legalize retail wagering at Indian casinos and four racetracks, which they argue violates the state constitution.

Hollywood Park Casino and Cal-Pac Rancho Cordova sued California Secretary of State Shirley Weber on Tuesday in the California Supreme Court. Hollywood Park Casino is located in Inglewood, whereas Cal-Pac is in Sacramento and both are licensed by the California Gambling Control Commission.

The cardrooms argue in their 68-page lawsuit that the initiative violates the state constitution’s mandate that ballot initiatives in California must be limited to a single subject.

The initiative, known as the California Legalize Sports Betting on American Indian Lands Initiative, is being supported by a coalition of tribes that gathered more than enough signatures during 2020 to put it on the November 8, 2022 ballot.

Besides sports betting, the initiative allows tribes to offer games such as roulette and craps at their casinos and enables private citizens to launch civil enforcement actions against illegal gambling violations not being pursued by the state attorney general.

Tribes have for years claimed that state officials have not done enough to eradicate allegedly unlawful card games offered by cardrooms.

“It’s not surprising that cardrooms, which have flouted the law for years by operating Nevada-style gambling, are now suing to prevent any accountability over their unlawful activities,” said Kathy Fairbanks, spokeswoman for the coalition of tribes supporting the already-qualified measure.

“We’re confident our measure passes legal muster and will be approved by California voters,” Fairbanks said in a statement.

It is those additional provisions of the sports-wagering ballot measure that the cardrooms believe violate the state constitution.

“California’s single-subject rule provides that ballot initiatives embracing more than one subject ‘may not be submitted to the electors,’” Maurice Suh, an attorney with Gibson, Dunn & Crutcher in Los Angeles, representing the cardrooms, wrote in the legal filing.

“In violation of this clear constitutional command, the California Indian gaming tribes have crafted this initiative, which unites three distinct subjects.”

The lawsuit notes that the majority of the initiative concerns sports betting, including its legalization, regulation and taxation. However, attorneys for the cardrooms argue the measure conceals two measures, both of which are designed to benefit tribes and have been previously rejected.

First, the lawsuit claims the initiative would eliminate California’s longstanding constitutional ban on Las Vegas-style casinos by authorizing roulette and craps in addition to tribes' exclusive right to offer slot machines and banked card games.

Second, the cardrooms argue the initiative would also enact a private-enforcement provision that would allow tribes to sue their private business competitors for alleged gaming violations, even though such lawsuits cannot be brought against sovereign Indian tribes.

“The gaming tribes have repeatedly tried and failed to obtain these casino gambling and private enforcement rights from ballot initiatives to state and federal lawsuits, to administrative rulemaking and enforcement processes,” the lawsuit says.

Suh said his clients were entitled to a “peremptory writ declaring the initiative invalid and permanently enjoining (Secretary of State Weber)” from placing it on the ballot because there exists no other adequate remedy.

“Without action by the court,” Suh wrote, “(Weber) will be required by law on June 30, 2022, to certify the initiative for inclusion on the November 2022 election ballot and on September 2, 2022, to send the … election ballot to the printer.”

As of Wednesday, the California Supreme Court had not scheduled a hearing during their next week of oral arguments from January 10 to January 14.

To date, the coalition of tribes has raised at least $12.5m in contributions and spent $12.2m in support of the initiative.

The coalition’s retail sports wagering initiative is one of four sports-betting ballot measures introduced in California.

The other three measures trying to gain inclusion on the 2022 ballot include a proposal by cardrooms to offer sports betting throughout the state, and another measure submitted by DraftKings, FanDuel and other leading sportsbook brands to operate online sports betting through tribal partnerships.

A fourth measure that was recently amended would similarly authorize California tribes to amend their gaming compacts and offer sports betting, craps and roulette on Indian lands.

The measure would further enable tribes to operate mobile wagering throughout the state via servers on tribal lands, while also offering tribes the option to instead offer state-wide online sports betting under state law and regulation.

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