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As California gaming regulators signed off on modifications to surveillance regulations for cardrooms, some in the industry argue the changes are heavier handed than jurisdictions that offer house-banked table games.
“We have non-banked cardrooms,” Alan Titus, an attorney with Robb & Ross that represents Artichoke Joe’s cardroom, told the California Gambling Control Commission (CGCC) on Tuesday (December 5).
Under the modified regulations, Artichoke Joe’s and other Tier IV cardrooms would have to establish a surveillance unit that “must be independent of the security department and have no other gambling-related duties.”
A Tier IV cardroom licensee can offer between 31 and 60 table games.
Alex Hunter, legislative and regulatory specialist with the CGCC, said the “intent of the regulation was to prevent fraudulent activity between the surveillance department and other parts of the cardroom.”
Licensed cardrooms will have 12 months from the filing of the regulations with the California secretary of state’s office to upgrade their systems and controls. The modified regulations are expected to be filed early in 2024.
The commission will also accept comments on the modified regulations approved Tuesday until December 20.
Vince DeFriese, Artichoke Joe’s surveillance manager, expressed concern that the changes would affect his other duties within the business. DeFriese said he never works on the casino floor but does interact with maintenance staff, security personnel and owners of the cardroom on various issues.
“That’s problematic,” said CGCC chair Paula LaBrie, adding that regulators are trying to avoid “one person with too many keys” to the business.
Currently, the separation of surveillance duties and required active monitoring of gambling operations during all hours of operation is only required for Tier V cardrooms that operate 61 gaming tables or more.
As unattended surveillance systems can only provide evidence after a crime or suspicious event takes place, “Tier IV cardrooms do not possess the same foundation for strong internal controls as Tier V cardroom business licensees and equivalent gambling operations conducted in other similar states,” said Rebecca Kirk, deputy director of legislative and regulatory affairs for the CGCC.
Titus questioned whether states with banked card games have similar rules to California, which does not allow banked games outside tribal casinos.
“In this regard, I note that Washington State, which has some casinos with banked games and other casinos without banked games, has some different surveillance regulations for each,” Titus said.
Titus said it is possible that in states with banked games, surveillance regulations might be intended to protect the public from being cheated by the casino.
“In California, the house does not play in the games and is a neutral party and those considerations from other states would be absent,” he wrote in comments submitted to the CGCC prior to Tuesday’s meeting.
According to the modified regulations, the surveillance system used by all licensed cardrooms in the state must record with “reasonable coverage and clarity, at a minimum, the gambling operations, including card values, wagers and game outcome.”
The system must also record the payment of player drop fees, the collection of drop boxes, the drop count processes, cage and cashier activities, gambling equipment storage areas except for furniture storage areas, and the interior of gambling establishment entrances and exits.
The final draft of amendments to Regulation 12396, dated November 17, requires all recordings be retained for 14, instead of seven, complete days of operation, except when the Bureau of Gaming Enforcement (BGC) or a law enforcement agency determines the video to be evidence.
The policies concerning surveillance increase based on the relative size, or tier, of the cardroom, which is determined by the number of tables the licensee is authorized to operate.
A Tier I licensee operates one to five tables, Tier II operates six to ten tables, Tier III operates 11 to 30 tables, Tier IV 31 to 60 tables and Tier V operates 61 or more table games.
“This has practical implications,” Titus said. “We have a good person [in DeFriese]. So, he is going to have to step back from certain roles. It seems the concerns here have been overblown.”
LaBrie made it clear that the modifications affecting Tier IV licensees were not about DeFriese or his role at Artichoke Joe’s.
“It’s for the greater good,” she said, “This is bigger than one cardroom. It applies to all Tier IVs.”
