California Tribes, Cardrooms Oppose Blackjack Regulation Changes

November 28, 2023
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Both cardrooms and tribal casino operators in California have expressed their opposition to proposed regulations altering blackjack-style games and the rotation of the player-dealer position at cardrooms in the state.
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Both cardrooms and tribal casino operators in California have expressed their opposition to proposed regulations altering blackjack-style games and the rotation of the player-dealer position at cardrooms in the state.

After proposing the new rules in September, the Bureau of Gambling Control (BGC), a division of the California Attorney General’s Office, received a total of 30 comment letters from cities that host cardrooms, tribal and cardroom trade associations, gaming attorneys, cardrooms, and gaming tribes.

Greg Sarris, chairman of the Federated Indians of Graton Rancheria located in northern California which owns and operates the Graton Resort and Casino, concluded that the proposed regulations would “continue the status quo by making inconsequential alterations in existing cardroom practices.”

Sarris added that the proposed regulation would also allow cardrooms to operate banking games in violation of the California Constitution, state statutes and judicial decisions.

The proposed regulation would prohibit blackjack games but permit blackjack variations under specific rules and modifications, including that game names may not include the number 21 or the word "blackjack."

If approved, cardrooms would have one year to comply with the new regulation.

Benjamin Horwich, an attorney with Munger, Tolles & Olson and counsel for the California Gaming Association (CGA) that represents licensed cardrooms, said cardrooms “strongly oppose the proposal.”

“At the outset, the [BGC] has not identified any grounds for the dramatic regulatory changes contained in the proposal,” Horwich wrote in a 53-page filing to the BGC, which Clarke Rosa, president of the Communities for California, and Keith Sharp, president of the California Cardroom Alliance, also signed.

Sharp, an attorney who represents cardrooms, previously served as a member of the Gaming Policy Advisory Committee, which advises the California Gambling Control Commission on gaming policy.

Horwich wrote he believed the prohibition on game names violates commercial speech rights, Penal Code Section 330, and the state’s Gambling Control Act. Penal Code Section 330 makes it a crime to engage in gambling by use of a “banking or percentage game.”

“The state has not provided a rationale for banning games because they have the number ‘21’ or the word ‘blackjack’ in their names. The [BGC] does not have the authority to adopt the proposed rules,” Horwich said.

The second proposed regulation concerns games with a player-dealer position, specifically the rotation and operation of such games, including the manner in which cards are dealt. The proposed draft would require the player-dealer position to rotate at least twice “every 40 minutes or the game shall end.”

Additionally, according to the proposed regulation, "no more than one third-party provider of proposition player services (TPPPS) shall be permitted to offer services at a table where a game that features a rotating player-dealer position is being offered for play."

Sarris of Graton Rancheria called for the BGC to “withdraw these proposed concept regulations and enforce state law against the illegal operation of banking games.”

Sarris reminded regulators that the operation of blackjack games is prohibited in California, an opinion that has been upheld by the state's Supreme Court and the National Indian Gaming Commission (NIGC). Sarris said the second set of proposed regulations appears to be intended to further regulate TPPPS.

“Nothing in these proposed concept blackjack regulations changes the fact that cardrooms would be able to continue operating banking games,” he added. “Blackjack is a classic example of a banking card game, in which each player is competing with, and can win from, the dealer (or 'bank'), rather than the other players.”

The BGC issued the draft language on September 11, with a deadline of October 26, 2023, to file comments. As part of the potential rulemaking process, the bureau will complete a Standardized Regulatory Impact Assessment (SRIA) to understand the economic impact of these proposed regulations. 

“These proposed regulatory changes to these games will negatively impact our city, our residents, and our businesses. The revenue derived from the casino … represents approximately 40 percent of the city’s total general fund revenues,” wrote Hugo Argumedo, mayor of the city of Commerce, home to the Commerce Casino cardroom.

Argumedo said without this analysis and focus on impacts to Commerce Casino and other local communities, “any final changes impacting games as they are offered today will result in flawed, non-inclusive regulations which will be scrutinized and likely challenged.”

He requested that any SRIA economic impact study be a fair and inclusive process that identifies all impacts from these and any final related regulations, as well as identifies mitigations on their effects and limitations on cardroom tables. Argumedo also requested the study identify job losses in cardrooms, cardroom support industries and local communities.

Proposition 1A, which passed in 2000, gives tribes the exclusive right to offer house-banked casino games in California.

These two regulatory proposals by the BGC are designed to resolve an ongoing policy dispute tribes have with cardrooms allegedly offering traditional house-banked card games, including versions of blackjack and baccarat. 

Tribes in California have also been lobbying lawmakers in Sacramento to crack down on cardrooms.

James Siva, chairman of the California Nations Indian Gaming Association (CNIGA), recently told Vixio GamblingCompliance that tribes are hopeful Senate Bill 549 will be raised in the next legislative session that begins in January.

The bill would give tribes standing to be able to take the issue to court and launch a lawsuit against cardroom game offerings because tribes have been refused standing by previous courts and lawsuits.

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