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California Bill Reignites Tribal-Cardroom Dispute

California's SB549 Reignites Tribal-Cardroom Dispute: Legislation approved to allow tribes to challenge cardrooms in court over gaming exclusivity, addressing a long-standing conflict and potential economic implications.
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Branimir Ivanov | Senior News Contributor

Updated: Jul 4, 2024

Tribal Gaming Under Fire

Sacramento, CA — After a year of legislative dormancy, a bill aimed at resolving a long-standing dispute between California’s tribal gaming operators and cardrooms is once again progressing through the state legislature. On Tuesday, the Assembly Governmental Organization Committee voted 15-1 in favor of Senate Bill 549, now renamed the Tribal Nations Access to Justice Act. This bill, championed by Sen. Josh Newman, provides tribes the legal standing to challenge cardrooms in court over the legality of certain house-banked games like blackjack and baccarat.

The bill's resurgence comes after it initially passed the Assembly Judiciary Committee on July 7 of last year but saw no further movement. This renewed effort aims to address a decades-old contention over tribal gaming exclusivity versus cardroom operations in California.

 

Key Developments

  • Legislation Advances for Tribal Legal Standing: California's SB549, allowing tribes to challenge cardrooms in court over house-banked games, was approved by the Assembly Governmental Organization Committee.
  • Historical Context of Gaming Dispute: The bill addresses a long-standing conflict stemming from laws that grant tribes exclusive gaming rights while cardrooms exploit loopholes to offer certain games.
  • Economic and Legal Concerns: The bill is contested by cardrooms and cities fearing financial impacts, while tribes advocate for judicial clarity to protect their gaming rights.

 

Cardrooms have been part of California’s gaming landscape since the 1800s, but the state’s Penal Code 330 prohibits “twenty-one” and other banking or percentage games. Prop 1A, passed in 2000, gave California tribes exclusive rights to offer slot machines and certain banking games on tribal lands. Cardrooms, however, have continued to operate certain games through a loophole involving third-party proposition players (TPPPs), licensed by the California Gambling Control Commission.

Despite repeated attempts by tribes to litigate their exclusive rights, courts have dismissed these cases on procedural grounds due to the tribes' lack of standing. SB549 aims to rectify this by granting tribes the right to seek a declaratory judgment from a California court on the legality of these cardroom games.

 

Provisions of SB549

Under SB549, tribes can file a lawsuit in the Superior Court of California, County of Sacramento. The bill mandates that any action be filed by April 1, should it pass this year. Key stipulations include consolidating multiple actions into a single lawsuit and excluding claims for monetary damages, penalties, or attorney’s fees. The bill’s proponents argue it is a necessary step to resolve ambiguities and uphold tribal gaming rights.

Sen. Newman emphasized during the hearing, “The central question of this bill is not about which games cardrooms should be allowed to offer, but whether the courts should have the opportunity to address this question on its merits.”

Tribal leaders expressed strong support for the bill during the committee hearing. James Siva, Chairman of the California Nations Indian Gaming Association, and Catalina Chacon, Vice Chair of the Tribal Alliance of Sovereign Indian Nations, highlighted the need for judicial clarity on the matter.

Siva stressed the necessity of a definitive court ruling:

 

“SB549 provides a fair pathway for an impartial court to decide whether cardrooms’ games infringe on our exclusive rights.”

 

Chacon drew historical parallels, referencing past injustices faced by tribes: “We refuse to allow injustices to be repeated. Today, we are in a position to protect our gaming rights and ensure they are honored for future generations.” The bill faces significant opposition from cardrooms and city officials concerned about economic impacts. Prior to the hearing, mayors from cities with cardrooms and over 100 cardroom employees rallied against SB549.

Attorney Ed Manning, representing the opposition, argued that cardrooms are legally operating under state-approved guidelines. He likened the situation to a licensed business being sued despite adhering to legal standards: “This would be the first time a sovereign entity could sue legally operating companies in California without the companies having recourse against the sovereign.”

San Jose City Councilmember Sergio Jimenez voiced concerns over potential financial fallout, noting that San Jose’s cardrooms contribute approximately $30 million annually in tax revenue. “This bill could inject uncertainty into city budgets and threaten jobs statewide,” Jimenez warned.

 

Legislative and Regulatory Inaction Criticized

Committee members criticized the state’s attorneys general for their failure to resolve the ongoing dispute. Asm. Sabrina Cervantes called for more proactive enforcement of gaming laws, while Asm. Jasmeet Bains condemned the historical exclusion of tribes from judicial recourse, stating, “Your sovereignty should not be weaponized to treat you as second-class citizens.”

The California Bureau of Gambling Control has made some regulatory moves, releasing draft regulations last year to clarify permissible games at cardrooms. However, these efforts remain incomplete and lack a definitive timeline for resolution.

With the Assembly’s summer break approaching, SB549 faces a tight legislative schedule. It must clear the Assembly Appropriations Committee, the Assembly floor, and likely the Senate Governmental Organization Committee before reaching the Senate floor for final concurrence. The bill’s proponents are hopeful but acknowledge the challenges ahead.

Viejas Band of Kumeyaay Indians Attorney General Tuari Bigknife expressed optimism: “Today’s vote is a strong signal of legislative support. We have momentum, but there is still work to be done.” As California continues to grapple with its gaming landscape, SB549 represents a pivotal step toward resolving a deeply entrenched conflict between tribal sovereignty and commercial cardroom operations.

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