California Cardrooms and Tribes Prepare for Major Legal Showdown
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California Cardrooms and Tribes Prepare for Major Legal Showdown

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## California Tribes and Cardrooms: A Legal Tug-of-War Over Third-Party Gaming Providers

For years, California’s tribes and cardrooms have found themselves at odds, particularly regarding the use of third-party gaming providers. With recent court interventions, the outcome of this longstanding dispute remains uncertain.

### Legislative Advances: SB 549 and Its Implications

In November, California’s legislature enacted SB 549, known as the Tribal Nations Access to Justice Act. This law is significant because it empowers state gaming tribes to pursue legal action against both cardrooms and third-party providers of proposition services (TPPs). Before this legislation, tribes faced considerable barriers in seeking justice due to their sovereign status.

Following the bill’s passage, a coalition of tribes acted swiftly, filing a lawsuit against over 90 defendants, including various cardrooms and TPPs. This case is currently in the hands of the Sacramento Superior Court, with proceedings scheduled for August 8.

### The Heart of the Dispute: Legality of Games

At the core of the contention lies the legality of the games operated by cardrooms. Tribes assert that these games effectively become “house-banked” games, where players are wagering against the house rather than competing against each other. Since 2000, tribes have held the monopoly on Class III gaming, characterized by games that allow for house-banked play.

California law permits cardrooms to host certain table games, provided they adhere to rules that ensure players deal and play amongst themselves. However, the introduction of TPPs has muddled these waters. Many recreational players desire the experience of Class III gameplay but lack interest in taking on the role of dealer. TPPs have filled this gap by partnering with cardrooms, a relationship complicated by legal demands for financial independence.

### Legal Actions from Tribal Nations

Recent lawsuits have been filed by tribes such as the Rincon Band of Luiseno Mission Indians and the Agua Caliente Band of Cahuilla Indians. The glare of the courtroom is now focused on claims that cardrooms and TPPs are violating state law by facilitating games that emulate the banking nature of those found in Nevada and New Jersey casinos.

The Rincon Band’s April complaint specifically targets blackjack, baccarat, and pai gow poker, alleging that the players are essentially functioning as banks within these games. Key to their argument is that uncertainty surrounding monetary gains or losses is typical of banked games, undermining the foundational premise of independent play.

### Examining TPP and Cardroom Relationships

The complexities deepen when considering the contractual relationships between cardrooms and TPPs. Despite claims of independence, investigations by media outlets like Capitol Weekly suggest that the ties between the two may be more intertwined than previously acknowledged.

The Rincon complaint argues that TPPs pay cardrooms for the privilege of occupying the player-dealer position. This financial arrangement raises questions about whether cardrooms are unlawfully benefiting from the outcomes of the games they operate, essentially blurring the lines that have historically defined their operations.

### Cardroom Defense and Historical Context

In response, cardrooms like Artichoke Joe’s have mounted a defense emphasizing the historical efforts made by tribes to seek legal recourse prior to the enactment of SB 549. They note that an earlier lawsuit was dismissed due to lack of standing, and attempts to amend state propositions have failed in the past.

Cardrooms argue that the introduction of SB 549 represents a circumvention of previous legal hurdles, allowing tribes to engage in litigation that previous law would not have supported.

### Conflicting Laws: Proposition 64

Adding another layer of complexity is Proposition 64, a 2004 measure stating that a plaintiff must demonstrate specific standing to sue for damages. Since the current lawsuit involves multiple tribes against several defendants, the question of whether each tribe has been individually harmed becomes crucial.

Cardrooms contend that differing geographic locations complicate claims of collective harm, suggesting that their operations do not infringe upon the exclusive rights of tribes spread across the state.

### Ongoing Regulatory Changes

As the lawsuit progresses, state regulators are also examining the rules governing cardroom operations. The California Attorney General has proposed regulations affecting blackjack and player-dealer protocols that align closely with the grievances raised in the lawsuit.

These regulatory changes could significantly impact cardrooms, with public hearings indicating strong support from the community for their operations, underscoring the economic implications for small cities reliant on cardroom taxes.

### A Future of Uncertain Alliances

In this unique landscape, both tribes and cardrooms underscore their mutual goals: to leverage their businesses for the benefit of their communities. The ultimate decisions made by state officials will determine whether both can coexist and continue to thrive in California’s vibrant gaming environment.

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