California’s card room establishments faced a significant defeat in their legislative efforts this year as they attempted to oppose a bill that would empower tribal casinos to sue them. Despite this setback, the card rooms wasted no time in retaliating against several lawmakers who supported the bill after Governor Gavin Newsom enacted it into law.
In a remarkable display of political backlash, California’s card room sector allocated over $3 million to oppose four key legislators in the lead-up to Election Day. Among the candidates targeted, three ultimately fell short in their respective races, including a rare loss for an incumbent Democratic senator. Keith Sharp, an attorney for Hawaiian Gardens Casino located in Los Angeles County, voiced their sentiments, stating, “We really don’t want to be the sort of, you know, the Rodney Dangerfield of industries. We want to be respected.”
The defeats of these legislators served as a vindication for the card rooms, even if their campaign was largely aimed at punishing these officials. Notably, two of the defeated lawmakers were vacating their Assembly positions and contended in non-legislative races, suggesting that their victory would not have substantially impacted future dealings with card room matters.
In the state’s political arena, tribal entities have consistently outspent card rooms, funneling more than $23.5 million into campaign contributions since 2014, significantly outpacing the contributions from oil companies during the same timeframe. In response to recent political developments, tribes contributed an additional $6.3 million to candidates since January 2023, while card rooms have managed to invest at least $1.3 million, not counting the punitive $3 million they expended on attacking the four candidates this election cycle.
The substantial financial commitment from the card rooms signals to lawmakers that they are not just passive actors but can also engage in significant political spending to express discontent, according to comments from former Democratic Assemblymember Mike Gatto. He noted, “Any time you have a group essentially announcing to the world that they are going to do vengeance spending, it does cause lawmakers to pay attention.”
The legislation in question, Senate Bill 549, signed into law by Newsom, grants tribal entities the authority to seek judicial clarification regarding the legality of card rooms operating table games like blackjack and pai gow poker. The tribes argue that California voters granted them exclusive rights to host such games, and, as sovereign governments, they’ve been unable to file lawsuits against the state’s approximately 80 card rooms until this bill became law.
This situation carries significant consequences, as several cities rely heavily on tax revenue from card rooms, with some receiving nearly half their budget from these sources. Should the tribes attain a favorable ruling in court, local services such as police and fire departments could face severe funding challenges. The card rooms maintain their games are lawful but express concerns that prolonged litigation could threaten their viability.
In response to the bill, card rooms launched an extensive lobbying effort, highlighted by Hawaiian Gardens Casino’s spending of $9.1 million on lobbying activities, the second highest recorded in the state, trailing only Chevron Corp. Despite their legislative defeat, card rooms invested over $3 million on various strategies to sway public opinion regarding the four targeted candidates, employing ads, text messages, and mail campaigns, alongside supporting candidates opposing those they targeted.
The independent expenditure committees, funded by the card rooms, took advantage of legal regulations allowing organizations not directly affiliated with candidates to spend unlimited funds on politics, as long as they do not coordinate with the candidates’ campaigns.
Among the candidates, only Laurie Davies, a Republican from Oceanside, emerged victorious against the card rooms’ onslaught, albeit by a narrow margin of only 3,870 votes in a total of 230,546 cast. The card rooms invested at least $1.3 million to bolster her opponent, Chris Duncan, with one mailer branding her as associated with “anti-choice radicals,” “MAGA extremists,” and “Big Oil.”
Davies angered card rooms by voting in favor of the gambling bill’s progress out of committee, despite the presence of a card room within her district. Outgoing Democratic Assemblymember Evan Low faced similar backlash during his unsuccessful congressional run, having also supported the bill while representing an area with a major card room. Reports indicate that the card rooms allocated at least $500,000 towards ad campaigns against him.
Additionally, the card rooms targeted Brian Maienschein, a termed-out Democratic Assemblymember in his unsuccessful bid for San Diego city attorney, pouring at least $443,000 into his campaign’s opposition. Maienschein’s unfavorable votes regarding the gambling bill garnered the ire of card rooms, alongside his refusal to meet with industry representatives prior to key votes.
Fullerton Democratic Senator Josh Newman, the main architect of the gambling legislation, was not spared despite representing a critical district for the Democratic Party. The card rooms committed at least $900,000 to campaigns undermining Newman and supporting his Republican challenger, Steven Choi. Ultimately, Newman lost by a margin of 6,075 votes in a race that saw a Republican flip a Democratic seat for the first time since 1980 during a presidential election.
In a televised ad funded by the card rooms, Newman was criticized as lenient on crime and for endorsing benefits for “illegal immigrants.” Although Newman later reflected that the card rooms’ ads may not have had as significant an impact as those from another independent committee, he acknowledged that they likely drew some voters towards Choi.
Despite the political fallout, Newman maintained he has no regrets about advocating for the bill and believes the tribes deserve legal recourse. Nevertheless, he questioned the rationale behind the card rooms’ extensive spending after their legislative defeat, asking, “If you shut the barn door after the horse is out, who are you really punishing?”