Seven Native American tribes that operate casinos have initiated a lawsuit in Sacramento County, marking their first legal action since a new law was enacted on January 1. This lawsuit could threaten millions in tax revenue that fund essential city services such as police and infrastructure improvements.
The tribes contend that various card rooms across California are unlawfully hosting card games, including blackjack and pai gow poker, which adversely impact the tribes’ gambling income. In their lawsuit’s opening statement, the tribes accused the defendants of profiting “brazenly” from illicit gambling activities. A spokesperson for the card room industry responded by asserting that their establishments operate “in full compliance with the law,” predicting that the tribes’ effort to eliminate lawful competition from tax-paying businesses would not succeed.
The legal action is made possible by Senate Bill 549, which Governor Gavin Newsom signed into law in September. According to the tribes, California voters granted them exclusive rights to operate the contested table games, funds from which are directed to uplift historically marginalized tribal communities. Prior to the passage of the bill, the tribes, as sovereign entities, lacked the legal standing to challenge the approximately 80 privately-owned gambling establishments in the state.
The bill created a designated three-month period, starting January 1, for tribes to file lawsuits against card rooms, leading to the suit being filed on the very first day California courts resumed in the new year. Notably, under the provisions of the bill, the tribes are barred from receiving any money or legal fees from the lawsuit; the court’s ruling will solely determine the legality of the card rooms’ gaming practices. The implications of this ruling are significant since many cities rely on tax revenue from card rooms for a substantial portion of their budgets, which in turn supports vital services like policing and fire departments.
For instance, Hawaiian Gardens derives nearly two-thirds of its budget from local card rooms, while Commerce relies on them for close to half its budget. San Jose City Councilmember Sergio Jimenez indicated that his city receives $30 million annually from card rooms, sufficient to support the salaries of 150 police officers or 133 firefighters. He cautioned that this funding could be jeopardized if the tribes win in court.
In defense of their activities, the card room industry asserts that the games they offer are legal, with prior endorsements from the attorney general’s office. This lawsuit follows a tumultuous year in which tribes successfully lobbied for SB 549, amidst what became one of the most expensive political conflicts of the recent legislative session. A mixed coalition of lawmakers, many of whom represent districts with large tribal casinos, championed the gambling measure, while a minority standing for card rooms opposed it.
This conflict unfolded following the collapse of a sports betting proposal in 2022, an initiative heavily funded by the tribes, which included similar provisions allowing for legal action. Since the beginning of 2023, opposing interests in the gambling scene contributed at least $4.3 million to the legislative contingent, as per data from Digital Democracy. Reacting to the perceived threat from SB 549, card rooms escalated their lobbying efforts, with the Hawaiian Gardens Casino dedicating $9.1 million to advocacy efforts this year, only trailing Chevron Corp. in expenditure.
Despite the setback associated with SB 549, card room advocates invested over $3 million in efforts to unseat four lawmakers who played pivotal roles in the bill’s passage ahead of the November elections. Ultimately, three candidates targeted for their roles, including the bill’s author, Democratic Sen. Josh Newman from Fullerton, faced electoral defeat.
