California cardrooms playing table games legally for decades

OPINION – California’s cardroom industry has been operating lawfully in the state for over 100 years. Many California communities rely on cardroom tax revenues to provide public safety, parks, recreation programs, senior services and housing programs, and improve the quality of life for residents. Cardrooms provide thousands of stable, well-paying jobs at which Californians can build careers and provide for their families.

Despite tribal allegations to the contrary, player-dealer games offered in California cardrooms are not banked games. The player-dealer games conducted within cardrooms have been approved for decades by numerous California attorneys general, including current Vice President Kamala Harris and former Governor Jerry Brown. Four Courts of Appeal* have confirmed the lawfulness of these games.

Nonetheless, after unilaterally determining cardroom games to be illegal, certain affluent tribes in 2012 began initiating campaigns at every level of government aimed at putting cardrooms out of business. All these attempts, including last November’s failed Proposition 26, have been unsuccessful. Now, with SB 549, which mirrors the previously rejected language of Proposition 26, these same tribes are asking the Legislature to disregard the expressed will of California voters.

This publication recently printed an article about a letter written almost 16 years ago by Department of Justice legal staff and signed by then-director of the Division of Gambling Control, Robert Lytle in 2007. The article contains numerous misconceptions and inaccuracies.

The player-dealer games conducted within cardrooms have been approved for decades by numerous California attorneys general, including current Vice President Kamala Harris and former Governor Jerry Brown.

First, Proposition 1A’s sole purpose was to authorize tribes to conduct and operate slot machines, lottery games, and banked and percentage card games on tribal lands. The passage of Proposition 1A, which consisted of a single paragraph, had no impact on cardrooms or the games they had been offering for decades, including variants of blackjack and baccarat.

Second, the article claimed that the 2007 letter “led to the creation of the current (and very confusing) third-party proposition player system cardrooms use today to offer banked games.” Nonsense. Player-dealer games like blackjack and baccarat have been played in cardrooms since 1983 – 25 years before the letter was issued – and the use of third-party proposition players in player-dealer games dates to the 1990s. In fact, prior to the passage of Proposition 1A, tribal casinos offered player-dealer games and used third-party proposition players.

In 2000, the Legislature confirmed the legality of both player-dealer games and the use of third-party proposition player companies with the passage of AB 1416 – seven years before the letter by Mr. Lytle. That legislation was drafted in consultation with the Department of Justice to avoid any concerns over whether player-dealer games are prohibited banked games. The legislative history of AB 1416 shows that early versions mandated specific player-dealer rotation, but these versions were rejected in favor of the final version which does not specify player-dealer rotation and expressly provides that it was not the intent of the Legislature to mandate acceptance of the deal by every player. AB 1416 also provided for the licensing of third party companies. (See AB 1416, Amended in Senate 3/23/00; AB 1416, Amended in Senate 7/5/00.) This meant that the Legislature knew and intended for player dealer games using third party companies to continue.

AB 1416 was enacted in 2000, three years before Mr. Lytle was appointed Division Chief in 2003, and seven years before he signed so-called Lytle letter, which essentially reaffirmed the DOJ’s long-held interpretation. Such letters are not regulations and have no force of law.

In contrast to self-regulated tribal casinos, cardrooms in California are subject to vigorous and independent regulation by two state agencies, ensuring they adhere to all federal, state, and local laws, including California’s labor codes and minimum wage requirements. Cardrooms have offered player-dealer games for decades, which have consistently been approved by the state’s attorneys general and endorsed by the Legislature, judiciary, and the voting public.

The California cardroom industry supports continued discussions regarding regulation of gaming within the state. However, it is essential that the discourse is not influenced by unfounded concerns from a few wealthy tribal casinos intent on creating a monopoly for themselves to the detriment of working California families and the communities served by cardrooms.

Kyle Kirkland is president of the California Gaming Association