Cardrooms file legal challenge to new gaming regulations

Less than a month after California Attorney General Rob Bonta announced new regulations for California’s cardrooms, the cardrooms struck back on Monday filing two lawsuits to block their implementation.

Both filed in San Francisco County Superior Court, the lawsuits seek to invalidate two regulations that combined would significantly change how cardrooms may offer their most popular and profitable games, which the state’s gaming tribes maintain have always been provided illegally.

“Attorney General Bonta’s regulations threaten to eliminate more than half of California’s cardroom jobs and wipe out a critical source of revenue for dozens of cities,” said Kyle Kirkland, president of the California Gaming Association, in a press release announcing the lawsuits. “These games have operated legally for decades under multiple Attorneys General, yet one public official is now moving to shut them down without identifying a single public safety concern or addressing the 1,764 public comments about these regulations.

“Our industry repeatedly raised legal and economic concerns throughout the rulemaking process, but the Attorney General refused to engage with the communities and working families who will be harmed. We are asking the court to stop these unlawful regulations before they wipe out thousands of jobs and put many local economies into fiscal distress across California.”

¼ cent sales tax in Commerce
The fate of the cardrooms affects the financial health of cities like Bell Gardens, Commerce, Compton, Gardena and Hawaiian Gardens that balance their budgets on the backs of the cardrooms operating within their borders.

The regulations, which go into effect on April 1, are expected to cause the loss of hundreds of millions of dollars in revenue to cities and hundreds of jobs in the state’s cardroom/TPPP industry, which had an estimated total economic impact of $5.6 billion annually in 2019.

City Council for the City of Commerce in Los Angeles County voted unanimously late last month to put a ¼ cent sales tax on the June 2026 ballot to offset the impact of the cardroom regulations.

“The Commerce Casino is a major taxpayer in the City that generates over $30,000,000 a year in revenues for the City, or over 40% of the City General Fund budget of approximately $80,000,000,” the city’s website says in a post about the new ballot measure. “The General Fund provides the resources that support parks and recreation programming, the public safety budget and the budget for library operations. Casino Revenues provide a significant additional boost to the City’s budget, enabling the City to offer extensive programming. Unfortunately, the Attorney-General for the State of California has ruled that significant operations at the Commerce Casino are no longer allowed.”

“Other cities are considering similar emergency measures,” the cardrooms said in the press release.

No more ‘California Blackjack’
The cardroom industry contends that the new regulations are inappropriate because the Bureau of Gaming Control years ago authorized the blackjack-style games and TPPP practices that are now under attack.

One of the new regulations regarding blackjack-style games prohibits cardrooms from offering contests where players or dealers can bust if their points exceed 21. Indeed, the new regulations not only bar cardrooms from offering any blackjack-style game where the target is 21 points but also forbids them from offering any games with the words “21” or “blackjack” in the name.

The regulations would seem to spell the end of “California Blackjack,” a derivative of the popular casino game developed for use within California cardrooms where the traditional rules violate state law.

Cardrooms are barred from offering games that pit gamblers against the house, a prohibition that was intended to limit play to games like poker. That’s a throwback to the Gold Rush era, when lawmakers were worried sophisticated gambling operations would hustle gold miners out of their money.

But over time the state approved cardrooms to offer blackjack-style games that rely upon TPPPs, the subject of the other new regulation.

Third party players with dough
That regulation says the role of the house or bank, known as “the player-dealer position,” must rotate to two players other than the TPPP at the table “every 40 minutes or the game shall end.”

TPPP employees working contractually within California cardrooms volunteer to act as the house or bank at every table where quasi-banked games are played. Before a dealer deals a hand of blackjack-style game, he or she offers all of the players at the table the opportunity to serve for a hand or two as the house or bank.

Most gamblers don’t have the means to cover that kind of action. But the employees of TPPPs do. So TPPP workers, who often wear badges identifying themselves as working for a TPPP and not the cardroom in which they are based, volunteer to play the role of the bank. The new regulations require that two other people playing a quasi-banked besides a TPPP worker must now hold the player-dealer position every 40 minutes or else the game ends.

That’s going to limit the action on such games, which in turn will limit the rake or fee cardrooms may collect. Cardrooms have until May 31 to tell the state how they intend to comply with the new regulations.

Bitter rivals in Golden State gaming
This lawsuit is just the latest twist in a long-running dispute pitting the cardrooms against the state’s gaming tribes, who claim their rivals have been offering certain table games in violation of state law. Understanding that dispute, however, requires a lesson in both state history and legal precedent.

In 2000, state voters approved Proposition 1A, authorizing tribal gaming in California. That ballot measure gives Native American casinos the exclusive right in the Golden State to offer banked games like Blackjack and Baccarat, where gamblers wager against the house.

But those rights came long after the advent of cardrooms, which over time evolved from humble saloons to glitzy casinos but remained constrained by state law barring them from offering banked games.

In December 2007, an obscure state official named Bob Lytle reinterpreted state law to allow cardrooms to offer variations of traditionally banked games. Today, alternate versions of banked games like Blackjack and Baccarat are offered off reservation in California cardrooms thanks to both repeated approvals by state regulators and the TPPP that work symbiotically with cardrooms.

California’s gaming tribes say this practice is in violation of the will of voters and have tried to challenge the cardrooms in court. But judges previously ruled that as sovereign nations they don’t have the standing to bring a lawsuit. SB 549 by former State Sen. Josh Newman and signed by Gov. Gavin Newsom in September 2024 sought to rectify that by granting the tribes special, one-time access to state court to sue over just this specific issue.

The power of the tribes
The bill reflects state politicians’ apparent reluctance to choose a side in the dispute. On one side, you have California’s gaming tribes, major political powers who stymied in dramatic fashion a well-funded attempt by major sportsbooks to legalize sports gambling in California in 2022. On the other side, you have the cardrooms, who support several communities across the state. Cardrooms may go out of business if they lose the ability to offer popular variations of banked games. That could send communities in the Golden State into economic distress.

At the same time, the tribes are deeply skeptical of state gaming regulators. That’s due in part to Lytle himself, who immediately after reinterpreting the law went to work for cardrooms, then got into so much trouble with state regulators he relinquished his state gaming license and agreed to a lifetime ban from California gaming activities. No one debates that the alternate games the tribes question have been approved by state regulators, which the cardrooms insist makes the whole dispute moot.

The cardrooms and the gaming tribes each see this as a fight for their very survival.

Without variations of banked games, the cardrooms are widely projected to lose much of their business. The tribes, conversely, believe they cannot let anyone encroach on their dominion over the California gaming market in order to ensure the survival of their communities.

Sacramento Superior Court Judge Lauri Damrell dismissed the tribes’ suit against the cardrooms in October 2025, arguing that the federal Indian Gaming Regulatory Act or IGRA preempts the will of the Legislature and governor. But she acknowledged at the time her ruling “may be wrong,” a statement that reflects the intricacies of the legal issues.

The tribes were expected to appeal the decision to the Third District Court of Appeal, which docketed the case in December, but briefs weren’t supposed to be filed until this year.