San Francisco Superior Court Judge Richard Darwin last month blocked state regulators, for now, from enforcing rules that would have barred cardrooms from offering blackjack, one of their most profitable games. The regulations were issued by Attorney General Rob Bonta’s Bureau of Gambling Control and had been set to take effect this week.

The ruling is not expected to end the dispute. Instead, it keeps alive one of the most expensive and politically influential fights in Sacramento — a conflict with major implications for gambling businesses, tribal governments, city budgets and campaign fundraising.

California has about 80 privately run cardrooms, also known as card clubs. Many local governments rely heavily on taxes generated by their table games. Tribal casinos, meanwhile, argue that cardrooms have been improperly offering games that voters reserved for tribes when they approved tribal gaming measures in 1998 and 2000.

Mike Gatto, a former Democratic assemblyman from Los Angeles, said the ongoing stalemate has also benefited another group: politicians.

“It keeps the fight going; it keeps the two very powerful interests caring about what goes on at the Legislature, and therefore it keeps the campaign contributions moving as well,” Gatto said.

Campaign finance records compiled by CalMatters’ Digital Democracy database show that 27 casino-owning tribes have contributed at least $15.8 million to current members of the California Legislature. Twenty-six cardrooms and related businesses have contributed at least $2.8 million.

Bonta, who is seeking reelection this year, has also received money from both sides. Since 2012, cardrooms have given him at least $244,000, while tribes have contributed $531,000, according to Digital Democracy.

Jonathan Underland, a spokesperson for Bonta’s campaign, said the donations did not influence the attorney general’s decision to move forward with the regulations. The Attorney General’s Office referred questions about campaign contributions to the campaign.

“Contributions have never impacted the Attorney General’s decision-making process,” Underland said in a text message. He added that Bonta stopped accepting donations from gambling interests before implementing the rules.

The legal and political fight centers on so-called “house-banked” games, including blackjack. Under California’s tribal gaming framework, tribes have the exclusive right to negotiate compacts with the state to operate Las Vegas-style casino games.

Tribal governments say gaming revenue has been critical to improving economic conditions in communities that have long faced poverty and political marginalization. They argue that cardrooms have undermined tribal exclusivity by offering versions of prohibited games through a workaround.

Cardrooms do not act as the bank in blackjack games. Instead, they contract with third-party companies whose employees sit at the tables and handle wagers and payouts. Dealers are required to periodically offer players the chance to serve as the bank, though nearly all decline. Cardrooms collect fees from the games.

Tribes contend that arrangement violates the state’s ban on non-tribal entities offering house-banked games. Cardrooms maintain that the model has been reviewed for decades and is lawful.

Bonta sided with the tribes, completing regulations that two of his predecessors, Kamala Harris and Xavier Becerra, had begun but did not finish. Darwin’s preliminary injunction found that Bonta’s office likely went beyond its authority by banning the cardrooms’ most popular table games. The order remains in place for 45 days, and the Attorney General’s Office is expected to argue its position in court on June 30.

A spokesperson for the California Nations Indian Gaming Association did not respond to a request for comment.

Kyle Kirkland, a Fresno cardroom owner and president of the California Gaming Association, praised the temporary court order and said cardrooms expect to win the broader legal fight.

“We are a legitimate industry, we have had decades of lawful operation,” Kirkland said. “We operate legally; we provide incredible support to our employees and our host communities.”

If cardrooms ultimately prevail, it would mark the second major legal setback for tribes in less than a year.

In October, a Sacramento judge dismissed a lawsuit brought by tribes against cardrooms. The case was based on a 2024 law signed by Gov. Gavin Newsom that gave tribes a one-time opportunity to sue cardrooms in Sacramento County Superior Court. Before that law, tribes had been unable to bring such unfair business practice claims in state court because, as sovereign governments, they lacked standing.

The judge ruled that federal law superseded the state law.

The stakes extend well beyond the gambling floor. Some California cities depend on cardroom tax revenue for a large share of their budgets, and officials have warned that losing that money could affect police, fire and other public services. San Jose officials have said the city receives about $30 million a year from cardrooms, enough to pay for 150 police officers or 133 firefighters.

The battle over the 2024 law, Senate Bill 549, became one of the most expensive political fights of that legislative session. A bipartisan group of lawmakers, many representing districts with large tribal casinos, supported the measure. A smaller bloc of legislators with cardrooms in their districts opposed it.

During the two-year session that ended in 2024, gambling interests on both sides donated at least $4.3 million to members of the Legislature, according to Digital Democracy.

The tribes had pushed for the bill after spending millions of dollars on a failed 2022 sports betting initiative that also would have allowed them to sue cardrooms.

Cardrooms responded with an aggressive lobbying campaign. In 2023, Hawaiian Gardens Casino spent $9.1 million on lobbying at the state Capitol, the second-highest amount reported by any company to state regulators that year. Only Chevron Corp. spent more.

After Newsom signed the bill, the cardroom industry spent more than $3 million that fall targeting four lawmakers who had played central roles in passing it. Three of those candidates lost reelection, including the bill’s author, Democratic Sen. Josh Newman of Fullerton.

For now, the court order allows cardrooms to keep dealing blackjack while the legal fight continues. But with millions of dollars in gaming revenue, city tax funding and political contributions at stake, few in Sacramento expect the dispute to end soon.

Original source: CalMatters

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