A controversial measure that would grant California's casino-operating tribal nations the right to sue state-licensed cardrooms over the legality of third-party proposition player (TPPP) games has quickly passed both houses of California's state legislature and has moved to the office of Governor Gavin Newsom, where it appears likely to be signed into law in the coming weeks. See our previous report for more background.
Senate Bill 549 (SB549), titled the Tribal Nations Access to Justice Act, passed easily following a final round of amendments in July and August. A week ago, SB549 cleared the California Assembly on a unanimous 62-0 vote, with 17 members not voting, and on Saturday it easily passed the State Senate on a 32-2 tally, with six senators not voting.
The wide margins of the votes indicate a signing by Gov. Newsom is the likeliest outcome, though Newsom, to date, has made no statement on the bill. The governor has until September 30 to sign or veto the bill, though the votes to override a veto appear to be present, since an override requires two-thirds of the vote in both the Assembly and Senate chambers. If Newsom makes no formal decision, SB549 would become law under California's 'pocket signature' rule.
Bill would create six-month window for tribes to sue
If signed into law, SB549 would create a one-time window for the tribal nations to sue individual cardrooms directly. The window would last for a little over six months, with any tribes wishing to sue being required to file their actions by April 1, 2025.
The final version of the bill as passed by California's legislature contains a few changes from earlier takes. For instance, if more than one tribe files suit, all the claims will be combined into a single case, which would be heard in California's Superior Court system. Only the cardrooms can be sued, and only the tribes can file actions; all other conceivable entities are exempted within the bill. There can also be no awarding of monetary judgments, as the bill as passed allows claims only for injunctive relief.
Both sides claim legal precedent
The battle over TPPP legality has been waged for more than a decade, with the tribes repeatedly trying various avenues to force the cardrooms to shelve the games. The issue was tucked within the tribes-favored version of two sports-betting referendums that failed by a huge margin in 2022.
The tribal nations' push to act via SB549 followed that debacle, which saw record spending but left the voting public poisoned by the bitter battles between the state's gambling stakeholders. Instead, via the legislative path, the tribal nations again push their two primary arguments -- that the TPPP games violate California law, and that the tribes have been denied standing to sue in the past due to the structure of their own gaming contracts with the state.
On the cardrooms' side, the argument has been that the TPPP games have been approved by California's Gaming Control Board for years, and that the approval has withstood previous challenges and claims of illegality by the tribes. The cardrooms have also claimed that SB549 removes authority over the games from the GCB and effectively deputizes the tribes to act as arbiters of the law.
However, language that all but declared the TPPP games to be illegal was scrubbed from earlier draft versions of the bill. As it now stands, SB549's purpose is 'to determine whether certain controlled games operated by California card clubs are illegal banking card games or legal controlled games, thereby resolving a decade-long dispute between California tribes and California card clubs concerning the legality of those controlled games and whether they violate state law....'
The cardrooms have also feared that SB549 could be used as a financial tool to hammer the cardrooms into submission via expensive litigation. That concern has been only partially alleviated in SB549's final form, since it remains undetermined as to which (or how many) cardrooms the casino-operating tribes would sue. On average, the tribal casinos are far more massive and generate much more revenue than the cardrooms. Many smaller cardrooms could also be forced out of business entirely if forced to shelve their TPPP offerings, as PokerOrg's Lee Jones explored in a July report.
