A controversial California bill could threaten thousands of jobs and force some California cardrooms to close if the state's tribes successfully prevent blackjack-style games from being offered.
The games — which are operated through third-party proposition players, or TPPPs — provide an important revenue stream for the state's cardrooms.
A TPPP is a player that acts as the 'house' in card games provided at cardrooms throughout California. The TPPP will provide the 'bank' and payout on wins and side bets, all while keeping the profits when the other players lose. Cardrooms can't act as the casinos in these games, but the commission they take from the TPPPs is an essential source of income.
In California, the TPPP often works as an employee for an entity providing the money and keeping the profits. TPPPs are regulated and they register with both the state and the cardroom.
The ongoing battle between California's tribal nations and cardrooms over TPPPs and blackjack-style games is likely to resurface in the coming weeks in the form of a state Senate hearing on the matter. The state's tribes have previously challenged the legality of prop players in an effort to curtail the growth of non-Tribal gaming throughout California.
The controversial California Senate Bill 549 (SB 549) introduced last year on behalf of the state's tribal nations would grant the tribes standing to sue cardrooms, but it won't be debated directly now. Instead, it will serve as the vehicle through which regulatory changes proposed by Attorney General Rob Bonta are to be considered.
The regulatory changes proposed by Bonta's office would likely have a negative impact on the cardrooms' ability to offer numerous blackjack-style games.
Attorney General Bonta published his proposed rule changes for the pseudo-blackjack and TPPP-banked games last September, along with a call to interested stakeholders to file public comments regarding the proposed changes. Bonta's call brought in 30 significant public comments from both sides of the rules battle.
Tribal shift to bureaucratic solution
Many of California's harder-line tribal nations have also used the TPPP and blackjack disputes as part of their justification for quashing various online gambling and online poker measures introduced over the past decade-plus.
The push using AG Bonta, whose office appears sympathetic with the tribal nations' claims, represents yet another shift in focus over the ongoing TPPP and pseudo-blackjack fight.
The matter was also inserted with little fanfare into the tribal-backed Proposition 26, which failed disastrously in a 2022 statewide referendum despite $170 million spent by its supporters. The proposal would have legalized live sports betting at California's tribal casinos, but it also included the same anti-cardroom language now found within SB 549.
Prop 26 and an online-only sports-betting referenda, Proposition 27, which was supported by many cardrooms and backed by major American sports-betting firms, failed by such huge margins that backers of both bills essentially gave up weeks before the November vote.
Bonta's proposed changes face significant hurdles
Despite the tacit favor shown by AG Bonta's office towards the tribes' claims of illegal games being offered by the state's cardrooms, the proposed regulatory changes likely face numerous and significant legal challenges if any new restrictions or definitions are approved.
One key point is that SB 549 is an attempt to re-litigate the legality of the TPPP and blackjack-styled games in question, which have already withstood multiple tribal-backed court challenges.
The lean toward the tribes' stance can be seen in multiple declarations in the proposed draft language. One such example declares, "A gambling enterprise that offers blackjack-style games previously approved by the Bureau that do not comply with [existing code]" must reapply to have the games approved.
However, all currently offered cardroom games are state-approved, and the proposed changes would, in effect, invalidate California's gambling regulators as a rule-making entity. The effort could also circumvent the regulators by granting standing and possible enforcement powers to tribal entities and individuals.
AG Bonta's proposals have also drawn ire from many of the inner-suburban cities who say that the AG's office has failed to complete any of the economic-impact studies required for such revenue-impacting rules. California's dozens of licensed cardrooms rely heavily on the revenue generated by games other than poker and many cities' operating budgets would take huge hits if already-approved games were suddenly yanked from a given cardroom's services.
The city of Hawaiian Gardens, for example, told Bonta's office that 70% of its annual revenue comes from the cardroom there of the same name.
Some smaller cardrooms may be forced to close if these games were pulled, and that would potentially mean less live poker venues.
Blackjack isn't 'twenty-one'
One added twist to the battle includes the wording of the changes and the underlying gambling laws themselves. One of the most prominent opinions submitted to Bonta's office was a 53-page legal treatise on the blackjack-styled games cardrooms created by the law firm of Munger, Tolles & Olson LLP.
The firm represents several entities on the cardroom side of the battle, including the California Gaming Association (CGA), the Communities for California Cardrooms (CCC), and the California Cardroom Alliance (CCA). (The firm also submitted a parallel legal opinion supporting California cardrooms' legal right to offer TPPP-banked games.)
In its defense of cardroom's blackjack-styled offerings, the Munger, Tolles, and Olson opinion noted something that could throw the proverbial monkey wrench into the entire blackjack debate. California's legal codes, when made law in the late 19th century, never even mentioned blackjack and blackjack as a game didn't even exist at the time.
Instead, the original California code banned the game of 'twenty-one', which had somewhat the same goal of accumulating cards toward a goal of 21 but used different rules.
In the original twenty-one, the dealer made all the betting and playing decisions, while the players were passive observers, much like watching the results of a roulette wheel spin. The dealer had few restrictions and could even force players to make certain bets. Along with extra provisions such as winning all ties, it made for a heavily house-favored game, hence its banning from California casinos.
The cardrooms have also begun playing the publicity game as well. For example, the Fresno Bee and other outlets recently featured an op-ed from Adriana Cervantes, a line cook at Club One Casino cardroom.
Cervantes describes from a cardroom employee's perspective how SB 549 imperils the jobs of thousands of cardroom workers by exposing them to "frivolous litigation" brought by tribal interests against cardrooms.
