California's card rooms celebrated a major victory on Tuesday when San Francisco Superior Court Judge Richard Darwin ruled that the state's Bureau of Gambling Control had exceeded its authority with new regulations impacting blackjack and player-dealers. The ruling reaffirmed a preliminary injunction issued in May, which temporarily blocked the regulations that began on April 1. Darwin noted that the state struggled to persuade him otherwise during the hearings.
The regulations aimed to significantly limit blackjack-style games and player-dealing practices, which would have severely impacted card room revenues and tax contributions. The Bureau of Gambling Control (BGC), one of California's two gaming regulatory bodies, was responsible for these controversial changes. Its counterpart, the Gambling Control Commission, functions independently, focusing on day-to-day operations and oversight, while the BGC is tasked with enforcement and prosecution.
"I find that in issuing the subject regulations, the Bureau acted in excess of the authority granted to it by the legislature and the Gambling Control Act," Darwin stated after hearing arguments. A follow-up case management conference is scheduled for July 10.
The attorney general's office expressed disappointment over the ruling and is considering its next steps. The California Nations Indian Gaming Association did not provide any comments regarding the decision.
Under the blocked regulations, card rooms would have been required to implement significant changes, including eliminating the "bust" feature in blackjack and raising the target score from 21. Additionally, there were mandates for player-dealers, including rotations every 40 minutes and offering the position to all players before each hand. According to state analysis, these changes could have led to a 50% drop in blackjack revenue, raising concerns about potential closures and leading cities to consider raising sales taxes to compensate for losses.
Kyle Kirkland, president of the California Gaming Association and owner of Club One Casino in Fresno, expressed relief after the ruling, stating, "The reaction from the industry and our members is relief. We felt like we were on the right side of the law and the argument, and today, this just cements it."
The legal battle involves three primary groups: the card rooms, represented by their attorneys, Attorney General Rob Bonta acting for the state, and California's influential gaming tribes. While the litigation focused on the first two parties, card rooms suggest that the state was acting under the tribes' influence, who overpower them in revenue and political leverage. Tribal groups maintain exclusive rights to Class III gaming in California and argue that blackjack games with player-dealers infringe upon those rights. However, state courts have ruled against the tribes in similar lawsuits, with one such case dismissed last year and currently unappealed.
Bonta, who is campaigning for re-election this November, has recently intensified his engagement in gaming issues, which has tended to disadvantage tribal interests. His actions include the proposed changes to card rooms, involvement in lawsuits regarding prediction markets, removal of gaming machines from the Santa Anita racetrack, and declaring daily fantasy sports illegal in California.
With California's court system being the largest in the nation, it remains uncertain how long this case might last if appealed, and there’s no guarantee the state Supreme Court would take it up. A key legal argument was whether the BGC had the proper authority to enact such sweeping regulations. Card room attorney Jeremy Kreisberg contended that the Bureau’s regulatory power applies to individual games, not broad classifications.
"The power to categorically prohibit games is not reasonably related to the Bureau's individual game approval authority, and that is the statutory problem here," Kreisberg asserted. In contrast, Deputy Attorney General Sharon O'Grady referenced legal codes that she believed justified the BGC's actions but faced defeat in her arguments.
"Regulation is not purely policy – these regulations are implementing the details of implementation; they are not policies," she stated, arguing that the BGC had the right to proceed with such rule-making.
