California card rooms achieved a notable victory in court on Tuesday when a judge ruled that the Bureau of Gambling Control (BGC) had exceeded its authority by implementing two sweeping sets of regulations that took effect on April 1. This decision was made by San Francisco Superior Court Judge Richard Darwin, who confirmed a preliminary injunction from May that halted the enforcement of these regulations during legal discussions. During the preliminary hearing and again on Tuesday, Judge Darwin indicated that the state faced significant challenges in convincing him otherwise, which they ultimately failed to do.
The regulations in question involved restrictions on blackjack-style games and the use of player-dealers, both of which would have greatly impacted card room revenues and the state's tax income. The BGC operates alongside the California Gambling Control Commission, focusing on enforcement and prosecution under the attorney general's office, while the commission operates independently and manages day-to-day oversight. Card rooms contended that the BGC had acted outside its remit, and Judge Darwin agreed.
"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 from both sides. A follow-up case management conference is scheduled for July 10 to discuss administrative procedures.
The attorney general's office expressed disappointment over the ruling but is evaluating its next steps and will respond accordingly. The California Nations Indian Gaming Association has yet to comment on the matter.
The new regulations would have required card rooms to make significant modifications to blackjack games, including eliminating a "bust" feature and altering the target point of 21. Changes regarding player-dealers mandated rotations every 40 minutes and stipulations to offer the dealer position to all players before each hand. Such measures would have posed a considerable threat to an industry that, as of 2019, contributed around $5 billion annually to the economy. State assessments indicated that these changes could have resulted in a projected 50% revenue loss for card rooms, leading some establishments to fear closure and prompting cities to consider fiscal measures like sales tax hikes to mitigate losses.
Kyle Kirkland, president of the California Gaming Association and owner of Club One Casino in Fresno, expressed satisfaction after the hearing, saying, "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 we heard that back in May when we got the preliminary injunction. Today, this just cements it."
This case involves different stakeholders, including card rooms, California Attorney General Rob Bonta, and the state's influential gaming tribes. While the litigation primarily concerned the first two parties, card rooms have consistently argued that the state's actions were influenced by tribes, which significantly outpace card rooms in revenue and political influence.
The tribes have exclusive rights to Class III gaming in California and claim that blackjack-style games and player-dealers violate this exclusivity. However, state courts have ruled against the tribes in similar cases, including one related to the tribes that was dismissed last year.
As Attorney General Bonta prepares for re-election this November, he has become more involved in gaming issues, an engagement that appears to have disproportionately affected tribal interests. He has made decisions impacting card rooms, including joining lawsuits related to prediction markets, removing gaming machines from the Santa Anita racetrack, and declaring daily fantasy sports illegal in California.
The future of this case is uncertain, as California's court system extends to a vast number of appeals, and it's unclear how long the process will take. Between September 2024 and August 2025, over 3,500 petitions were submitted to the California Supreme Court, but the court heard arguments in only 52 cases and issued 45 written opinions.
A central argument in court was whether the BGC had the authority to issue such extensive regulations. Card room attorney Jeremy Kreisberg argued that the Bureau’s authority is limited to specific games, not broad classifications. "The power to categorically prohibit games is not reasonably related to the Bureau’s individual game approval authority, and that I think is the statutory problem with the Bureau seeks to do here," he claimed.
In contrast, Deputy Attorney General Sharon O’Grady referenced legal codes and prior cases to support the BGC's authority, stating that the regulations are not merely policy changes, but are implementing necessary details as outlined by Penal Code Section 330.
