Some California Cities Say Sportsbook Initiative Will Kill Cardrooms

California cities that host cardrooms say a measure to legalize sports betting poses a special threat to them. A provision allowing private attorneys to sue cardrooms over violations is of special concern, they say.

Some California cities that host cardrooms that contribute a significant amount to their general funds are warning against a ballot measure they say could put those casinos out of business, killing a $1.6 billion industry.

Unfortunately for them, the California Sports Wagering Regulation and Unlawful Gambling Act is backed by a coalition of gaming tribes that represent a much larger industry. It is led by Pechanga Resort Casino, the largest casino on the West Coast.

It would allow tribal casinos and the Golden State’s four racetracks, to offer sports betting, and add roulette and craps to their slot machines. This would, say the cities, give the tribes virtually a monopoly on gaming in the state. They point to a provision in the act that they say could allow the tribes to complete that monopoly by strangling the cardrooms.

The act would expand on the state’s Private Attorneys General Act and allow private attorneys hired by tribes to stand in for the state Attorney General to sue cardrooms over possible violations.

Cities close to Los Angeles and San Francisco host some of the largest, most lucrative cardrooms in the state. Several get the lion’s share of their revenue from their card casinos.

The cities opposing the measure include Commerce, Compton, Hawaiian Gardens and Bell Gardens. At a May 19 press conference Bell Gardens councilwoman Alejandra Cortez pointed out that Bicycle Hotel & Casino accounts for 46 percent of her city’s budget.

She said the Covid pandemic gave her city “a preview of what that would be like when we had to shut down in 2020 during the COVID-19 pandemic.” She added, “It was closed for nine months and it resulted in a loss of about $10 million.”

Kathy Fairbanks, spokeswoman for the Coalition for Safe, Responsible Gaming, which supports the initiative, says their fears are overblown. She said in a statement: “Our measure simply ensures existing laws preventing illegal gambling are being followed,” she said. “Cardrooms following the law have nothing to worry about—nor do their employees.”

Fairbanks, on the other hand, points to recent settlements that several cardrooms have had to pay for violating state and federal laws on money laundering. “The only cardroom casinos at risk of legal enforcement are those that repeatedly violate California gaming laws,” she said.

But the tribes themselves are fighting the other measure that is on the ballot, proposed by out-of-state sportsbook operators. They are spending millions on advertisements to oppose.

That measure, the California Solutions to Homelessness and Mental Health Support Act, is counting on Golden State residents to look at their measure in the light what most people think is the state’s biggest problem: homelessness.

An opponent of that measure, Rob Stutzman, who represents Tribal Sovereignty and Safe Gaming, told CDC Gaming Reports, “Yes, they are promising money to fight homelessness, and if you look at the fine print, 90 percent of these dollars go out of state, and then the pennies that remain get chopped up through some other loopholes.” He added, “Essentially, you’re looking at maybe a 3% bump to the amount of money the state currently spends on homelessness.”