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NEWS
State Court of Appeals affirms dismissal of Tribal suit against cardrooms challenging cardroom games.
Federal Court of Appeals affirms dismissal of Tribal suit against the State of California challenging cardroom games.
RESOURCE LINKS
LEGISLATION
Effective January 1, 2024, AB 341 provides for a moratorium on new cardroom licenses until 2043 and allows for a limited number of new cardroom tables. AB 341
Effective January 1, 2024, AB 1271 allows the Gambling Control Commission to simplify the licensing process for currently licensed owners of gambling businesses when the licensee needs to change their license designation or acquires an interest in another licensed business. AB 1271
SB 549 has been introduced in the Legislature. If adopted, it would allow Tribal casinos to sue cardrooms over the legality of cardroom games. SB 549
CALIFORNIA GAMBLING LAW GUIDE
The California Constitution, Article IV, Section 19, generally prohibits casinos of the type operating in Nevada and New Jersey. However, constitutional amendments together with legislation have created many distinct categories of regulated and legal gambling.
1) Card Clubs offer poker games and table games, like Three Card Poker, Baccarat and Pai Gow. The card clubs are not allowed to operate banked games. Penal Code 330. Instead, the players can take turns being the player-dealer and bet on the dealer hand against the other players, rather than wagering against the casino. Penal Code 330.11. Four Court of Appeal decisions have held that player-dealer games are not banking games. Sullivan v. Fox, 189 Cal. App. 3d 673, 678 (1987); Bell Gardens v. City of Los Angeles, 231 Cal. App .3d 1563, 1568 (1991); Huntington Park v. Cty. of Los Angeles, 206 Cal. App. 3d 241, 250 (1988); Walker v. Meehan, 194 Cal. App. 3d 1290 (1987). The card rooms are regulated by an independent state commission, the California Gambling Control Commission, and by the Bureau of Gambling Control in the Department of Justice.
2) Tribal Casinos. Tribal Casinos have compacts or agreements with the State of California under which tribal casinos can operate slot machines and house banked card games. Cal. Const. Art. IV, Sec. 19(f). Tribal casinos are largely self-regulated, but the National Indian Gaming Commission provides training and technical assistance to tribal regulatory agencies, and approves tribal gaming ordinances and management agreements.
3) Parimutuel Horse Racing. Horse racing is legal and there are also advance deposit wagering companies that take online horse wagers. Horse racing and ADW is regulated by the California Horse Racing Board.
4) There is a California State Lottery. All other lotteries and promotions that contain the elements of a lottery (prize, chance and consideration) are prohibited under Penal Code 319.
5) Charities are permitted to offer bingo games.
6) Raffles are permitted under prescribed rules, including raffles sponsored by sports teams.
7) Sweepstakes and contests are permitted. BPC 17539-17539.3, 17539.35.
8) The laws allows card games played in private residences if no person makes money for operating the game, except as a player. Penal Code 337j.
9) Slot machines are illegal. Penal Code 330a and 337t.
10) Sports Wagering is illegal. Penal Code 337a.
FEDERAL GAMBLING LAW
Federal gambling laws often supplement state gambling laws and address inter-jurisdictional activities.
1) Wire Act of 1961. The Wire Act prohibits interstate sports wagering by prohibiting businesses or persons from using a wire communication facility to transmit interstate or foreign bets, wagers and directly related information, unless the wager is legal both where the bet is made and where it is received.
2) Unlawful Internet Gambling Enforcement Act – UIGEA. UIEGA targets gambling operators, banks and financial institutions that knowingly accept any payment or deposit to be used for illegal online gambling. UIEGA relies on other federal and state laws to determine what is illegal gambling. UIGEA defines “unlawful internet gambling” as “placing, receiving, or otherwise knowingly transmitting a bet by means of the internet where such bet is unlawful under any law in the State where the bet is made.“ UIEGA includes exemptions for social games without redeemable points or credits, legal intrastate and inter-tribal gaming, and horse racing under the Horse Racing Act of 1978. However, that does not mean that fantasy sports contests or daily fantasy sports contests are legal. Even if the contest meets the specific requirements in UIEGA, that would exempt the contest only from UIEGA, not other federal and state laws.
3) The Illegal Gambling Business Act prohibits a gambling operation which (1) is in violation of state or local law where it is conducted, (2) involves five or more persons that conduct, finance, manage, supervise, direct or own all or part of the business and (3) remains in substantially continuous operation for more than thirty days or has a gross revenue of $2,000 in any given day.
4) The Racketeer Influenced and Corrupt Organizations Act was adopted with the Illegal Gambling Business Act as part of the Organized Crime Control Act of 1970. RICO imposes penalties on persons who commit multiple violations of certain specified laws, including gambling laws.
5) The Interstate Wagering Paraphernalia Act prohibits the interstate transportation, except by common carrier, "of any record, paraphernalia, ticket, certificate, bills, slip, token, paper, writing, or other device used, or to be used, adapted, devised or designed for use in" bookmaking, wagering pools with respect to sporting events or a numbers, policy, bolita, or similar game.” This statute applies to software. There are exceptions for legal forms of gambling and betting materials transported into a state that has legalized the relevant type of betting.
6) The Travel Act prohibits interstate or foreign travel, or use of the mails or "any facility in interstate or foreign commerce", for the purpose of distributing the proceeds of an unlawful activity …or to "promote, manage, establish, carry on" an unlawful activity. Unlawful activity includes illegal gambling.
7) The U.S. Gambling Ship Act prohibits shipboard gambling in U.S. territorial waters.
8) The Transportation of Gambling Devices Act of 1951 (the “Johnson Act;”) bans the transportation of gambling devices to states where gambling is illegal and requires manufacturers and distributors of gambling devices to register annually with the U.S. Department of Justice.
9) The Lottery Laws (18 U.S.C §1301) prohibit various offenses concerning lotteries, including importing or transporting lottery tickets in jurisdictions where the lottery is not legal.
