A collective of seven Native American tribes in California have filed suit against dozens of card rooms over claims the clubs provide illegal banked games where players bet against the house.
The 153-page complaint, filed in Sacramento Superior Court, follows the implementation of the state’s Tribal Nations Access to Justice Act (TNAJA). The law, which went into effect last week, allows tribes with casino operations to sue card rooms and their “proposition player services” suppliers for skirting state restrictions on banked games.
Under California law, only casinos on tribal lands can legally offer house-banked games. Card rooms, on the other hand, can only provide “round” games in which players bet against each other, like poker. However, the card rooms have developed a hybrid game style sometimes known as California games which adapt traditionally house-banked games like blackjack and baccarat to use a rotating player-dealer position so as to qualify as round games.
As detailed in the filing, tribes have accused the card rooms of “brazenly” profiting from these games, which they consider illegal gambling.
California law prohibits card rooms from offering “banked” casino games—such as blackjack, baccarat, and pai gow—where an entity with an odds-based advantage takes on all comers, pays all winners, and collects from all losers. Under tribal-state compacts, California Indian tribes have bargained with the State (and pay) for a gaming system that facilitates their exclusive right to offer such banked games within California. But for years, California card rooms and their partner third-party proposition players have ignored the law and refused to recognize tribes’ exclusive rights. Instead, they have reaped illegal windfalls by offering banked games that are barred by the California Constitution, California Penal Code, and relevant judicial decisions. Plaintiffs bring this lawsuit under the recently enacted Tribal Nations Access to Justice Act to stop Defendants’ exploitative abuses.
Tribes claim third-party providers act as “defacto” bank
Traditionally, poker—a quintessentially player-vs.-player game—was the main game spread at California’s 72 licensed card rooms. In a poker cash game, players bet against one another and the house only collects a “rake” from each pot for supplying the equipment and dealer.
However, the tribes claim that offerings have grown beyond traditional poker over the last twenty-plus years. They say the change is part of an effort to attract more players and revenue.
From the complaint:
Since the early 2000s, card rooms have steadily expanded their offerings beyond traditional poker games. To draw in more players who will wager more money—thereby generating greater collections revenue—the card rooms have introduced variants of casino-style banked table games, such as blackjack, baccarat, and pai gow. The card rooms purport to provide these games in compliance with California’s prohibition on banked games by not banking the games themselves using the card room’s funds. Instead, the rules for these variants on banked games specify that a “player-dealer” will bank the game while a representative of the card room (the “House Dealer”) deals cards, collects player fees, and otherwise runs the game.
The lawsuit further alleges that the card rooms use two mechanisms to disguise the games’ banked essence and evade California laws.
First, they argue that card rooms adopted rules “purporting” to rotate the banking position between players. However, they claim that the rules—as written or interpreted—fail to require actual rotation but “merely the offering of it.”
In practice, regular players will typically decline the opportunity to act as player-dealer in a California game because, although it is advantageous, they could be on the hook for a large sum of money if an opponent happens to hit the jackpot.
Because of that reality, the tribes say the card rooms’ have developed partnerships with third-party proposition players (TPPs), who pay “substantially” to assume the banking position. While the complaint acknowledges that TPPs are not expressly illegal, it argues that card rooms’ lack of bank rotation makes TPPs a ” defacto house bank.”
With these tactics, they say the card rooms have “created gaming experiences that are indistinguishable from banked games in Nevada or New Jersey casinos.”
Complaint seeks injunction to enjoin alleged misconduct
The lawsuit claims card rooms have created a new and lucrative niche business to fill the player-dealer role.
It notes that card rooms initially paid TPPs to occupy the player-dealer position to offset individual players’ inability to drive their profitability. However, the complaint argues that over time, the situation has changed, and TPPs’ position has become more profitable.
As a result, TPPs now pay card rooms for the right to occupy the player-dealer position and take on a host of other responsibilities and expenses typically associated with running a casino, such as providing equipment like surveillance cameras, cards, and shuffling machines, contributing to rent for the gaming space, and advertising for the banked games off which they profit.
In response, the 8-count lawsuit claims both have “reaped illegal windfalls” thanks to the illegally offered games like blackjack and pai gow.
Notably, the TNAJA does not permit the award of monetary damages.
However, the tribes are seeking a ruling that the actions of over 90 card rooms and their providers breach California law. They have also requested an injunction to enjoin the contested activities and “such other and further relief as the Court deems just and proper.”
About the Author
