California card rooms race to defend against new regulations

California card rooms began a new, uncertain era on Wednesday as two sweeping sets of regulatory changes regarding blackjack-style games and player-dealers went into effect after years of legal and regulatory battles.

The card rooms assert the rule changes will devastate their businesses and communities, and the state’s economic analysis acknowledges a significant potential impact. But California’s formidable gaming tribes, which won exclusivity for casino gaming in 2000, argue the new rules uphold that exclusivity by cracking down on illegal gaming.

In the years since tribes won the rights to offer Class III games, card rooms have evolved in tandem. The rooms operate under a pari-mutuel betting framework, which over time has inspired new table game variants and the introduction of third-party providers of proposition players, or TPPPs. Both sides have warred over the legality of the game variants and TPPPs for many years, with the rule changes being the most significant development in that feud to date.

Meanwhile, tribal leaders from California and around the US flocked to San Diego this week for the annual Indian Gaming Tradeshow and Convention. James Siva, chairman of the California Nations Indian Gaming Association, told iGB on the sidelines of IGA that the card room changes are a victory for the state’s gaming tribes.

“We were excited about the decision. It’s something that tribes have been advocating for the last 10 years,” Siva said. “We firmly believe that the games they’re offering were illegal house-banked games, which is in violation of our exclusivity, our sovereignty.” 

Regarding the collateral impact that the changes may bring, Siva said the “intent was never to bring any negative harm” to card room cities. Rather, the rule changes “uphold the law, which is a position of tribes, especially gaming tribes, from the very beginning”.

Lawsuits filed to halt new rules

The state’s card rooms have embarked on legal challenges to try and halt the rule changes, which were introduced in 2025 and approved in February.

On 9 March, the California Gaming Association announced it had filed two suits in San Francisco Superior Court seeking to block the two sets of regulations. In a release the CGA called the changes an “unprecedented power grab” by Attorney General Rob Bonta, whose office promulgated the rulemaking process.

Then on Tuesday, the CGA announced it had filed motions seeking preliminary injunctions to try and prevent the rules from taking effect while the litigation unfolds. The 406-page civil lawsuit names Bonta, the California Department of Justice, Bureau of Gambling Control and agency director Yolanda Morrow, as respondents.

In seeking declaratory relief, the petitioners outlined numerous cause of action remedies, including the contention that the respondents lack authority to enforce blackjack regulations and game-action revocation. Moreover, the regulations, they argue, conflict with the law it purports to interpret while violating state and federal due process protections.

As that saga plays out, card room host cities are bracing for big financial headaches. The Department of Justice was blunt in its estimation last year that the changes could slash blackjack revenue in half, and “25% of customers may switch patronage from cardrooms to tribal casinos to play traditional blackjack” instead.

“Cardrooms would be directly affected by the proposed regulations,” the DOJ’s analysis said. “In 2023, existing blackjack games in California cardrooms produced an estimated $136 million in revenue. The department estimates that cardrooms would lose $68 million in revenue under the proposed regulation, while tribal casinos will gain $34 million.”

Cities face significant revenue loss

For several California cities, card room revenue is one of, if not the biggest tax driver for municipal services. In the cities of Commerce and Bell Gardens, for example, card room revenue accounts for more than 40% of their general funds.

Both cities have declared states of fiscal emergency and both are placing quarter-cent sales tax measures on the June ballot to compensate for the lost taxes. Card rooms have until 1 June to submit new compliance plans, with a hard stop of 1 July if no updates are submitted.

Kyle Kirkland, president of the CGA and owner of Club One Casino in Fresno, told iGB the changes fly in the face of years of precedent.

“The attorney general’s office does their own internal analysis and casually says, ‘50% of card room revenue can go away’ and just sort of breezily dismisses that,” Kirkland said. “That’s no big deal for either the card rooms, or the 20,000 employees that work in card rooms, or the cities that we support and the communities that are dependent on us. It’s just a very cavalier, 180-degree pivot on how prior attorneys general have interpreted the way we play our games and what we do.”

Huge changes to blackjack-style rules

The proposed changes to blackjack-style games would render them virtually unrecognisable from a gameplay standpoint.

They include:

• Games would no longer be able to have a “bust” feature, where a player or dealer automatically loses if their total exceeds 21. Rather, wins and losses “shall be determined solely by whether the total points of a player’s hand is closer to the target point count when compared with the total points of the player-dealer’s hand”.
• The target point cannot be 21.
• With the absence of a 21 target, players or dealers would no longer automatically win a hand with that combination.
• In the event of a tie or “push”, players would win, instead of the usual non-action.
• No games shall feature the words “21” or “blackjack” moving forward.

TPPPs regulations also updated

With regard to TPPPs, the proposed changes to player-dealer regulations include:

• The player-dealer must be seated at the table at all times and the position must be offered to all players before every hand. This offer shall be “visible to surveillance cameras”.
• Each table must post the following notice: “Any player can assume the player-dealer position when it is offered. The player that assumes the player-dealer position cannot win or lose more than the amount they wager.”
• The role of player-dealer must rotate to “at least two players other than the TPPP every 40 minutes or the game shall end”.
• If the TPPP is serving as the player-dealer, the next rotation must be to another player.
• Additionally, TPPPs would only be allowed to accept and settle wagers when they are serving as player-dealer.
• Only one TPPP would be permitted per table.

Issues of interpretation

Discrepancies related to interpretation and precedent, as Kirkland alluded to, add to the complexity of the issue. The state’s Bureau of Gambling Control, which is under Bonta’s purview, said in its rulemaking proposal that all of this work was essentially an effort to reiterate and enforce existing regulations.

“The regulations will benefit the public’s health, safety and welfare and the regulated industries because they will ensure that the public does not engage in, and the regulated industry does not offer, any form of gambling prohibited by Penal Code section 330 and the State Constitution,” the BGC’s notice said in part.

This sentiment largely aligns with tribes’ contentions. Tribes have long asserted that card rooms’ blackjack-style games and use of TPPPs overstep their legal boundaries. Despite this, the state had not previously indicated this was the case – TPPPs are licensed contractors and the games had operated in their current forms for years.

“There have been no complaints about the games that we offer other than from tribal lobbyists,” Kirkland said.

Tribes assert longstanding exclusivity

Under California law, a game is considered legal and not “banked” if:

“… the published rules of the game feature a player-dealer position and provide that this position must be continuously and systematically rotated among each of the participants during the play of the game, ensure that the player-dealer is able to win or lose only a fixed and limited wager during the play of the game, and preclude the house, another entity, a player, or an observer from maintaining or operating as a bank during the course of the game. The house shall not occupy the player-dealer position.”

Proposition 1A, which granted tribes their exclusivity, lists blackjack (21) as Class III gaming, which can only be offered “if the tribe and the state have agreed to a tribal-state compact that allows such games”. The compact, in turn, states that tribes are granted “any banking or percentage card game” under the scope of Class III, but the terms are not defined.

Tribes have repeatedly pointed to these rules, arguing state officials have been lax in enforcing them. But as sovereign nations, tribes had no legal recourse to sue in state court over the discrepancies. That changed, however, with the passage of SB 549 in 2024, an unusual bill that created a one-time carveout for tribes to sue card rooms.

That suit was filed last January, but was ultimately dismissed and is on appeal. The end result of the rule changes seem to achieve many of the same objectives, although some in Indian Country are underwhelmed in the face of years of frustration.

“Honestly, I had hoped the regulations would have gone a little bit further, but we understand and we applaud Bonta as the first AG to bring any action on this,” Siva said at IGA.

Spotlight on Bonta

With tribes and card rooms on opposite sides, Bonta is squarely in the middle of issue, and the subject of much scrutiny. Since taking office in 2021, Bonta has become increasingly active in gaming matters, and this activity has largely affected tribes’ adversaries.

In addition to the card room regulations, Bonta also directed the seizure of 26 “Racing on Demand” machines from the Santa Anita Park racetrack in January mere days after they were installed. Santa Anita filed suit in response and alleged Bonta never indicated that the machines were not legal prior to their sudden removal.

“Neither the attorney general’s office, nor the CHRB, ever disputed [the track’s] written legal analysis or stated that the [track] did not have the legal right to offer the 3X3 wager on concluded races,” the suit said.

Last July, Bonta also issued a non-binding legal opinion that declared essentially all forms of daily fantasy sports to be illegal in the state. A ban on sweepstakes gaming was also enacted last year, though that came via the legislature.

“Yes, California law prohibits the operation of daily fantasy sports games with players physically located within California, regardless of where the operators and associated technology are located,” Bonta’s opinion said. “Such games constitute wagering on sports in violation of Penal Code section 337a.”

As of Thursday evening, the California Department of Justice had not issued a statement on the implementation of the new regulations.

Follow the money?

Bonta is up for reelection this November, and his 2026 campaign has amassed $7.5 million in contributions, up from $7.1 million in 2022, per state records. His opponents, card rooms included, allege that tribal interests have influenced his agenda.

“If you look at [Bonta’s] campaign contributions, several hundreds of thousands of dollars have come from tribes,” Kirkland said. “And I think this is just a political flex to satisfy a special interest group, and we take it for what it is.”

That said, Bonta has received thousands of dollars from both tribal and card room donors over the years. In the 2021 cycle, for example, he received at least $118,000 from card rooms, but that total is currently less than $35,000 for the 2026 cycle.

Given the breadth of tribes – over 60 are compacted in California – it is more difficult to track an exact total of their contributions. But the spending from six of the most influential tribes appears to have gone down for this campaign. In 2021, Bonta received more than $70,000 from just the following:

•  Yuhaaviatam of San Manuel Nation
• Pechanga Band of Indians
•  Morongo Band of Mission Indians
• Federated Indians of Graton Rancheria
• United Auburn Indian Community
• Viejas Band of Kumeyaay Indians

In this cycle, that total has decreased to about $45,000, with no listed contributions from the Pechanga, Graton and Viejas tribes.

Matt Rybaltowski contributed to this report.

Jess Marquez

Jess has covered the global gaming industry since 2022. A native of Reno, Nevada, he’d like to note that it’s Ne-va-da, not Ne-VAH-da.