California card rooms breathed a temporary sigh of relief in court. This Thursday, Judge Richard Darwin of the San Francisco Superior Court issued a preliminary injunction, pausing the enforcement of new regulations targeting blackjack-style games and player-rotated dealerships, providing a buffer window in the lengthy legal battle. The injunction is valid for 45 days, with the next hearing scheduled on June 30. However, as Kyle Kirkland, president of the California Gaming Association, mentioned, card rooms are currently in a state of limbo, having to operate in the direction of potentially effective new rules while continuing to fight in court. PASA's official website previously mentioned in a series of analyses on U.S. gaming regulation that when policy targets involve multi-billion dollar industries and tens of thousands of jobs, courts are often the critical battleground.
The judge directly pointed out that the Gaming Control Agency overstepped its authority, and the new rule's jurisdiction became the core dispute
In his ruling, Darwin was quite blunt: "I find that the applicant is very likely to succeed on the argument that 'the Gaming Control Agency exceeded its jurisdiction when issuing new rules'." He also added a comment that made the courtroom laugh — the structure of the "Gaming Control Act" is "not a pretty piece of work." However, he immediately pointed out that the act does not grant the agency the power to prohibit or restrict games, leaving no room for ambiguity. This core judgment directly undermined the enforcement basis of the Attorney General's office.
Deputy Attorney General Sharon O'Grady argued in court that the agency has the authority to decide what constitutes a "controlled game," including blackjack; the authority to prohibit personnel from entering card rooms and ensuring that gambling venues do not foster illegal activities inherently means that regulatory power should be exercised by the agency rather than the Gaming Control Commission. However, Jeremy Cryzberg, the lawyer for the California Gaming Association, countered more precisely: the legislature has given the power to set statewide gaming standards to the commission—a body appointed by the governor and confirmed by the Senate—not the directly controlled agency by the Attorney General. These games targeted by the new rules have been approved by the agency for decades, and suddenly banning them now logically does not make sense. Moreover, the agency, by upgrading itself to a rule-maker beyond its approval functions, was precisely the reason Darwin determined the overreach.
A cut of 50% in revenue, card rooms claim "most can't survive"
The destructive power of the new rules is quite clear, as stated by the state government itself. The Justice Department candidly mentioned in the rule-making proposal that the existing blackjack revenue of card rooms is expected to be halved, and the income from third-party dealer services will decrease by about 50%, with a quarter of the customers turning to tribal casinos. The state's economic analysis is even more frightening—regulatory impacts of at least $600 million over the next decade, with card rooms losing $396 million and tribal casinos correspondingly gaining $198 million. A spokesperson for the California Gaming Association stated that once the new rules take effect, statewide card room revenues will be cut by more than half, with tens of thousands of jobs at risk of evaporating.
Specifically for individual casinos, Kirkland, who runs Fresno's Club One, calculated that games where players take turns being the dealer contribute about 60% of the revenue, with blackjack accounting for 20%. The new rules directly cut off the blackjack segment, while putting that 60% at risk on the line. He said he has been in the industry for twenty years, "This is the most destructive set of rules I've seen, and I'm not sure most card rooms can survive."
The core changes in this set of new rules are actually only two, but each strikes directly at the survival foundation of card rooms. In terms of blackjack-style games, the new rules require the elimination of the "busting" mechanism, the target number can no longer be set at 21 points, and even the appearance of "21" or "blackjack" in the game name is not allowed. Regarding players taking turns being the dealer, the new rules require that the dealer role must rotate to at least two non-third-party seated players every 40 minutes; if no one takes over, the entire table is shut down and cleared. This essentially cuts off the major artery of the business model for card rooms that have long relied on third-party seated players continuously acting as the dealer.
Tribal casinos' behind-the-scenes pressure, city finances flashing red
The feud between card rooms and tribal casinos has been entangled for nearly twenty years. In 2000, California voters passed a proposition granting tribes exclusive rights to operate three types of gaming on reservation lands, including slot machines and house-banked games. Card rooms have always argued that blackjack-style games and third-party player dealer models have been approved by multiple Attorneys General over the past decades, already forming established legal practice. However, tribal casinos insist that card rooms have been playing legal edge balls for many years. James Siva, chairman of the California Indian Gaming Association, did not hide his excitement in an iGB interview in April this year: "We are thrilled about this decision. This is something the tribes have been pushing for the past decade. We firmly believe the games they offer are illegal house-banked games, infringing on our exclusive rights and our sovereignty."
On the other hand, card rooms accuse the state Attorney General Rob Bonta, who is seeking re-election, of merely endorsing tribal interests and bypassing legislative procedures to forcibly rewrite California gaming law. Bonta's office only responded with "aware of the injunction, will respond appropriately in court."
The outcome of this chess game is not limited to card rooms and tribes; several California cities are also sitting on pins and needles. Upon learning of the new rules, two small cities in Los Angeles County, Commerce and Bell Gardens, immediately declared a financial emergency. The reason is simple: Parkwest Bicycle Casino in Bell Gardens alone contributes about 40% of the city's general fund, with annual tax revenue exceeding $17 million; Commerce owns the state's largest Commerce Casino. Both cities were forced to push tax increase proposals to the June public vote, trying to plug the budget gap with a sales tax increase. Kirkland said that now with the injunction issued, the timeline for these municipal remedial measures has also become uncertain.
The next key point is the hearing on June 30. The 45-day injunction is just a procedural pause, not a final judgment. Card rooms have won the first round, but from Darwin's request for both parties to submit more written arguments, it seems the battle is far from over.
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This article is from "PASA-Global iGaming Leaders," a gambling industry news channel: https://t.me/pasa_news
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