May 7, 2025
By Brian Hews
Earlier this year, seven of California’s wealthiest gaming Tribes filed the “Agua Caliente Lawsuit” against nearly every cardroom in the state, including The Gardens Casino in Hawaiian Gardens and the Commerce Casino in Commerce. The greedy tribes even included cardrooms that had not been operational for years.
The lawsuit was a result of the enactment of State Senator Josh Newman’s (D-Fullerton) Senate Bill 549, a special interest bill that was sponsored by the state’s wealthiest gaming Tribes, who pumped hundreds of millions into getting the bill passed, aiming to shut down taxpaying cardrooms by terminating their ability to offer Department of Justice approved player-dealer games.
SB 549 began as Prop. 26, which 74% of Californians voted down. It was a bill dealing with education, but in June 2023, Newman lifted almost word for word the verbiage from Prop. 26, called gut and amend, and authored SB 549.
SB 549, known as the Tribal Nations Access to Justice Act, was later signed into law by a seemingly out-of-touch Governor Gavin Newsom, in September 2024 even though SB 549 would cut $500 million in tax revenue statewide, local communities would lose $5.6 billion in economic output generated by cardrooms and 32,000 good-paying jobs that generate $1.6 billion in wages annually.
The potential consequences are dire. Some cities would be forced to implement draconian cuts or get pushed into bankruptcy. In Hawaiian Gardens, the Gardens Casino provides 78% of the city’s revenue; in Commerce, the Commerce Casino provides 50% of the city’s revenue. The ripple effect of these closures would be felt far beyond the gaming industry, affecting the livelihoods of many and the fabric of these communities.
The lawsuits contend that card rooms circumvent the law by employing third-party proposition player services [TPPPs] to simulate house-banked games, thereby infringing upon tribal gaming exclusivity.
A TPPPs is a business that provides services to cardrooms under an agreement with the cardroom. TPPPs are able to accept the player-dealer position when offered just like every other player at the table.
California cardrooms, which have operated for over 150 years, do so under strict regulatory oversight from both the California Gambling Control Commission and the California Department of Justice’s Bureau of Gambling Control.
For over twenty years, these regulatory bodies have ensured that cardroom games do not violate California’s prohibition on “banking games.”
The cardrooms have relied on the DOJ, the GCC, and the BGC inactions, which is a very important term in contract law. They would not have invested, expanded, or offered these games if regulators had made their illegality clear or taken enforcement action.
The Tribes who filed this lawsuit have attempted to destroy the cardroom industry for years through various lawsuits, legislative lobbying, and even a voter initiative. Every attempt failed.
Newman’s SB 549 is the Tribes’ latest effort to get the cardrooms shut down. SB 549 purports to allow gaming Tribes to sue cardrooms and related California businesses while at the same time ensuring that the gaming Tribes themselves cannot be sued.
In a statement, Kyle Kirkland, President of the California Gaming Association, wrote, “Cardrooms have legally operated these highly regulated games for decades, each of which has been approved by the California Department of Justice. We remain confident the legal process will uphold what’s right for the tens of thousands of Californians who depend on cardroom jobs to support their families, as well as for the communities that count on their local cardroom’s economic activity and tax revenue to fund essential services.”
And this past Friday, the cardrooms made good on their promise, filing four motions challenging the Tribe’s complaints.
“On Friday, we submitted filings demonstrating the overreach and unconstitutionality of Senate Bill 549, legislation sponsored by the state’s wealthiest gaming Tribes in their ongoing effort to eliminate perceived competition from licensed, taxpaying cardrooms. Our filings explain that SB 549 is preempted by federal law and inconsistent with constitutional separation-of-powers and due process principles,” said Kirkland.
The filings argue that the SB 549 lawsuits must be dismissed in their entirety, or, at a minimum, substantially narrowed, under state and federal laws intended to ensure this kind of litigation does not happen.
Attorneys argued that SB 549 is an invalid piece of legislation for the following reasons: First, SB 549 is preempted by federal law, which requires negotiations between States and Tribes over gaming practices to take place through a special process—the tribal-state compact process. SB 549 seeks to circumvent that compulsory process improperly.
Second, under state constitutional law, the Governor must negotiate tribal-state compacts. But, in enacting SB 549 and circumventing the compact process entirely, the Legislature usurped that compact negotiation authority.
Third, SB 549 violates defendants’ rights and separation-of-powers principles by allowing tribal casinos to exercise law-enforcement powers that should be left to the discretion of neutral public prosecutors and other government attorneys.
Fourth, the attorneys argue that SB 549 is essentially void because it violates the Unfair Competition Law, where plaintiffs must prove that they have “standing,” that they suffered an actual injury, and lost money or property to sue.
One insider in the industry who did not want to be identified for fear of retribution told LCCN, “Mr. Hews, I appreciate someone in the media that is fully aware of this issue regarding the tribal lawsuit against the card room industry. The majority of the $13 billion their industry generates annually isn’t enough for these seven Tribes that have filed the lawsuit. By the way, 63 Tribes don’t want their names associated with the lawsuit. For the seven, it’s an absolute necessity to take away the income of single moms, ethnic minorities, fire, police, parks, and the ability for a community to enjoy a local card club or, worse, destroy the budgets of some cities so they can make that extra $100 million.
“They played blackjack and other card games in the 80s and 90s using 3rd party proposition players, and that was OK then, but now it’s not? They forget that the voters gave them everything, and they may take it away one day.”
The Court is scheduled to hear arguments on all the motions on August 8, 2025.
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