Judge lets California cardrooms keep dealing blackjack

SAN FRANCISCO (CN) — California cardrooms facing dire changes to blackjack rules got dealt a good hand Thursday by a San Francisco judge.

San Francisco Superior Court Judge Richard Darwin issued a preliminary injunction stopping Golden State officials from enforcing new rules on cardrooms. Those rules, in effect since April 1 but not expected to be enforced until June 1, prohibited traditional blackjack in cardrooms — changes operators and some city leaders said would destroy jobs and shutter businesses.

The ruling means cardrooms can continue offering traditional blackjack as two related cases continue moving through the courts.

Darwin’s decision hinged on which regulatory body has the power to make such rule changes. The state Bureau of Gambling Control, which falls under the state Justice Department, issued those rules, which the state Office of Administrative Law approved earlier this year.

Darwin ruled the Gambling Control Act doesn’t give the bureau that power.

“The structure of the Gambling Control Act is not a thing of beauty,” Darwin said to laughter.

However, he said what is clear is that the rulemaking power claimed by the bureau isn’t found in the act. It can’t prohibit or restrict games.

Representing the Justice Department, attorney Sharon O’Grady argued her department decides which games can legally be played in the state. The bureau is empowered to decide what a “controlled” game is, like blackjack. It also has the power to ban people from cardrooms and ensure such businesses don’t support illegality.

Ultimately, it’s the bureau — not the California Gambling Control Commission — that has the power to approve games, O’Grady said.

“What is a card game goes to the heart of what is legal,” she added.

Representing the California Gaming Association, attorney Jeremy Kreisberg said the underlying question was who has the authority to create statewide rules and standards for games like blackjack. He argued the Legislature granted those powers to the commission, not the bureau.

The bureau has the power to approve games, Kreisberg said. In fact, blackjack and other games affected by the new rules all received bureau approval.

“But that’s a separate question from who sets the standard for what kinds of games can be played in the state,” he added.

According to Kreisberg, lawmakers made a point of giving such power to the commission. Its members are appointed by the governor and confirmed by the state Senate. The bureau falls under the purview of the Justice Department, which is controlled by the attorney general.

Additionally, Kreisberg noted the games in question have enjoyed state approval for decades. It’s only recently that cardrooms have faced the threat of change.

“I’m going to adopt my tentative,” Darwin said of making his initial ruling final.

The preliminary injunction can last for no more than 45 days from when the judge formally issues the injunction. It’s only a temporary pause to the cases, leading Darwin to call for more written argument and another hearing on June 30.

The issue of cardrooms offering games like blackjack has been a long-simmering dispute between tribal casinos and cardrooms.

The dispute centers on banked games like blackjack, where the “house” serves as the bank. Cardrooms use third-party proposition players, who serve as a bank. Indian casinos say that’s illegal.

The new rules would have upended banked games like blackjack. The role of dealer would have changed into a player-dealer, someone seated at the table. It’s a position that must be offered to other players at the start of every hand. Also, the position must rotate to at least two other players every 40 minutes or the game ends.

Additionally, a third-party provider of proposition player services — entities that operate as the casino bank under current rules — cannot serve as the player-dealer consecutively.

“Today’s ruling validates what we have said all along: Attorney General Bonta and the Bureau of Gambling Control exceeded their authority by attempting to rewrite California gaming law,” said Kyle Kirkland, president of the California Gaming Association, in a statement. “These regulations were driven by pressure from powerful tribal gaming interests that have long sought to eliminate lawful competition from California’s cardrooms.”

The Justice Department told Courthouse News in a statement that it would respond appropriately in court.