Cardrooms Unhappy with California Casinos Legislation

Recent legislation that grants California casinos the right to sue cardrooms operating in The Golden State is drawing backlash from—you guessed it—the cardrooms that will potentially be impacted.

This is not necessarily a revelation. On the contrary, it is part and parcel of the expected fallout.

As we covered in this space, tribes running California casinos secured a big win with the latest legislature bill. For so long, they have argued that cardrooms infringe the compact that gives tribes exclusive gaming rights throughout The Golden State. And now, these tribes have the right to do something about it. Senate Bill 549 (SB 549) permits them to sue cardrooms they believe violate the spirit of the tribal gaming compact.

Naturally, cardrooms are providing push-back to the idea. How could they not? This piece of legislation threatens to undermine their entire business model. More and more cardroom operators are going to express dismay—particularly as California casinos begin exercising their right to sue.

In fact, it is already happening in San Jose. Cardrooms are unhappy with local House representative Evan Low for throwing his support behind SB 459. And not only are they displeased, but they are levying some pretty serious accusations related to his interests.

Do these claims hold any serious weight? And with the new California casinos bill still unsigned by Governor Gavin Newsom, is SB 549 in any jeopardy of not going through? Let’s explore the latest.

San Jose Cardrooms Suggest Representative Low’s Support of SB 459 was Bought by California Casinos

San Jose currently has two cardrooms in active operation. Both are currently upset with Rep. Low’s support of SB 549—which he illustrated twice. Here is PlayCA’s Cheryl Coward with a full breakdown:

“The California cardrooms upset with Low, Casino M8trix and Bay 101, even paid for a billboard near the San Jose Airport that rebuked the Assemblymember for supporting the bill. To add more drama to the controversy, Low received support from the San Diego-County-based Viejas Band of Kumeyaay Indians in the form of $60,000 in radio ads. The ads came after Low’s yes votes on SB 549, raising eyebrows among government watchdogs, including Sean McMorris, a program manager for California Common Cause. ‘Even though there was probably no coordination between Evan Low and this [political action committee],’ McMorris said to Cal Matters, ‘I can probably guarantee you they wouldn’t have spent that money if Assemblymember Low didn’t vote for their interests.’”

The Viejas Band has, of course, denied buying Low’s support of SB 549. As many have pointed out, they do not even reside in Low’s District. However, SB 549 is a statewide initiative, so it would obviously be in the Viejas Band’s best interest for it to pass.

Opposition to Senate Bill 549 Continues to Highlight Lost Revenue

If SB 549 goes through and California casinos start taking aim at cardrooms, many stakeholders are worried about what they could mean for the economy. Though cardrooms do not generate nearly as much revenue as online sports betting in the United States or casino gaming in California, they are an overall source of money—and jobs. As Coward writes:

“San Jose is among several cities in the state that rely on millions in tax revenue from cardrooms.Statewide, the California Gaming Association estimates cardrooms support more than 32,000 jobs. They also generate more than $500 million in tax revenue. San Jose collects over $15 million in taxes from its two cardrooms [on an annual basis]. The cardroom tax revenue helps support essential services like public safety, infrastructure, and community programs in San Jose. Cardrooms also generate indirect economic activity by attracting patrons who also spend money at nearby hotels, restaurants, gas stations, and other local businesses. In addition, the two gambling venues also contribute 1,000-1,500 jobs to the local economy. They also make significant charitable donations to the community.”

These tidbits are obviously problematic. But they also presume that California casinos will shut down every single cardroom throughout the state. That is far from a given.

Dig into SB 549’s language, and you will see it merely grants tribes the right to take cardrooms to court. Just because a lawsuit is filed does not mean the plaintiff will win. Sure, some cardrooms may be found in violation, but will all of them?

Certain stakeholders will argue the sweeping closure of cardrooms is possible. And technically, they could be right. If one or two cardrooms are forced to shut down, it sets a precedent. And that provides a blueprint for later cases.

Could the Legalization of Sports Betting Impact How SB 549 is Deployed

This entire saga remains a waiting game. Governor Newsom still has to sign SB 549 into law. After that, we have to see how aggressively California casinos start bringing cardrooms to court. There is no guarantee tribes become bent on closing cardrooms. At the very least, the interest in doing so could vary by District.

Still, there is another element to this ordeal: The future of sports betting in California.

Many are starting to believe California sports betting could be legalized by 2026, with online wagering to follow in 2028. If tribes believe that they will not only be able to open sportsbooks but won’t have to compete with online sportsbooks in the USA such as FanDuel, BetMGM, DraftKings, etc. for at least two years, they may not be as interested in bringing cardrooms to court.

The reason? Cardrooms will not be part of any California sports betting legalization. Nobody expects them to receive licensing opportunities. At least initially, this right will be reserved for tribes. And compared to the revenue California casinos could generate from sports betting, the overlap with cardrooms will be just a drop in the bucket.

This gives us even more of a reason to track California sports betting legislation in 2025. Though the rollout will not be immediate, the tenor of discussions could dictate whether casinos seek to capitalize on the rights afforded to them by SB 549.

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