On February 9, the California Bureau of Gambling Control (BGC) issued new regulations regarding the operation of California cardrooms. As of April 1, California cardrooms that are licensed and regulated by the California Department of Justice will...
- Be prohibited from offering blackjack, or any game that looks and smells like blackjack.
- Have to maintain a rigorous rotation of the 'bank' across the players at the table.
If you have no idea of what I'm talking about, have a look at this article I wrote about a similar legislative attack on California cardrooms 18 months ago.
There is a good summary of the new rules in this iGaming Business article – it's worth reading.
How did this happen?
I had a conversation with Kyle Kirkland, who is the president of the California Gaming Association, and owner/operator of the Club One Casino in Fresno, California. He said that the changes will "affect... 70+% of the games and revenue in the California cardroom industry."
He added that blackjack represents about 27% of the revenue at Club One, and the 'table games' (non-poker games) represent 60-70% of the club's revenue. He said, "Without changes [the new rules] will be devastating to the California cardroom industry."
His first point was that the Bureau of Gambling Control doesn't have the authority to put forward these regulations – the California Gambling Control Commission has that authority.
During the comment period about the new regulations, the cardrooms, employees, cities, and employee organizations put forward over 1700 comments. None of those comments or suggestions were acted on. The BGC submitted the changes to the Office of Administrative Law (OAL) right before Christmas with limited public notice.
What will be the impact?
The California cardroom industry has about $2 billion in annual revenue. It provides 20,000 jobs and pays $500 million in taxes to local jurisdictions. Many cities rely heavily on cardroom taxes. As an example, the city of Hawaiian Gardens, home to the Gardens Casino, gets 70-80% of its municipal revenue from the casino.
If the upcoming rule changes are implemented, cities such as Hawaiian Gardens and Commerce could lose 60% or more of their municipal revenue.
Kirkland says that of the 51 tables at Club One, 27 of them are table games – half of his business, give or take. That ratio is fairly consistent across the state, though there are some casinos that offer only table games and have no poker. Those clubs could possibly go out of business. At the very least, there will be wrenching changes to staffing, schedules, and overall employment.
What is driving these changes?
I gave Kirkland the opportunity to dance around the elephant in the room, but he quickly stopped the dance. "[These rules] are 100% politically motivated by tribes. [California Attorney General] Rob Bonta has received over half a million dollars in donations from the tribes." (This report by Current Report gives a detailed look at the cash pipeline.)
"There is no showing of public harm... there was no change in the law... there is no new court ruling... it is a heavy-handed show for his tribal donors. This is 100% catering to one particular donor group."
Why should I care? I'm a poker player
I guess it depends if you want to look beyond the end of your nose.
First, these new rules, assuming they go into effect, will undoubtedly cause people to lose jobs. It's simple economics – if a cardroom loses that big chunk of their revenue, jobs will disappear. People will get shorter hours each week. People that you see every time you walk into the casino, who smile and say hi to you. People who have kids, and rent, and car insurance payments.
Second, as I noted above, these rule changes are going to hammer cities that rely heavily on cardroom income. Commerce, Hawaiian Gardens, Compton, Bell Gardens, Gardena, Inglewood, and Emeryville (80% of Emeryville revenue comes from Oaks Club taxes). In a time when cities and states are suffering from arbitrary and capricious withholding of federal funds, the last thing these municipalities need is a staggering cut in cardroom tax revenue.
Third, sure, let's talk about you. Do you think that your poker games are going to be unaffected if 25% or 50% of the revenue on the 'other side' vanishes? You think the restaurant will continue to operate with the same menu and hours? You think the casino will maintain the same physical footprint, promotions, and marketing?
What is the outlook?
As Kirkland noted, the poker business has been through a lot the past 20 years, and somehow hangs on (think 2006 and 2011). The California Gaming Association has already begun legal measures to prevent implementation of the new rules. Even if they're unsuccessful, there will still be live poker in California.
But I assure you that, should these measures go into effect, the live poker in California that we know in 2027 will not be as healthy and vibrant as the ecosystem we knew going into 2026.
