In a major legal victory for California’s cardrooms, a San Francisco Superior Court judge ruled Tuesday that the state’s Bureau of Gambling Control (CBCG) exceeded its authority when it issued new rules restricting blackjack games.
Judge Richard Darwin agreed with the California Gaming Association (CGA), which represents the cardroom industry, that the legislature gave statewide rulemaking authority over gambling games to the California Gambling Control Commission (CGCC), not the CBGC.
The latter, which is overseen by the Justice Department, has the power to approve games individually, but not to prohibit or substantially redefine them, he said.
Cardroom operators said the new rules would have equated to an effective ban on blackjack in cardrooms.
Game Changer
Under California law, tribal casinos hold exclusive rights to operate certain house-banked casino games. Cardrooms, however, have long relied on a legal workaround involving third-party proposition player services (TPPPs).
These independent companies act as the bank during blackjack-style games, allowing cardrooms to argue they are not directly offering prohibited house-banked games. Tribal gaming interests have long maintained that the arrangement unlawfully infringes on their exclusive rights.
Under the proposed regulations, the “player-dealer” role would have to rotate among players every 40 minutes, preventing TPPP companies from continuously acting as the bank.
Meanwhile, players would no longer automatically bust by exceeding 21. Instead, games would use a different target point, with each hand settled by comparing the player’s cards with those of the player-dealer. Cardrooms also would no longer be allowed to market games as “blackjack” or “21.”
Operators argued the changes would make many of their most popular games commercially unworkable.
‘More Than Gaming’
“For more than a year, we have said this case is about far more than gaming – it is about whether the Attorney General and his regulators can bypass the Legislature and unilaterally rewrite decades of established law. Today, the Court delivered a clear answer: they cannot,” said Kyle Kirkland, CGA president, in a statement.
He claimed that the rule changes were “designed to advance the interests of a handful of powerful gaming tribes at the expense of local communities.”
Many cities that host cardrooms rely on the businesses for revenues that fund essential services, such as police, parks, libraries, and youth programs. San Jose alone receives about $30 million a year from cardroom operations, per city officials.
According to the California Attorney General’s own impact assessment, the new rules could have eliminated at least 50% of cardroom jobs and revenue, leading to closures.
