The California Gaming Association (CGA) and the state’s cardrooms have filed a motion for a preliminary injunction against the Bureau of Gaming Control (BGC). The regulator, the plaintiffs argue, exceeded its authority by approving new rules in February, the central element of which was a ban on blackjack, “twenty-one,” and similar variants. Nine municipal managers from cities where cardrooms are located formally supported the motion, citing the threat of a serious drop in local budget revenues.
What a preliminary injunction means and how the court will assess it
If the motion is granted, the BGC will not be able to enforce the new rules until the case is decided on the merits. The court evaluates two key criteria: the likelihood of success on the merits and the presence of “irreparable harm” that would occur if the rules take effect immediately.
Two changes that rattled the industry
The BGC’s February rules were a response to long-standing complaints from tribal casinos, which believe that cardrooms are violating their exclusive rights to casino-style gambling. The regulator made two significant changes:
- Reform of the mandatory “player-dealer” position. Cardrooms will no longer be able to use paid third-party proposition players (“prop players”) to fill that role. The function must now shift to regular players on a voluntary, unpaid basis.
- A ban on blackjack and similar games. This is the point around which the lawsuit is focused.
What cardrooms are challenging
The CGA insists that the Bureau went beyond the scope of its authority by banning games that “have historically been permitted” in California cardrooms. The motion materials include a call for the court to “prevent unlawful regulations from taking effect until they undergo judicial review.” It also notes that the BGC itself projects that cardrooms will lose about half of their visitors, and that customers will shift to tribal casinos and illegal underground gambling venues.
25 supporting declarations and silence from officials
Attached to the motion are 25 supporting declarations from third parties, including nine city managers. Cities supporting the motion include: Colma, Inglewood, Hawaiian Gardens, San Jose, Gardena, Commerce, Citrus Heights, Chula Vista, and Bell Gardens. Requests for comment went unanswered.
Why municipalities are sounding the alarm—and what the internet has to do with it
The mechanism of potential harm is straightforward: a decline in cardroom attendance leads to lower revenue, followed by a drop in tax revenues to local funds. The CGA warns that a reduction in customer traffic will result in job losses, loss of skilled staff, and cuts to essential city services.
Cardrooms are already going through difficult times because more and more players prefer to play card games at online casinos. This applies both to gambling enthusiasts from New Zealand or Europe and to Americans. As part of our own research, we decided to view details on a review site about online casinos offering no-deposit bonuses. All major operators featured on the site offer players a variety of card games, including blackjack. These games are available 24/7, which gives online platforms a major advantage over brick-and-mortar cardrooms. Additional bans only worsen the problem.
The “City of Cemeteries” stands to lose the most
Colma, a small city near San Francisco Airport, most of whose territory is occupied by famous cemeteries, has become the clearest example of vulnerability. According to the 2020 census, its permanent population is only 1,507 people. The city’s operating budget is modest and is estimated at $20 million, a significant portion of which is generated by Lucky Chances Casino.
City Manager Dan Barros said the blackjack ban could “eat up” as much as 15% of the operating budget. In his estimate, Lucky Chances’ revenue could fall by 70%, which significantly exceeds the industry forecast of 50%. Translated into service cuts, the loss is equivalent to eliminating the entire Public Works and Planning Department, one-third of the Public Safety Department, or half of general city administration.
Figures for other cities
The scale of dependence on cardrooms varies from city to city:
- Hawaiian Gardens: about 60% of the city’s general fund is generated by the local cardroom.
- Commerce: Casino Commerce provides about 40% of revenue, although the share attributable to blackjack is not specified separately.
- Bell Gardens: The Bicycle generates about 38% of the city’s general fund; the share attributable specifically to blackjack is also not disclosed.
- Gardena: about 8%.
- San Jose, where Bay 101 and M8trix operate, estimates a potential loss of $25 million annually, on top of an existing $56 million deficit.
A number of cities limited themselves to general wording about a “serious blow” without exact percentages.
An old law versus the new blackjack
In justifying the ban, the BGC cites an archaic provision of California law that includes a ban on the game “twenty one.” The CGA, however, argues that the ban applied to an earlier version in which both sides were free to decide whether to take a card or stop. Modern blackjack, the association says, is a different format: the player acts freely, while the dealer position must follow a fixed set of rules. Until 2000, when tribal casinos and cardrooms operated under the same rules, there were no objections to the cardroom version of the game.
Who has the authority to ban specific games
The lawsuit’s main procedural question concerns the division of authority. The CGA insists that the authority to ban or restrict methods of conducting a game belongs to the California Gaming Commission, subject to required procedures. The BGC’s functions are limited to licensing, oversight, investigations, and disciplinary actions. To ban a specific game, the Bureau must demonstrate to the Commission that the law is being violated, rather than imposing restrictions directly.
Cities are looking for a backup plan
Commerce and Bell Gardens are already preparing for the worst-case scenario and plan to put a 0.25% sales tax increase on the November ballot to offset potential losses.
What happens next
The court will consider the motion for a preliminary injunction, and its decision will determine whether the BGC’s new rules can be enforced before the final ruling. Proceedings on the merits will then follow regarding the regulator’s authority and the legality of the February rules.
