California’s cardroom industry launched a major campaign targeting lawmakers after Governor Gavin Newsom signed a controversial gambling bill into law. The industry spent over $3 million targeting four pivotal legislators in the bill’s passage. Despite the legislation already being enacted, the campaign was seen as a punitive measure and proved effective – three of the four targeted lawmakers lost their elections.
The new law allows tribal casinos to sue cardrooms over specific table games, such as blackjack and pai gow poker, which tribes claim exclusive rights to offer. A court ruling in favor of the tribes could endanger approximately 80 cardrooms across California, fueling uncertainty in the state’s gambling sector. Many gamblers are turning to online casinos as they await legal clarity.
Although online casinos can’t be licenced in California, iGaming expert Pavel Pudakov highlights that offshore instant payout casinos remain accessible. These platforms offer various games, faster payouts, transparent transactions, and flexible payment methods, including cryptocurrencies. Their enticing promotions – welcome bonuses, cashback offers, free spins, and matched deposit bonuses – make them attractive alternatives for California gamblers during this tense period.
The stakes of this conflict are significant for local governments, particularly in cities reliant on cardroom tax revenue. Cardrooms contribute nearly half of the regional budgets in some areas, funding essential services like police and fire departments.
As tensions between cardrooms and tribal casinos escalate, the potential loss of tax revenue poses a significant financial challenge for the city and its residents. This revenue funds essential public services and supports the local economy. Its decline could lead to reduced services or higher taxes, further impacting the community and heightening the broader implications of this power struggle on California’s gambling industry.
Initially, cardrooms attempted to block the bill with an aggressive lobbying effort, including a $9 million campaign from Hawaiian Gardens Casino alone. Despite becoming the second-largest lobbying spender in California, only behind Chevron, the effort was unsuccessful.
Following the bill’s passage, cardrooms shifted their focus to targeting lawmakers who supported it. Independent expenditure committees funded ads, mailers, and voter outreach aimed at these lawmakers, spending millions to influence the elections. While these committees can’t coordinate directly with candidate campaigns, they can spend unlimited amounts in political races.
Among the targeted lawmakers was a Republican assembly member from Oceanside, who barely kept her seat despite over $1 million spent against her. Two Democratic assembly members – one running for Congress and the other for a local office – lost their races after being targeted for supporting the gambling bill. Additionally, the industry opposed a Democratic state senator who authored the bill, spending money on ads criticizing his record. This effort helped flip a Democratic seat to a Republican challenger in an unusual outcome during a presidential election year.
This aggressive spending highlights the broader dynamics of California politics. While cardrooms invested heavily in political influence, tribal casinos, long-standing major contributors to state political campaigns, outspent them significantly. Since January 2023, tribes have donated over $6 million to candidates, far surpassing the $1.3 million contributed by cardrooms, not including the $3 million spent on targeting specific lawmakers in the election cycle.
The rivalry between cardrooms and tribal casinos goes beyond legislative battles, affecting California’s broader gambling landscape. Tribal casinos dominate the market, offering slot machines, table games, and other amenities that cardrooms cannot provide. Cardrooms, meanwhile, focus on card-based games and have long operated in a legal gray area, especially regarding the games now challenged by tribes in court. California also allows other forms of legal gambling, such as lotteries and horse racing, further complicating the gambling sector.
The new gambling bill raises the stakes for California’s gambling industry, allowing tribal casinos to challenge cardrooms in court. In response, cardrooms launched aggressive political campaigns, leaving local governments at risk of losing vital tax revenue amidst the power struggle.
