California Card Rooms Will Face Stricter Rules For Player-Banked Games Following AG Review

Steve Ruddock July 1, 2016 1743 Reads
California card rooms rules change player-banked games

Changes are coming to California card rooms.

After a months-long review by the Bureau of Gambling Control, the rules governing player-banked games offered at licensed California card rooms will undergo some tweaking.

On Thursday, June 30, California Attorney General Kamala Harris’s office sent a letter, obtained by US Poker, to California gaming establishments and third-party providers of proposition player services, explaining new rules will need to be adopted and sent to the Bureau no later than September 30, 2016.

The new rules aren’t debilitating, but they will cut into card rooms’ revenue, and make spreading the impacted games tougher from a logistical standpoint.

Per the letter from the Attorney General’s office:

“The Bureau has now completed an extensive review of the play of games currently offered at gambling establishments throughout the State. A number of gambling industry stakeholders have provided input and all suggestions and comments received have been considered.”

Read the full letter here.

How we got to this point

The impetus of the review is a longstanding fight between card rooms and tribes over player-banked games. For the back-story on player-banked games I recommend this article: How California Card Rooms Are Able To Offer House Banked Games.

I first reported on this story when the review was announced back in February, and it seems my original analysis was pretty spot on. While not ideal for card rooms, the fact that the review even took place foreshadowed an increased burden on card rooms.

When the review was first announced in February I wrote the following:

“There are three potential findings that could come from the review:

The Attorney General’s office could find that no changes need to be made.

The Attorney General’s office could decide that some changes need to be made to the structure of player-dealer games, such as restricting bet sizes, or how many hands the same player can bank the game.

The Attorney General’s office could come to the conclusion that radical changes need to be implemented, in effect killing the card rooms’ means of spreading these games.

The most likely outcome in my opinion is scenario two, and I suspect the changes will be significant, but not enough to create a barrier most card rooms won’t be able to overcome.”

What the new rules call for

Card rooms are now required to audibly offer the player-dealer position to each player seated at the table no less than every second hand. This must also be visible to security cameras.

While this change will certainly slow down games, and require additional training for staff, the more impactful change is the second one, which has four aspects.

The changes, from the AG’s letter, are:

  1. Provide that no one person or entity may hold or otherwise be involved in the player-dealer position continuously for 60 minutes. The player-dealer position must rotate completely away from a person or entity within a 60-minute period, to a different person or entity from the one who occupied the position during the hand immediately preceding the rotation. The 60-minute period commences upon acceptance of the player-dealer position.
  2. Provide that upon failure of fulfillment of any of the requirements of play identified in paragraph 2, the game must end, and that a new game cannot begin for at least two minutes.
  3. Provide for immediate notification to all players that the game has ended, cards or tiles cannot be dealt, and wagers cannot be made. The dealer tray must be covered during this time to indicate the game has ended.
  4. Provide for the shuffling of all cards or tiles upon the opening of a new game.

This change will essentially kill games being banked by a single player every 60 minutes, for no less than two minutes, and almost certainly longer when you factor in uncovering the dealer tray and reshuffling the cards or tiles.

Card rooms are not only losing out on collecting revenue during these dead times, but it also creates a situation where some players will get up and leave as a result of the wait, further cutting into card room revenue and by extension the taxes the card rooms pay.

This has been the chief concern of the California Gaming Association, which represents licensed card rooms in California, throughout the review process.

The group even created web ads to get this point across:

The California Gaming Association reiterated this in a press release issued on Thursday (the full CGA statement can be found at the end of the column):

“While we have not yet fully analyzed these new approval and enforcement practices, we are very concerned about the substantial adverse economic impact these changes will have on our industry’s ongoing operation.

We are most concerned about the effect on the 23,000 jobs cardrooms support throughout the state and the dozens of California communities that rely on the cardroom industry for valuable jobs and tax revenue, which may suffer as a result of these new policies.”

CGA reaction

The full statement from the California Gaming Association reads:

Kyle Kirkland, President of the California Gaming Association (CGA), issued the following statement in response to new game guidelines issued by the California Attorney General’s Bureau of Gambling Control earlier today:

“We are in receipt of the Bureau of Gambling Control’s Notification Regarding Rules of Games Featuring a Player-Dealer Position dated June 30, 2016. While we have not yet fully analyzed these new approval and enforcement practices, we are very concerned about the substantial adverse economic impact these changes will have on our industry’s ongoing operation. We are most concerned about the effect on the 23,000 jobs cardrooms support throughout the state and the dozens of California communities that rely on the cardroom industry for valuable jobs and tax revenue, which may suffer as a result of these new policies.

“Throughout our industry’s history, California cardrooms have offered legal games compliant with the laws and regulations governing the industry and have only offered games that were fully vetted and approved by the Bureau of Gambling Control. For the past decade, our members have relied on the guidance and oversight from the Bureau in implementing lawful gaming activities and have invested millions of dollars in our communities to offer safe, high-quality entertainment to the public.

“While we are uncertain about the severity of the impact this new interpretation will have on how cardroom games must be played, we respect the Bureau and its mandate and will encourage our members to comply fully with the new practices. Our ongoing goal is for our industry to continue providing value to our communities, transparency to state and local regulators and a stable foundation for employees to enjoy rewarding work. Our industry will do whatever it can to mitigate the detrimental impact these changes will have on our businesses, our communities and the thousands of California families who depend on us.”

Four court decisions also have held that player-dealer games are legal where the players are each offered the opportunity to be the player-dealer. No court decisions require that the player-dealer position be accepted by every player and no court case or law requires that the player-dealer position rotate every two or any specific number of hands or specific time period. The Legislature considered and rejected a requirement that the position rotate every two hands. For these reasons, the California Gaming Association rejects specious arguments that the law requires the Attorney General to go further on this issue.

California cardrooms support more than 23,000 jobs statewide, generate more than $2 billion in economic activity each year and provide hundreds of millions of dollars of tax revenue to communities across the state.