California tribes sue to stop card clubs from providing illegal 'banked' games

(CN) — A group of Native American tribes in California on Thursday sued dozens of licensed card clubs in the state, claiming they illegally provide so-called banked games similar to those offered by Las Vegas casinos where gamblers play against the house.

The complaint, filed in California Superior Court in Sacramento, follows on the heels of the Tribal Nations Access to Justice Act, a state law that went into effect this week. The law allows tribes that operate casinos on their reservations to sue card clubs and the third-party providers of “proposition player services,” which purportedly help the card clubs to skirt restrictions on banked games.

“Defendants brazenly profit from illegal gambling,” the tribes say in the complaint. “California law prohibits card rooms from offering ‘banked’ casino games — such as blackjack, baccarat and pai gow — where an entity with an odds-based advantage takes on all comers, pays all winners and collects from all losers.”

In California, only casinos on Indian reservations are permitted to offer such banked games. Card clubs can only provide “round” games, such as poker where players bet against each other.

However, according to the tribes, the card clubs and the providers of proposition player services, have reaped windfalls from illegally offering banked games like blackjack, with the proposition player service paying the card club up to millions of dollars a year for in effect operating as the bank, or house, against which players bet.

The lawsuit is brought by seven tribes — all of whom operate casinos on their reservations — who seek a court ruling that about 100 card clubs and proposition player service providers are in breach of the law. They also ask for an injunction to halt their purported illegal activity. The new law doesn’t allow for monetary damages.

There are 72 licensed card rooms in California. Traditionally, these card rooms have provided poker, a non-banked “round” game where the player-dealer position systematically and continuously rotates among the players, and the house’s only interest in the game is in collecting specified table fees.

However, since the early 2000s, the plaintiffs claim, card rooms have steadily expanded their offerings beyond traditional poker games. To draw in more players who will wager more money — thereby boosting revenue — the card rooms have introduced variants of casino-style banked table games, such as blackjack, baccarat and pai gow.

The card rooms, the tribes claim, evade California’s prohibition on banked games by not banking the games themselves using the card room’s funds. Instead, the rules for these variants on banked games specify that a “player-dealer” will bank the game while a representative of the card room, the house dealer, deals cards, collects player fees and otherwise runs the game.

This created the new niche business of the third-party proposition player to fill that player-dealer role. Initially, card rooms would pay the proposition player to occupy the player-dealer position at their tables, the tribes argue, because individual players often lack sufficient liquidity to ensure the level of wagering card rooms desire to drive their profitability.

But as card rooms fully embraced offering illegal banked games, the plaintiffs claim, the proposition player’s position in the player-dealer spot has become more lucrative.

“As a result, [third-party proposition players] now pay card rooms for the right to occupy the player-dealer position and take on a host of other responsibilities and expenses typically associated with running a casino, such as providing equipment like surveillance cameras, cards, and shuffling machines, contributing to rent for the gaming space, and advertising for the banked games off which they profit,” the tribes claim.

A representative of the California Gaming Association, which represents the card clubs, didn’t immediately respond to a request for comment on the lawsuit.

The tribes are represented by Elliot Peters, R. Adam Lauridsen, Julia Allen and Maya James of Keker, Van Nest & Peters LLP in San Francisco.

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