A San Francisco Superior Court judge has ruled that California gambling regulators exceeded their legal authority when they tried to impose restrictions on card room gaming across the state, handing a major victory to the state’s card room industry and the cities that depend on its revenue.
Judge Richard Darwin issued a decision on Tuesday, concluding that the Gambling Control Bureau, which operates within the Attorney General’s office Rob BontaThe Department of Justice, however, does not have the power to impose a broad ban on gaming throughout California through regulation. The decision invalidates the challenged regulations and prevents them from taking effect unless a higher court overturns the decision.
The regulations target blackjack-style games and contests involving third-party players, commonly known as player-dealers. California card rooms have offered versions of the game for decades, while tribal casinos argue that the offering conflicts with state law because tribes have exclusive rights to bank-funded card games.
Court Finds Limits on Bureau’s Authority
Darwin’s decision centered on the scope of authority given to the Gambling Control Bureau. During the legal proceedings, attorneys representing the California Gaming Association argued that the bureau’s responsibility was to enforce existing gambling laws rather than create new statewide policies through regulations.
The judge questioned the structure that allows the Bureau of Gambling Control and the separate California Gambling Control Commission to exercise similar authority over categorical gaming bans. According to GV Wire, he described the arrangement as a “strange structure.”
The bureau argues that its authority to approve games also gives it the authority to ban them. The agency’s attorney pointed to the agency’s history of issuing regulations since 1999. Darwin interrupted the argument by saying "it’s not like this.”
Lawyer Jeremy Kreisbergrepresenting gaming associations, argued that state law specifically limits the commission’s authority regarding gaming bans and does not place similar limitations on the bureau. According to arguments presented in court, the discrepancy shows that the Legislature never intended for the bureau to wield such broad powers.
Darwin also indicated that there would likely be further legal proceedings, and noted the possibility of an appeal. The parties are expected to meet to discuss procedural issues following the ruling. A written order is expected to be issued after a hearing scheduled for next week.
Industries and Cities Warned of Economic Fallout
Cardroom operators and local governments strongly oppose the proposed regulations, and warn that such measures could severely harm the industry and the communities associated with it.
According to information presented during the dispute, licensed card rooms in California support thousands of jobs and provide hundreds of millions of dollars to local governments annually. Industry representatives argue that eliminating essential games would slash revenues, force business cuts and threaten jobs across the state.
The Attorney General’s own analysis found that the proposed restrictions would eliminate more than half of card room revenue statewide. The analysis also estimates that about a quarter of that revenue would go to tribal casinos.
Another economic assessment prepared for the Justice Department projected an impact of about $600 million over the first decade after implementation.
Some cities joined the opposition effort over concerns about the loss of tax revenue used to support public services. In Fresno, for example, Club One contributes about $1 million a year to the city’s general fund. Across California, industry representatives estimate that restrictions affecting the state’s 86 licensed card rooms could cost about $396 million annually.
Cardroom operators also highlighted the potential loss of jobs. Opponents of the law argue that more than 30,000 jobs would be threatened if the policy were implemented.
Heather Guerenavice president and general counsel of Stones Gambling Hall in Citrus Heights, said games involving third-party players make up about 70% of the casino’s revenue. He said eliminating the games would require the company to reduce its workforce by between a third and a half.
“It was a relief to us when the judge interpreted the statute correctly and found that the department did not have the authority to issue this rule,” Guerena said.
Reaction and Prospects for Appeal
The California Gaming Association welcomed the decision and considered it a significant check on regulatory authority.
Kyle Kirklandpresident of the California Gaming Association and president of Club One Casino in Fresno, said, "For more than a year, we have said that this case is more than just a game – it is about whether the attorney general and his regulators can bypass the Legislature and unilaterally rewrite a law that has been in place for decades. Today, the court gave a clear answer: they cannot.”
He also said, "This Court’s ruling is a lifeline for communities across California. If this rule is allowed to stand, the consequences will be dire for working families, local businesses, and cities that rely on card revenues to fund police, parks, libraries, youth programs, and other critical services.”
Kirkland further criticized the purpose of the regulations, stating, "These regulations were never intended to protect the public. They were designed to advance the interests of a few powerful gambling groups at the expense of local communities, working families, and established card room businesses.”
The Gambling Control Bureau expressed its disagreement with the results. A spokesperson said, “We are disappointed with today’s decision, but we are reviewing our options and will respond appropriately.”
The legal battle comes after years of disputes between card rooms and tribal gaming interests over blackjack-style games and player-dealer arrangements. Attorney General Bonta announced the proposed restrictions in February, arguing that blackjack offerings violated 19th-century prohibitions involving the game known as “21.”
The Office of Administrative Law has approved the regulations, which are scheduled to take effect April 1. However, Darwin issued a preliminary injunction in May blocking enforcement while litigation continues.
Tuesday’s ruling keeps the disputed games in operation for now and turns attention to a possible appeal that could determine the future of card room gaming regulations across California.
