Gaming Regulation in California

By September 9, 2017Uncategorized
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“In Vegas, everybody’s gotta watch everybody else. Since the players are looking to beat the casino, the dealers are watching the players. The box men are watching the dealers. The floor men are watching the box men. The pit bosses are watching the floor men. The shift bosses are watching the pit bosses. The casino manager is watching the shift bosses. I’m watching the casino manager. And the eye-in-the-sky is watching us all.”

Ace Rothstein, Casino

There’s a misperception that California cardrooms are under-regulated and bad practices pervade the industry. In fact, California cardrooms are subject to a wide-range of state and local gaming regulations and public licensing and enforcement hearings. That said, the state’s regulatory scheme is still relatively young—the Gambling Control Act was enacted in 1998—and unusual relative to that found in other gaming jurisdictions.

California cardrooms are regulated by two state agencies (the Bureau of Gambling Control and the California Gambling Control Commission) and must adhere to all federal, state and local laws, including extensive regulations on all aspects of their operations. The California Gambling Control Commission (CGCC) is a five member panel appointed by the Governor and charged with the overall regulation of the industry including licensing and adjudication of gaming related issues. The California Department of Justice Bureau of Gambling Control (Bureau) is charged with the investigation of potential licensees and enforcement of regulations. The Bureau is under the jurisdiction of the Attorney General.

California cardrooms are also subject to detailed local ordinances and additional licensing consideration and enforcement by local law enforcement agencies. No other segment of California’s gaming industry is as thoroughly monitored and regulated.

The regulatory oversight to which cardrooms are subject includes:

• Compliance with CA’s Gambling Control Act and specific local gaming ordinances
• Public licensing and disciplinary hearings by the CGCC
• Compliance and enforcement actions by the Bureau and local law enforcement
• State-mandated minimum internal control standards covering all operations
• Bureau approval of game rules, advertising and promotions
• Approval of capital investments and ownership changes by state and local regulators
• Required participation in state Responsible Gambling programs
• Payment of federal, state and local taxes, including specific gaming taxes and fees
• Adherence to California minimum wage and other California labor laws

In contrast to California cardrooms, California’s 62 active tribal casinos are self-regulated in non-public forums and not subject to many of the items listed above. Tribal casinos are covered by compacts with the state, but much of the day-to-day regulation is conducted by self-appointed tribal regulators in non-public forums. As a result, much of the regulatory oversight is not subject to scrutiny by the general public or law enforcement bodies. Further, tribal casinos enjoyed “sovereign immunity” which shields them from most civil litigation challenges. As a result, the checks and balances to which tribal casinos are subject is less than that on other gaming activity in the state.

About the author

Kyle Kirkland is the current president of the California Gaming Association, the 501(c)(6) non-profit trade association that represents California cardrooms.  Mr. Kirkland is President and General Manager of Club One Casino, a 51-table cardroom in Fresno and holds the same positions for two smaller cardrooms.  Mr. Kirkland’s background includes work in the consulting, finance, music and gaming industries, and he has served on the boards of several public companies.  Mr. Kirkland holds an A.B. degree from Harvard College magna cum laude in Economics and an MBA degree from the Graduate School of Business at Stanford University.  He can be contacted at kyle@calgaming.org.