Newsom signs new law backing tribes in high-stakes gambling fight

Gov. Gavin Newsom today signed a bill that would allow California’s casino-owning tribes to sue their business competitors, concluding one of the most expensive political fights of the legislative session.

With Newsom’s signature on Senate Bill 549, tribes now have the ability to ask a judge to decide their longstanding claim that the state’s card rooms are illegally offering card games such as blackjack and pai gow poker.

The stakes are high since some cities receive nearly half of their budgets from taxes on cardrooms, meaning a tribal victory in court could jeopardize money for police, firefighters and other local services.

Tribes say California voters gave them the exclusive rights to host the disputed table games. But because they’re sovereign governments, the tribes lacked legal standing to sue the state’s 80 or so privately-owned gambling halls scattered across California.

The fight over the bill saw tribes and the cardroom industry spend millions of dollars on lobbyists and donations to lawmakers’ campaigns.

Cardrooms responded to the bill’s introduction last year with a massive lobbying blitz. That included a single card room, Hawaiian Gardens Casino in Los Angeles County, spending $9.1 million on lobbying last year alone. It was the second-highest amount reported to state regulators that year. Only the international oil giant, Chevron Corp., spent more.

The opposing gambling interests also donated at least $4.3 million to the 120 members of the Legislature since January 2023, according to the Digital Democracy database. The tribes were the bigger campaign spenders. That included giving $92,000 in the weeks leading up to a critical July vote to members of an obscure Assembly committee that regulates gambling.

Tribes over the years also have vastly outspent card rooms when it comes to donating money to  Newsom’s campaign and to causes he cares about.

Since running for governor in 2017, the state’s tribes have contributed at least $7.1 million to Newson through his ballot measure committee, his anti-recall committee, and his various candidate committees. By comparison, card rooms have contributed at least $252,400 to Newsom during the same period.

Newsom has apologized on behalf of the state for “historical wrongs committed against the native communities,” he has pushed to return lands to tribes and he supported a tribe-backed effort that saw the removal of four large dams on the Klamath River.

On Friday, which Newsom noted was the 57th annual celebration of California Native American Day, he signed a package of other tribal-backed bills — including one that requires schools to include perspectives from Native Americans when teaching California history. Another bill makes it easier for tribes to intentionally light wildfires for land-management purposes.

“I’m proud of the progress California has made to reckon with the dark chapters of our past, and we’re committed to continuing this important work to promote equity, inclusion and accountability for native peoples,” Newsom said Friday in a news release.

Cities fear loss of cardroom revenue

In the Legislature, a bipartisan coalition of lawmakers, many of them with large tribal casinos in their districts, had pushed for the gambling measure, while a smaller group of lawmakers with card rooms in their districts opposed it.

It followed a failed 2022 sports betting initiative that the tribes spent millions of dollars to sponsor and that included a similar provision that would have let the tribes sue.

The tribes contend the cardrooms’ games have stolen hundreds of millions of dollars of revenue from historically disenfranchised tribal communities across California. Tribes argued the bill would go a long way toward California making amends for atrocities committed on native peoples.

But opposing the bill were several California cities that have budgets propped up by cardrooms. Those cities’ employee unions also opposed the measure.

Cities, including San Jose, argue that if the card rooms stop offering the disputed table games, it could force the municipalities to cut police, fire and other city services because their budgets are propped up by the taxes and fees that the card rooms pay local governments.

For example, nearly two-thirds of the budget for the small city of Hawaiian Gardens and almost half for the city of Commerce, both in Los Angeles County, come from local card rooms.

San Jose City Councilmember Sergio Jimenez told lawmakers in July that the city receives $30 million each year from card rooms, enough to fund 150 police officers or 133 firefighters. Jimenez said that money’s in jeopardy if the tribes end up prevailing in court.

Cardrooms say their games are not illegal and that the attorney general’s office has approved each of them. But they argued that if the tribes were allowed to sue, the card clubs wouldn’t be allowed to sue tribes back, and they could go out of business from the ensuing legal fees.

Cardrooms also called it an unfair fight, saying their annual earnings are barely 10% of what tribal governments make from gambling.

CalMatters data reporter Jeremia Kimelman contributed to this story.