Governor Newsom’s New Law Backs Tribes in High-Stakes Gambling Battle

By Todd Winkler,
Editor at online-gambling.com

Todd Winkler Editor at online-gambling.com

Todd Winkler is another one of our highly professional editors at online-gambling.com. The expert has been part of our team for 6 years, during which time he contributed articles regarding poker, blackjack, and DFS. Winkler is also knowledgeable about New Zealand's legal gambling market.

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Last updated: October 1, 2024

California’s gambling landscape significantly shifted when Governor Gavin Newsom signed Senate Bill 549 into law in September 2024. This legislation grants Native American tribes the legal right to sue privately-owned card rooms and marks the culmination of a long-standing political battle.

Overview of Senate Bill 549

Senate Bill 549 is a landmark piece of legislation that specifically addresses tribal grievances over privately owned card rooms offering games that tribes claim as their exclusive right. This includes popular table games such as blackjack and Pai Gow Poker.

Before the passage of this bill, the tribes could not pursue legal action. This was due to their sovereign status, which prevented them from directly suing card rooms operating in violation of what the tribes consider state-sanctioned exclusivity. Now, with the ability to bring lawsuits, the tribes can challenge the approximately 80 card rooms in California offering these games.

The Political Clash: Tribes vs. Card Rooms

The passing of SB 549 ignited a fierce political battle between tribal casinos and privately owned cardrooms. For years, card rooms have operated these controversial games, which the tribes claim infringes on their exclusive rights granted by California voters. The tribes argue these card games siphon millions of dollars from tribal communities.

Lobbying surrounding the bill was also intense, with both sides pouring millions of dollars into efforts to sway lawmakers. For example, Hawaiian Gardens Casino alone spent $9.1 million in lobbying last year​, marking one of the highest lobbying efforts outside of the oil industry. Tribes also made significant political donations, giving at least $7.1 million to Governor Newsom’s campaigns​.

Economic Impact on Local Communities

The economic stakes for many California cities are high. Card rooms contribute substantial revenue through taxes and fees that fund essential city services, including police and fire departments. In Hawaiian Gardens, two-thirds of the city’s budget is financed by card rooms, while the city of Commerce relies on card room taxes for nearly half of its municipal budget​.

If the tribes succeed in court and card rooms are forced to stop offering these disputed games, the revenue loss could have severe consequences for local government operations, potentially leading to cuts in essential services. San Jose, for example, could lose $30 million annually, which is enough to fund 150 police officers or 133 firefighters​.

Tribal Sovereignty and Broader Implications

The passage of Senate Bill 549 represents more than just a legal victory for tribes; it underscores California’s broader efforts to reckon with its historical treatment of Native American communities.

Governor Newsom has made strides toward addressing these past injustices, including his own opposition to Prop 27 and 26, which would have allowed tribal casinos to provide roulette and dice-based table games.

In signing of the current bill, Newsom emphasized the importance of equity and inclusion for Native American tribes by saying:

“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…”

This new law strengthens tribal sovereignty, allowing tribes to assert their rights over gambling operations. Yet, it also signals the start of legal battles that could redefine the state’s gambling industry. Whether this will lead to a reconfiguration of California’s gambling revenue streams or force cities to diversify their income sources remains to be seen.