California cities fear cardroom closures due to sports betting

Several cities in Southern California are opposed to a sports betting ballot initiative, which they contend would lead to excessive litigation against cardrooms, resulting in their closure. This would wipe out 32,000 jobs and $1.6 billion in annual wages.

The initiative has no official name, yet is known as the Tribal Sports Wagering Act. Some businesses, the Pechanga Resort Casino, public safety officials, social justice activists, and community groups support this initiative. Tribal casinos and four racetracks in California would be able to offer sports betting through the initiative.

Opponents said that tribal casinos would monopolize all gaming in California, including roulette, craps, and sports wagering. Furthermore, they were concerned that the Private Attorneys General Act would permit tribal casinos to employ private attorneys, thereby replacing the state’s attorney general’s function to sue cardrooms and putting them out of business over costly litigation.

The Los Angeles region could lose at least $71.1 million in general-fund tax revenue that subsidizes public health, homelessness services, and senior programs if the initiative is approved in November.

Misunderstanding leads to fears

In a press conference outside the Commerce Senior Citizens Center on Thursday, May 19, representatives from Commerce, Compton, Hawaiian Gardens, and Bell Gardens voiced their concerns about the initiative. A spokeswoman for the Coalition for Safe, Responsible Gaming Kathy Fairbanks said that “fears surrounding the initiative have been misconstrued”.

As an example, she mentioned a $3.1 million settlement against The Gardens Casino in Hawaiian Gardens in 2019. A fine was imposed after the casino misled gambling regulators and violated the Bank Secrecy Act, a federal law designed to prevent money laundering.

“In the gaming world, if you fail to play by the rules, expect to pay the price,” said California Attorney General Xavier Becerra at the time.

Last year, the partnership that runs the Bicycle Hotel & Casino in Bell Gardens paid $500,000 to resolve an investigation into alleged anti-money laundering violations.

Fairbanks added, “The only cardroom casinos at risk of legal enforcement are those that repeatedly violate California gaming laws.”

Revenue loss concerns

Opponents of the Pechanga initiative are concerned that a tribal casino monopoly and increased PAGA litigation will be too costly to fight, resulting in cardroom closure. According to Bell Gardens Councilwoman Alejandra Cortez, the Bicycle Hotel & Casino contributes approximately 45 percent of the city’s general fund revenue.

“We got a preview of what that would be like when we had to shut down in 2020 during the COVID-19 pandemic,” Cortez said. “It was closed for nine months and it resulted in a loss of about $10 million.”

The funds are used to pay for police services, public works, and other essential city services. Hawaiian Gardens, according to City Councilman Jesse Alvarado, will be negatively affected.

“The Gardens Casino, which has operated in the city of Hawaiian Gardens for the past 22 years, is a critical partner to our entire community, providing more than 68 percent of our city’s total general fund revenues,” Alvarado said in a statement.

His remarks underscore the importance of the money in assisting the city in reducing crime and reducing gang-related problems.

“If the eligible tribal gaming initiative were to become law, it would devastate our community,” Alvarado said.