Gov. Newsom Signs New Law to Help Tribes Fight Gaming

CALIFORNIA, USA – Gov. Gavin Newsom signed a bill today that would allow California's casino-owning tribes to sue their business rivals, ending one of the costliest political battles of the legislative session.

With Newsom's signature on Senate Bill 549, the tribes now have the opportunity to ask a judge to rule on their long-standing claim that the state's card rooms illegally offer card games such as black jack and Pai Gow poker.

The stakes are high as some cities get nearly half of their budgets from taxes on arcades, meaning a tribal victory in court could jeopardize money for police, fire and other local services.

Tribes say California voters gave them exclusive rights to host the controversial table games. But because they are sovereign governments, the tribes lacked the legal authority to sue the state's roughly 80 private gambling halls, which are scattered throughout California.

In the fight over the bill, tribes and the card gaming industry spent millions of dollars on lobbyists and donations to lawmakers' campaigns.

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

According to the Digital Democracy database, the opposing gambling interests have also donated at least $4.3 million to the 120 members of the Legislature since January 2023. The tribes were the bigger campaign spenders. That included donating $92,000 in the weeks before a crucial vote in July to members of an obscure House committee that regulates gambling.

Tribes have also spent significantly more card room over the years when it comes to donating money to Newsom's campaign and causes close to his heart.

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

Newsom has apologized on behalf of the state for “historic injustices against Native communities,” he has advocated for the return of land to tribes and he has supported a tribal-backed initiative that removed four major dams on the Klamath River.

On Friday, in what Newsom said was California's 57th annual Native American Day celebration, he signed a package of other tribal-backed bills — including one that would require schools to include Native American perspectives when teaching California history. Another bill makes it easier for tribes to intentionally start wildfires for land management purposes.

“I am proud of the progress California has made in addressing the dark chapters of our past, and we are committed to continuing this important work to advance justice, inclusion and accountability for Indigenous people,” Newsom said in a Friday Press release.

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

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

The tribes allege that the card room games have stolen hundreds of millions of dollars in revenue from historically disenfranchised tribal communities across California. Tribes argued that the bill would go a long way toward ensuring California makes amends for atrocities committed against Native Americans.

However, several California cities whose budgets are supported by arcades were opposed to the bill. The employee unions in these cities also rejected the measure.

Cities including San Jose argue that if casinos stop offering the controversial table games, municipalities could be forced to cut police, fire and other city services because their budgets are supported by the taxes and fees that the local casinos pay governments.

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

San Jose City Council member Sergio Jimenez told lawmakers in July that the city receives $30 million each year from ticket offices, enough to fund 150 police officers or 133 firefighters. Jimenez said money would be at risk if the tribes prevailed in court.

Ticket offices say their games are not illegal and that the attorney general's office has approved each of those games. However, they argued that if the tribes were allowed to sue, the card clubs would not have the right to sue the tribes as well and that they could go out of business because of the resulting legal fees.

Ticket offices also called it an unfair fight, saying their annual revenue was barely 10% of what tribal governments earned from gambling.

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