Gaming in California

In California, the State Constitution has provisions covering most types of gambling. Specifically, it:

  • Authorizes the California State Lottery, but prohibits any other nonstate-run lottery.
  • Allows horse racing and wagering on the result of races.
  • Allows bingo for charitable purposes (regulated by cities and counties).
  • Prohibits Nevada- and New Jersey-style casino gambling.

The Constitution does not specifically mention card rooms. The Legislature, however, has authorized card rooms, allowing games (such as poker) where the card room operator has no stake in the outcome of the game.

In 1996, estimated gross gambling revenues for the California gambling industry totaled $2.3 billion. (This does not include Indian gambling, for which we do not have revenue estimates. The "best guess" is that Indian gambling in the state generates revenues easily in the hundreds of millions of dollars and potentially exceeding a billion dollars a year.) This
revenue represents 5.7 percent of the comparable nationwide total. As shown in Figure 4, the state lottery accounts for nearly 50 percent of the statewide gambling revenues.

 



Card Rooms

The state allows card rooms to conduct certain "nonbanked," "nonpercentage" card games. These are games where the card room operator has no stake in the outcome of the game. The players play against each other and pay the card room a fee for use of the facilities. Typical card games include draw poker, 7-card stud, and Asian games, such as pai gow. State law specifically prohibits certain games such as twenty-one (blackjack), monte, and faro.

There are currently 176 active card rooms operating a total of 1,883 tables in California (excluding rooms operated on Indian land).



Most card rooms are very small--less than five tables. There are, however, six very large card rooms, which operate one-half of the tables in the state. These clubs are: California Commerce Club (300 tables), Bicycle Club (200 tables), Hollywood Park Casino (140 tables), Normandie Club (120 tables), and Crystal Park Casino (110 tables) all in Los Angeles County and Ladbroke's Casino-San Pablo (100 tables) in Contra Costa County.

Estimated 1996 revenue for the 176 California card rooms totaled $630 million. This is nearly 12 percent less than prior-year estimated revenues of $712 million.

 

State Regulation. State regulation of card rooms is currently in a period of transition. The Legislature recently enacted The Gambling Control Act Chapter 867, Statutes of 1997 (SB 8, Lockyer) that established an overall umbrella of state regulation of card rooms beginning January 1 of this year. (Prior to January 1, the Attorney General's Office registered card rooms, but had only minor regulatory authority.)

Under Chapter 867, the state will regulate card rooms through a three-member Gambling Control Board (for up to one year) and a new Division of Gambling Control in the Attorney General's Office. A five-member Gambling Control Commission will succeed the board on either January 1, 1999 or upon enactment of a statute appropriating funds for the division and the commission, whichever occurs first. The 1998-99 Governor's Budget includes about $5 million to carry out the provisions of Chapter 867.

The responsibilities and authorities of the division and the board/commission (hereafter referred to as the commission) include licensing of owners and most employees, investigating suspected violations of the Gambling Control Act, granting approval of games, and assessing fines for violations of the act. Thus, the state regulatory authority over card rooms has significantly increased with the implementation of Chapter 867.

Chapter 867 does not change local governments' basic responsibilities concerning card rooms. They will continue to approve card rooms in their jurisdiction, as well as establish the hours of operation, table size and number, and wagering limits.

 

Acknowledgments

This report was prepared by Megan M. Atkinson, under the supervision of Gerald Beavers. The Legislative Analyst's Office (LAO) is a nonpartisan office which provides fiscal and policy information and advice to the Legislature.





 



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