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Tuesday June 11, 2019 9:20 p.m.
BY BRIAN HEWS
The Native American casinos have alleged corruption in California cardrooms and the casino-style games they offer for decades, but authorities have never filed a single lawsuit based on their complaints.
Since 2000, when California voters passed Proposition 1A allowing Native Americans to operate gambling casinos on their reservations, no Attorneys’ General has brought action against the card rooms based on their allegations.
Bill Lockyer (1999-2007) refused, Jerry Brown (2007-2011) refused, and even Kamela Harris (2011-2017) refused.
Cue Xavier Becerra, who was appointed attorney general by Gov. Jerry Brown in 2016, the job coming open when Kamala Harris was elected to the U.S. Senate.
Becerra’s Department of Justice oversees the Bureau of Gambling Control (BGC), established along with the California Gambling Control Commission (Commission), under the Gambling Control Act.
Most people think the BGC and the Commission perform the same duties, but they are quite different.
The BGC is the investigatory and enforcement agency that looks into crimes, levying fines and revoking licenses when warranted.
The Commission, on the other hand, operates in the regulatory and adjudicatory gambling arena.
The five member independent Commission is appointed by, and reports directly to, Governor Newsom.
But for some reason, Becerra recently instructed his agency, the BGC, to violate its charter and wade into the regulatory arena that is under the Commission’s purview.
It took Becerra less than two years, during which time he received massive cash for his 2018 election campaign from the Native American tribal casinos, for his Office of the Attorney General to ignore over forty years of precedent and deliver a crushing body-blow to California cardrooms and the cities they are located in.
On September 25, 2018, just six weeks before his 2018 election, the BGC’s Stephanie Shimazu, under Becerra’s orders, issued onerous rule changes of card room games that will have wide-ranging ramifications up and down the state.
The changes handed the Native American tribal casinos the holy grail.
If enacted, the new rules will put many California cardrooms out of business, and likely bankrupt some cities, devastating whole families, while costing cities and the state thousands of jobs and hundreds of millions in revenue.
Phil Wagner, former Bell Gardens city manager, home of the Bicycle Hotel and Casino, told HMG-LCCN before he left the city, “the City of Bell Gardens generates approximately $13 million from their partnership with the Bicycle Hotel & Casino, which is 44% of the General Fund budget. Should the City lose any significant share of that revenue it would necessitate employee layoffs in addition to severe cuts to city services including the police department, which is 51% of the city’s total budget.
City of Commerce City Manager Edgar Cisneros told CALmatters that the proposed rule changes would force the city to make 25 percent cuts across the board, severely impacting public safety and infrastructure.
The Gardens Casino in Hawaiian Gardens contributes upwards of 75% to the city’s General Fund revenue, if taken away, the city would likely file bankruptcy.
The changes have many questioning the timing of the BGC’s ruling, and its authority to issue the changes.
The BGC ruling strikes at the heart of card room revenue: make it extremely difficult for players to play card games in the clubs.
The crux of the rules change involves “banking games” versus “percentage games.”
Under statute, only tribal casinos can operate banking games, where the house is the dealer.
But the same statute indicates that the dealer can be “rotated,” which is how card room games are operated.
The proposed rule changes will mandate breaks when the dealers are rotated, slowing down card play resulting in player getting frustrated and walking away from the table.
This change will cause card room revenues to plummet, with many card rooms projected to close.
After the BGC’s ruling, Shimazu organized “workshops,” attended by hundreds of angry citizens and officials from all area cardrooms, to discuss the ramifications of the changes.
During the workshops Shimazu refused to answer several pointed questions or answer comments concerning changes in card room games.
She indicated the BGC “made some findings” with respect to the games, but when asked what those finding were she stated, according to attendees, “I am not going to tell you.”
“Why is it all of a sudden wrong,” said California Cities for Self Reliance Joint Powers Authority (JPA) attorney Jimmy Gutierrez, “the games have been going on for decades, the Commission has not acted nor has the BGC ever revoked licenses, there has been no criminal or civil actions in the courts.”
Gutierrez continued, “their actions run counter to the Gambling Control Act, the BGC does not have the authority to change the rules, there is nothing in the Act that says the BGC can do this.”
In many cases, cardrooms existed and licensed their games well before the Gambling Control Act, the Commission, and the BGC were in existence.
Some card rooms operated well before the first Native American casino opened.
The games at that time were legal and no one challenged them in court.
In addition, when the BGC and the Commission was established, both agencies tacitly approved the existing games, allowing them to run on for decades.
As a result, card rooms have relied on that approval, expanded operations and invested heavily into infrastructure, while the cities have developed a huge flow of income on which they rely.
Now Becerra and the BGC want to destroy the foundation built by card rooms, bringing down their operations, and the cities, like a house of cards.
The BGC is the investigatory and enforcement agency while the Commission operates in the regulatory and adjudicatory gambling arena.
Given that description, it is the Commission that has the authority over gambling rule changes, not Shimazu and the BGC.
And if the Commission tries to step in, a statute in the state’s own Gambling Law Regulations prohibits the Commission, on a statewide basis, from eliminating games.
The statute specifically forbids the Commission from changing the way a game is played unless it is based on a violation of an ordinance, or state or federal statute.
Article 3 of California’s Gambling Law Regulation, Section 19842 (a) states, “ The Commission shall not prohibit, on a statewide basis, the play of any game or restrict the manner in which any game is played, unless the Commission finds that the game, or the manner in which the game is played, violates a law of the United States, a law of this state, or a local ordinance.”
“That is the crux of our argument, and the Achilles Heel of the BGC,” said Gutierrez, “these are not questions for administrative bodies or state officials to consider, it is up to the courts to determine if these games are illegal.”
In Dec 2018, HMG-LCCN sent a records request to the DOJ asking for any and all emails, with attachments, sent to or from anyone at the BGC including Stephanie Shimazu, Yolanda Morrow, Nathan Davalle, and Suzanne George, from Sept. 2017 to Dec. 2018, regarding keywords related to the card room rule changes.
Five days later the DOJ gave a very surprising answer to the request, “Except as specifically provided in the Gambling Control Act, the records of the Bureau [the BGC] are exempt from disclosure under the Public Records Act [as dictated] in the Business & Professions Code, Section 19821.”
The DOJ indicated that anything involving the BGC, casinos or card rooms, such as licenses and applications, is sensitive information and is exempt from disclosure.
“That’s interesting,” said one local card room owner who did not what to be identified, “nothing we give them is sacred information.”
La Verne based attorney Kelly Aviles, who is expert at fighting public agencies that refuse public records requests, told HMG-LCCN, “this is appalling, no agency should be above the law. The California Public Records Act is the State’s implementation of one of the most basic principles in our democracy – that the people have the right to information about how public agencies are conducting its business. This kind of secrecy promotes corruption and undermines the public’s confidence in our institutions.”
And the very Business and Professions Code that the DOJ cites runs counter to the agency’s claim of exemption.
Section 19801 (g and h) of the code states, “Public trust that permissible gambling will not endanger public safety… and is free from criminal and corruptive elements….can only be maintained by strict and comprehensive regulation of all persons, locations, practices, associations, and activities related to the operation of lawful gambling establishments.”
“How does withholding of public documents by the DOJ support public trust?,” snapped Aviles.
In the meantime, there are many reasons why Becerra is using the BGC to change the rules, circumventing the Commission, who has actual authority over the change.
286,000 reasons.
An examination of donations by HMG-LCCN published by Follow the Money shows that Becerra took over $286,000 from all the major American Indian casinos, and some smaller casinos most people have never heard of.
Editor’s Note: Clicking on link will land on the individual American Indian casino page. Click on the Candidates button on left, then sort by name to find donations.
A majority of the donations, over $156,000, was given to Becerra’s successful 2018 campaign.
Pechanga gave $45,000, including $14,600 in 2018.
San Manuel gave $34,000, including $14,600 in 2018.
Barona donated $32,000, including $12,300 in 2018.
Agua Caliente gave $30,000, including $14,600 in 2018.
Yocha Dehe Wintun Nation, who runs Cache Creek Casino, gave $24,000, including $7,500 in 2018.
Chumash in Santa Ynez gave $23,000, including $14,600 in 2018.
Morongo Casino gave $18,000, including $14,600 in 2018.
Sycuan Resort in San Diego gave $14,600, all in 2018.
The Table Mountain Rancheria Casino in Fresno donated $10,000, $7,500 in 2018.
The tiny Saboba Casino in San Jacinto shelled out $9,800, all in 2018.
Viejas Casino in Alpine managed to give $7,300, all in 2018.
Shingle Springs Band of Miwok Indians, owners of the Red Hawk Casino in Placerville, donated $7,300, all in 2018.
Ricon Harrah’s Casino gave $6,500, all in 2018.
Colusa Indian Community Council gave $5,000, all in 2018.
San Pablo Lytton Casino in Northern California gave $2,500, all in 2018
Finally, Twenty-nine Palms Band of Mission Indians gave $2,900, all in 2018.
Why would Becerra sell out local cities filled with fellow latino’s for a bunch of greedy Indians? He’s obviously selling out. Talk about a typical corrupt politicians. I hope the local card clubs organize to fight back.
Why now after 25 years??? Where is the public outcry?? Only tribal complaints about how games are played. Zero from california citizens. This is all about A handful of greedy fabulously rich tribes in bed with a politician that wants their money to further his political ambitions.