California's Sacramento County Superior Court Judge Laurie Earl recently dismissed several major lawsuits filed by California tribal casinos against state poker rooms, ruling that federal gambling law takes precedence over state authorization. The lawsuit, filed by California tribes under Senate Bill 549 signed by Governor Newsom in 2024, claimed that the tribes have exclusive rights to offer dealer games such as blackjack. The judge ruled that although state law temporarily authorizes such lawsuits, federal law takes precedence and therefore the lawsuit cannot proceed in state court. Tribal representatives expressed their intention to appeal, emphasizing that the ruling did not address the substantive issue of whether poker rooms are illegal, while the poker room industry insists its operations are legal and have been long approved by state regulatory agencies. This case involves significant local financial interests, with multiple cities relying on poker room tax revenue to maintain basic public services.
Lawsuit Background and Legal Basis
Several California tribal casinos filed a lawsuit against state poker rooms under Senate Bill 549 signed by Governor Gavin Newsom in 2024. The tribes claim exclusive rights to offer dealer games such as blackjack under state law, accusing poker rooms of operating prohibited games and infringing on their proprietary rights.
The lawsuit was filed on January 2, 2025, the first day of court after the enactment of SB 549, accusing poker rooms of "blatantly profiting from illegal gambling."
Court Ruling and Legal Basis
Judge Laurie Earl of the Sacramento County Superior Court dismissed the lawsuit, ruling that federal gambling law takes precedence over the powers granted by the state government. In her written decision, the judge confirmed that although the legislature intended to resolve conflicts, the court "is bound by federal law" and cannot hear the case in state court.
The judge acknowledged that previous efforts to resolve this long-standing dispute through regulation, legislation, voting, and litigation had not been successful, and she expected the case to be appealed.
Tribal Reaction and Appeal Plans
Tribal representatives expressed disappointment with the ruling, feeling deprived of a fair opportunity for a full hearing. James Siva, chairman of the California Indian Gaming Association, stated that the ruling was difficult to reconcile with the clear intent of the legislature, and the court avoided addressing the substantive content of the case.
Tribal attorney Adam Lauridsen confirmed plans to appeal, arguing that federal regulations should not replace state laws governing non-tribal gaming. A meeting is scheduled for November 4 to discuss the preservation of evidence during the appeal.
Poker Room Industry Position
The poker room industry insists that its operations are legal and have been approved by the state attorney general and gaming regulatory agencies for decades. The industry uses a third-party proposition player system, with licensed entities acting as "dealers" at the table to comply with state laws prohibiting direct betting with customers.
Kyle Kirkland, chairman of the California Gaming Association, stated that poker rooms have operated legally under full transparency and strict regulation for decades, supporting employment, public services, and the local economy.
Economic Impact and Local Dependence
Many California cities heavily rely on poker room tax revenue to maintain basic public services. Last year, San Jose City Councilmember Sergio Jimenez pointed out that the city receives $30 million in annual tax revenue from poker rooms, which pays for about 150 police officers or 133 firefighters.
Officials warn that a tribal victory could threaten basic services in commercial and residential areas, highlighting the significant impact of the lawsuit's outcome on local finances.
Legal Dispute and Core Issues
The core dispute of the lawsuit is whether the dealer games operated by poker rooms violate state law, and whether the tribes have exclusive gaming rights. The tribes claim that California voters granted them exclusive rights through Proposition 1A, funding important community projects with these operations.
The judge's ruling only addressed procedural issues, leaving the substantive legality of poker room operations to be resolved by the appellate court.
Lobbying Activities and Legislative Impact
SB 549 became one of the most expensive legislative battles in the last Congress, with tribes and poker rooms spending millions on lobbying and campaign donations. In 2023, the Hawaiian Gardens Casino spent $9.1 million opposing the bill, second only to Chevron.
After Newsom signed the bill, the poker room industry spent over $3 million opposing legislators who supported the bill, leading to the defeat of several, including the bill's author, Senator Josh Newman.
Subsequent Legislation and Regulatory Developments
Despite the courtroom setback, tribal lobbying efforts have not slowed. In September 2025, legislators passed Assembly Bill 831, prohibiting online gaming companies from offering digital lottery activities that tribes consider a threat to their exclusive rights.
Governor Newsom signed the bill on October 12, 2025, confirming its effectiveness from January 1, 2026, and strengthening restrictions on unlicensed online gaming activities.
Current Status and Future Directions
The current court ruling maintains the status quo: poker rooms continue to operate, city tax revenue remains unchanged, and the long-standing struggle between tribes and poker rooms moves to the appellate court.
The case may be re-examined for core legal issues, determining the regulatory framework and distribution of rights in California's gaming industry.
Industry Significance and Precedential Value
This case holds significant industry importance for California's gaming industry, potentially establishing the priority of federal and state law in gaming regulation. The outcome of the ruling will provide a precedent for similar disputes, affecting the future operational models of tribal casinos and commercial poker rooms.
The case highlights the complexity of California's gaming regulatory system and the ongoing conflicts in legal and regulatory interpretations among different stakeholders.
