Poker clubs draw a suit
The house is usually a sure bet in California poker casinos. But five Los Angeles County card rooms could lose millions if two recreational poker players win a lawsuit challenging a popular jackpot promotion.
Poker has long been allowed in California. But the state has warned casinos that the jackpots -- in which players can win thousands of dollars for losing -- are illegal lotteries.
Card rooms typically collect $1 from every pot, amassing thousands of dollars a day, and use the money to reward players who lose despite holding exceptionally strong hands. These tough-luck gamblers qualify for the casinos’ “bad-beat jackpots” -- consolation prizes that often far exceed the amount of money scooped up by the winning players.
In a 2005 advisory, then-Atty. Gen. Bill Lockyer cautioned casinos that the promotions violated state law unless players were allowed to win the jackpots without paying the fee. It’s the same legal principle that requires McDonald’s to give away game pieces for its popular Monopoly game to consumers who ask for them, regardless of whether they buy anything.
Recreational poker players Dennis Chae and Jeff Kim contend in a lawsuit that the Bicycle Club, Commerce, Hustler, Hollywood Park and Hawaiian Gardens casinos would not allow them to compete for the jackpots unless they played at tables that collected the $1-per-pot fees, even though their ads said no purchase was required.
Their lawsuit, filed May 1 in Los Angeles County Superior Court, seeks class-action status and alleges that tens of thousands of players could become plaintiffs. It accuses the casinos of false advertising and unfair competition and seeks monetary damages and an injunction ending the jackpots.
Haig Kelegian, managing general partner of the Bicycle Casino in Bell Gardens, described the lawsuit as a stunt that had little chance of succeeding. If players at his casino ask, and very few do, they can play at tables that don’t collect the $1 fees, he said.
“They’re just doing this to try to figure out a way to sue somebody,” Kelegian said. “We have always had no purchase necessary.”
Andy Schneiderman, vice president and general counsel for the Commerce Casino, said in a statement that the casino’s bad-beat promotion “complies with all legal requirements.”
Officials with the other casinos listed in the lawsuit did not respond to interview requests.
The poker players’ lawyers estimate that the five casinos collect millions annually for the jackpots. They charge “administrative fees” of 15% to 25% before funding the jackpot pools, collecting hundreds of thousands of dollars in profit, the lawyers said.
“The casinos obviously have tremendous incentive,” said Tym S. MacLeod, one of the plaintiffs’ lawyers. “This is not a case about collecting gambling losses back; this is a case about putting a stop to the deceptive advertising.”
Jackpot poker was first deemed an illegal lottery in a 1989 attorney general opinion that was upheld by an appeals court in Los Angeles. The casinos have been offering the promotion as no-purchase-necessary since the 1995 appeals court decision, said I. Nelson Rose, a Whittier Law School professor and author of the book “Gambling and the Law.”
“I think it’s basically a screw-up by a couple of employees,” Rose said. “I can’t see the suit really amounting to much.”
Poker player David Kullmann said he hoped Chae and Kim succeed, because the $1-per-pot collection cuts into his potential profit. The jackpot fees are in addition to a “rake” of at least $3 a pot that casinos collect to cover operating expenses.
The Westchester man said he typically plays a $200-buy-in game of no-limit Texas Hold ‘Em at Hollywood Park Casino in Inglewood. He said he had played thousands of hands without hitting a jackpot.
“It’s a tax. I don’t like it,” Kullmann said. “If you play 30 hands an hour, that’s $30 an hour that’s being taken off the table that you can’t win.”
Kelegian said the jackpots are extremely popular among players at his casino, commonly known as “the Bike.”
“People don’t complain. They want it because we do all the work: We accumulate all the money. We take care of it,” he said. “It’s like found money. . . . You hit a certain hand, you win a jackpot.”
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