Crucial Section of Card Room Law Is Upheld

A state appellate court has upheld the constitutionality of a key element of San Diego city regulations designed to gradually do away with the card-room business.

Ruling unanimously, a three-judge panel of the 4th District Court of Appeal said this week that the city has the power to limit to $2.50 the hourly charge that card rooms can impose on poker players.

Stanley Penn, owner of the Lucky Lady Card Room on El Cajon Boulevard--the city’s largest poker parlor--had challenged the rule, most recently reaffirmed by the City Council in 1983, on the grounds that it has no reasonable link to the city’s expressed objectives in regulating card rooms.

Primary among those objectives is reducing the number of card rooms, and thus curtailing the illegal activities that police say are associated with the gaming parlors.

Penn--whose card room grosses more than $500,000 a year, according to court testimony--contended that a rule that reduces the players’ cost of participating in gambling could not be expected to meet the city’s expressed goal of constricting the card-room business.

But the appellate court said the $2.50-an-hour limit could be understood to meet that objective by reducing the profitability of operating a card room.

“The City Council properly could conclude that impacting the provider of the business sought to be discouraged is as reasonable as impacting the consumer of that business,” said the court’s opinion, issued Tuesday.

According to the opinion, the city has fixed the maximum hourly fee at $2.50 since 1976. Though city staff members recommended increasing--or even deregulating--the rate several times between 1976 and 1980, the City Council instead chose to crack down on the industry.

It stood firm with the $2.50 maximum in 1983, meanwhile adopting rules that bar the opening of new card rooms and prohibiting the transfer of existing card-room licenses.

Deputy City Atty. Steven Gustavson, who argued the case for the city, said Wednesday that the ruling was an important affirmation of the city’s power to regulate the card-room business.

But Gustavson predicted that legal wrangles over the industry are not over. Though the court ruled that Penn could not claim that the city was illegally confiscating money from him by limiting the hourly charge, Gustavson noted that a card-room owner could renew that allegation as time and inflation make the $2.50 limit more onerous.