Cities Bet on Gambling : Sheriff’s Raids on Asian Games Touch Off Fears of Lost Revenue

Fearing deep cuts in city operating funds, officials of several Southeast cities and Gardena are joining forces to try to ensure that three controversial Asian betting games will be allowed to continue at area card clubs.

In the wake of a series of casino raids by the Los Angeles County Sheriff’s Department last month, officials in Bell, Bell Gardens, Huntington Park, Commerce and Gardena have formed a joint city managers’ committee to lobby for changes in the state’s 98-year-old gambling law. The group of city administrators began meeting last week.

County officials contend that the casinos are violating the state law that prohibits games in which gamblers play against a “bank,” usually the casino, rather than against each other. Card club operators, however, contend their games are legal.

Two of the cities have also joined in a lawsuit with casino operators to keep the games open. Sheriff Sherman Block has agreed to allow the games to continue until a Superior Court judge considers the lawsuit on Feb. 9. And Commerce officials are considering canceling the city’s law enforcement contract with the Sheriff’s Department as a result of the raids.

“We need to get this settled once and for all,” said Bell Gardens City Manager Claude Booker about the latest dispute over the games’ legal status. “We want to get the cloud out from over the games.”

City officials complained that if Superior Court Judge Kurt J. Lewin determines that the rules of pai-gow, Asian poker (also called pai-gow poker) and Super Pan 9 violate state law, the cities will lose millions of dollars in revenue. Cities collect a portion--usually ranging from 7% to 13.5%--of the casinos’ gross receipts from gambling tables, city officials said.

Casino owners predict that business would drop severely if the games are declared illegal. About 50% of casino business is derived from the Asian games.

“It would be devastating,” said Booker, who is leading the joint effort and whose city stands to lose the most. Booker estimated that Bell Gardens would lose up to $6 million a year, about 60% of what it now receives from the Bicycle Club.

The state gambling law, last updated in 1891, states: “Every person who deals, plays or carries on . . . any banking or percentage game . . . is guilty of a misdemeanor.” In percentage games, the house, or casino, collects a percentage of winnings.

City officials, complaining that the state law is too vague, will press for an amendment in the state gambling law that would ensure the legality of Asian games and define precisely the terms “banking” and “percentage,” Booker said.

No decision, however, has been made on what strategy the group of city officials would take or which lawmaker would sponsor the cities’ effort to revamp the gambling law, Booker said.

The Asian games have been targeted by law enforcement officials because they use a “revolving bank,” in which players take turns operating as the bank, officials said.

Players take turns being the dealer, who is pitted against the rest of the table. That player also becomes “the bank,” paying winners and collecting from losers. That contrasts with other games, such as draw poker, in which all gamblers play against one another for a common pot.

Lawyer David Chodos, who represents the Bicycle Club, said the state prohibition of “banking” games was intended to prevent a casino from holding an unfair advantage over players. But that cannot happen when players take turns operating as the bank, he added.

Played almost exclusively by Asians, pai-gow, Asian poker and Super Pan 9 have become a major source of revenue for the handful of card clubs because they are played at a faster rate than other poker games allowed at the card clubs, casino operators say. Casinos once collected a percentage of each bet, but now charge a flat, per-hand fee from every player under a recent court order.

On Dec. 29, deputies raided the Bicycle Club in Bell Gardens; the Commerce Club, the Huntington Park Casino, the California Bell Club in Bell, and three poker clubs in Gardena--the Normandie, the El Dorado and the Horseshoe casinos.

Deputies arrested six employees at three of the clubs for allegedly violating the section of the gambling law that prohibits “banking” games, Cmdr. Raymond Morris said. Several days later, deputies forced the closure of 70 tables at six of the clubs for the same reason. The Horseshoe had no Asian games running at the time of the raids, officials said.

Casino owners contend that they are not breaking the law because individual players take turns holding the bank, and the casino itself has no direct interest in who wins the hand.

Morris said that when the six arrests were made--two each at the Bicycle, Huntington Park and Normandie clubs--off-duty employees were allegedly operating as the bank. Two of the six card club employees are scheduled to be arraigned Feb. 14, officials said. Four others await arraignment on March 14. Card Club officials told authorities that the three off-duty employees were playing on their own, and were taking their turns at holding the bank at their tables, Morris said.

Lawsuit Filed

After the raids, the Bicycle and Commerce clubs and Bell Gardens filed a lawsuit to block the Sheriff’s Department from closing the Asian games. The Commerce City Council met in emergency session Jan. 5 and decided to join the suit.

On that day, Block agreed to allow the games to resume until Judge Lewin makes a decision on the legality of the games.

The Huntington Park Club Corp., which operates the Huntington Park Casino, filed a lawsuit against the county in 1984 after sheriff’s deputies moved to shut down pai-gow games because of the way casinos were collecting their fees from players. The casinos collected a percentage of the amount bet in Asian games, rather than a per-hand or table rental fee.

A trial court judge ruled that state law prohibiting percentage games was unconstitutionally vague.

But last November that decision was overturned by a three-judge panel of the 2nd District Court of Appeal, which found that state law prohibiting percentage games is clear and constitutional. The clubs now charge the per-hand fee in compliance with the appellate court ruling, casino spokesmen said.

Not Clearly Decided

The appellate court decision also discusses banking in relation to the Asian games, but the court did not clearly decide the issue of a rotating bank, county officials contend.

Previous court decisions have defined a banking game as one in which the house or bank participates in the game and pays winners and collects from losers.

The Sheriff’s Department awaited the appellate court decision, Morris said. And when the court did not rule definitively on the banking issue, the department decided to move against the clubs, he said.

Although the appellate decision states: “It is clear that under the present facts pai-gow is not a banking game . . . “, an accompanying footnote reads: “Under the unique facts of this case no issue has been raised as to whether a ‘banking game’ would result if a person other than the ‘house’ were to maintain and operate the ‘bank.’ We do not reach and do not decide that question.”

George Hardie, owner of the Bicycle Club, said because the players take turns holding the “revolving bank,” the Asian games are apparently legal. “It’s not a banking game,” Hardie said. “The appeal court said it was legal.”

Calling the state law too vague, he has joined city officials in urging that the law be amended to include a definition of the word banking that would allow players to act as the bank.

But Deputy County Counsel Kevin Brazile, who is representing the county in the case, disputes the view of the Asian-game advocates.

“When you have a player who’s doing the same thing that the house would do (in Las Vegas), our position is it’s a banking game,” Brazile said.

Bell Gardens is not the only city faced with a large financial loss if the games are ruled illegal.

Commerce expects to receive $5.3 million from the Commerce Club, or 23.1% of what the city plans to spend this fiscal year on general services, including police and fire protection, said John Mitsuuchi, director of finance. Officials fear about half of that could be lost if the Asian games are prohibited.

The city has a $5.9-million reserve, but the loss of income from the card club could force the council to make some budget cuts, City Administrator Louis Shepard said.

“We’d have to cut our budget and that could not be done without some very serious changes in service,” Shepard said.

In Huntington Park, the City Council has directed its attorney to file a friend-of-the-court brief in support of the card clubs to protect its financial interests, City Administrator Donald L. Jeffers said.

No Comfortable Reserve

The city expects to receive about $480,000 in revenue from the Huntington Park Casino this fiscal year. Unlike Commerce, Huntington Park does not have a comfortable reserve, and is counting on the card club revenue to keep its $9.9-million general fund in balance, Jeffers said. To balance the budget, the city cut general fund expenditures by about $500,000 from last year, Jeffers said.

“Anything that we lose is critical to our budget,” Jeffers said. “We’d have to generate additional revenue sources or make some cutbacks to offset that loss.”

Huntington Park Mayor Jack Parks also lashed out against the county.

“I think the sheriff is (unjustifiably) challenging the law,” Parks said. “We get a fair revenue out of those games. We want to follow the law. We’re not doing anything against the law.”

But county officials said they cannot be concerned with the effect their actions may have on city coffers.

“We’re not trying to stop them from making money,” attorney Brazile said. “It’s real simple. We’re trying to enforce the law.”

In addition to the potential financial losses, Commerce officials were angered because they say they were not informed of the raids beforehand.

The council has voted to study whether the city should fire the Sheriff’s Department as its law enforcement agency in favor of starting its own police department or contracting with a nearby city. The city contracts with the Sheriff’s Department to provide all of its law enforcement services. Commerce expects to pay the county about $3.2 million this fiscal year for those law enforcement services, Mitsuuchi said.

“The sheriff is really acting as the city’s chief of police,” City Administrator Shepard said. “He has an absolute obligation to communicate with the city.”

Sheriff’s Cmdr. Morris said that his department informed Commerce officials that state law would be enforced in accord with the appellate court decision, and that banking games were discussed.

“We thought the city understood we intended to enforce all provision of (state law),” Morris said. “I can understand, given subsequent events, that there could have been a misinterpretation of our intent.”

PAI-GOW--This game is similar to 21, which is illegal in California because players bet against a dealer rather than against one another. Pai-gow players take turns being the dealer, who collects all losses and pays out all winnings. Pai-gow (meaning “cards nine”) is played with 32 dominoes. As many as eight players are dealt two hands of two tiles each. Players try to reach nine in various combinations. To win, both of the player’s hands must exceed the value of the dealer’s two hands. If only one hand is higher, a “push” results in which no money changes hands.

SUPER PAN 9--This game is a modification of pai-gow. Instead of using dominoes, however, players use eight decks of playing cards with all 7s, 8s, 9s and 10s removed. Face cards have no value. Like pai-gow, the object of the game is to have your hand total as close to nine as possible, without going over.

After betting, players are dealt three cards. At that point, players add the values of the cards to determine how close they are to nine. They may then play their hand as is or ask for an additional card. Similar to a hand of 21, a nine-point hand is considered perfect.

ASIAN POKER (also called pai-gow poker)--This game is more like traditional poker than the pai-gow and Super Pan 9 games. The players are dealt seven cards. The players then divide the cards into two piles--one with two cards, the other with five cards. The hands are then played and ranked as traditional poker hands.

But the betting procedure is the same as the other two Asian games: the players take turns at being the dealer and controlling the betting. To win, both of a player’s hands must beat both of the dealer’s hands.

CASINOS’ FINANCIAL IMPACT ON CITY BUDGETS

Current City Income City Budget From Casinos Bell $7.5 million $60,000 Bell Gardens 16.1 million 9.5 million Commerce 22.9 million 5.3 million Huntington Park 9.9 million 480,000

Source: City officials of four cities.