Wilson Signs Bill for Strict State Control of Card Clubs

Gov. Pete Wilson signed legislation Saturday giving the state historic new authority to enforce strict, wide-ranging controls over California’s multibillion-dollar card club industry.

After four years of losing the battle with opposing poker parlor interests and uncooperative lawmakers, proponents for the first time were able to celebrate enactment of substantial gambling controls after legislative passage last month.

“Finally, Californians can be confident that an adequate regulatory strategy is now in place to oversee the [state’s] rapidly expanding card room industry,” said Atty. Gen. Dan Lungren, who inherits an expanded unit of investigators to give teeth to the law.

Lungren assumes the extra clout just as he is about to launch his expected campaign for governor next year. He is considered certain to receive the Republican gubernatorial nomination.

Wilson hailed the bill, saying it would “limit the spread of money-laundering and other illegal activities that can occur in gambling establishments.”

California’s card clubs, approaching 200 in number with some of Las Vegas dimensions sporting 100 to 200 tables, account for $9 billion in wagers per year. That is more than twice the betting total of the state lottery and horse racing combined, according to industry analysts.

Under the law, dozens of gaming experts, auditors and law enforcement officials operating as a unit within Lungren’s office will receive marching orders to scrutinize all aspects of the card parlor business.

As of Jan. 1, 1999, measure SB8 by state Senate Leader Bill Lockyer (D-Hayward) calls for creation of a five-member Gambling Control Commission with broad powers to monitor, license and oversee the industry.

Until then, beginning next Jan. 1, Lungren’s new Division of Gambling Control will conduct primary oversight and licensing, with its decisions subject to appeal to a three-member outside board.

Members of both the temporary Gambling Control Board and, later, the full commission, will be appointed by the governor and confirmed by the state Senate.

The new controls apply only to card clubs and not to other forms of legal gambling or to gaming on Indian lands.

A total of 173 state-sanctioned card clubs operate in 27 counties, with 18 more clubs awaiting approval to open. A moratorium, extended under the Lockyer bill, is in place prohibiting local elections to approve new card clubs until 2001, although partial expansion of existing clubs can occur in some circumstances.

The state Department of Justice polices the card club industry now, conducting background checks and licensing owners and some club managers.

But Lungren has long complained that with less than a dozen gaming investigators at his disposal, he lacks the resources to keep up with demand.

To date, fewer than 500 card room personnel are licensed and half of those await a final check by Lungren’s understaffed gaming unit, the attorney general said.

Now, with the ranks of investigators increased to 81, scrutiny of clubs will be vastly expanded, for the first time including oversight of games played, regular audits of all clubs and far more club employees required to submit to background checks and licensing.

The clubs offer varieties of poker, modified blackjack and Asian games. State law restricts the clubs to collecting a fixed fee from players, who do not “play against the house,” as players do in Nevada-style casinos.

But among players, there is not only the $9 billion wagered at licensed card clubs but uncounted millions bet across the poker tables at Indian casinos.

All of that money, changing hands quickly, inevitably breeds crime, Lungren has said.

He cites instances of parking lot gunfights, attempted casino infiltration by organized crime figures, “follow home” robberies and club owners or managers taking part in money-laundering, loan-sharking and profit-skimming.

State regulation, proponents argue, will provide not only more but better enforcement than that provided by local authorities. Witnesses have testified here for years that local governments follow a go-easy policy on investigating crime at card clubs, many of which are major sources of local tax revenue, representing a built-in conflict of interest.

The top 10 grossing card clubs in the state, according to state reports, each pay local taxes ranging from $13.5 million to $1.4 million a year.

Industry proponents, meanwhile, have contended that card club-related crime can be horrific when it happens, but they say it doesn’t happen often.

Nevertheless, most card club backers have said for years that they would welcome tighter state regulation--on their terms--if only to spruce up their image.

This year’s successful version of new controls, said Rod Blonien, the Sacramento lobbyist for the California Commerce Club in City of Commerce, the state’s largest club, “will mean a cleaner industry. When there is a problem, it reflects on the whole industry.”

Anti-gambling opponents charged that elements of the new law actually allow for more gambling expansion than would have occurred under previous but failed attempts to enact state controls.

Assemblyman Bruce Thompson (R-Fallbrook), who opposes gambling on moral grounds, said he had been “willing to go along with setting up a commission in previous legislation,” including a bill of his own. That measure would have required a two-thirds majority local vote to permit new card clubs.

The Lockyer bill that prevailed requires only a simple majority to authorize a new club once the moratorium expires.

Because of that element and other expansion provisions, Thompson said, “I wanted no part of it” and joined 14 Assembly members who voted against the bill in its final form. The measure passed unanimously in the Senate.

Another troubling feature of new state oversight, cited by Thompson and others, is the impression given that gambling will now be scrupulously policed and therefore acceptable. In that atmosphere, voters could be more willing to approve card club proposals, as well as to look more kindly on the prospect of Las Vegas-style gambling coming to California, opponents said.

A representative for Nevada gambling interests who requested anonymity said that Las Vegas casinos, subject to strict state regulation for years, will welcome regulation in California “in the interests of fairness.”

The real irritant for Nevada casinos, the source said, is the ability of Native American casinos in California to offer Las Vegas-style gaming--with their estimated 12,000 slot machines scattered over 30 tribal gaming sites--”in wholesale violation of the law.”

Wilson and Lungren have maintained that the tribal casinos should be bound by state laws outlawing slot machine gambling. But the casinos on Indians lands are under federal jurisdiction. So far, federal authorities have warned the tribes against continued slot machine gambling but have not taken on the political risks of raiding Indian casinos.

The tribes also wield influence among state lawmakers--made evident last month by their successful lobbying to delete from Lockyer’s bill any reference to the state assuming authorities over Indian casino gambling.

Also on Saturday, Wilson:

* Signed a bill by Sen. Betty Karnette (D-Long Beach) that requires campaign financing disclosure documents, above certain monetary limits, to be filed on the Internet rather than in the present paper form that limits public access. Statewide campaigns and donors must begin electronic filing, via the secretary of state’s office, by next year. Other state candidates must make the switch in 1999-2000.

* Vetoed a series of bills designed to improve care for patients in HMOs and other managed care systems. Wilson reiterated that he is not ready to sign HMO-related legislation “piecemeal” until he receives a report on managed care from a task force he appointed. The study group is expected to report its findings in January.

Among bills vetoed were those that would allow outside medical review when HMOs turn down bone marrow transplants for cancer patients, that would discourage HMOs from refusing treatment of all kinds and that would allow for longer hospital stays. Proponents had argued that the reforms should not be delayed because the health of patients was at stake.

* CASINO SHUT DOWN: Authorities close the Crystal Park Hotel and Casino in Compton. B1