BILL ANALYSIS {u AB 98 u} Page 1 Date of Hearing: May 10, 1999 ASSEMBLY COMMITTEE ON GOVERNMENTAL ORGANIZATION Herb Wesson, Chair AB 98 (Floyd) - As Amended: March 15, 1999 {u SUBJECT u} : Gambling {u SUMMARY u} : Authorizes the play of non-house banked twenty-one in licensed card clubs. {u EXISTING LAW u} : 1)Specifies that any person who conducts any game of faro, monte, roulette, lansquenet, rouge et noire, rondo, tan, fan-tan, seven-and-a-half, {u twenty-one u} , hokey-pokey, or any banking or percentage game played with cards, dice, or any device, is guilty of a misdemeanor. 2)Establishes the Gambling Control Commission and grants it jurisdiction over the operation of card clubs and of all persons having an interest in the operation of card clubs. 3)Creates the Division of Gambling Control within the Department of Justice to investigate and enforce controlled gaming activities in the state. 4)Defines a "controlled game" as any game of chance, including any gambling device, played for currency or any other thing of value that is not prohibited and made unlawful by statute or local ordinance. {u FISCAL EFFECT u} : None {u COMMENTS u} : 1. {u Legal card games in California. u} Since 1872, California has prohibited gambling on specified games. In 1885, the Legislature prohibited several additional games, including stud-horse poker and twenty-one, as well as any "banking" or "percentage" games played with cards, dice, or any device. Legislation enacted in 1991 (AB 97, Floyd) subsequently deleted stud-horse poker from this list of prohibited games. While current law specifies the prohibited games, it does not {u AB 98 u} Page 2 define the term banking game or percentage game. As a result, the public, law enforcement agencies, and the card club industry has generally had to rely on case law to determine the range of games legally allowed in this state. Banking games have come to be defined as games whereby the house or bank is a participant in the game, taking all comers, paying all winners, and collecting from all losers. A percentage game generally describes any game of chance from which the house collects money calculated as a portion of wagers made or sums won in play, exclusive of charges or fees for use of space and facilities. Both these types of games are commonly associated with the games played at out-of-state casinos, and are disallowed in California because in these games the house has a direct interest in the game, a statistical advantage in some instances, and generally possess limitless funds. Banking and percentage games place the house in a position where it has an active interest in the game, either as banker or in taking a percentage of the wagers. By contrast, poker, and other games played in a "round," where players bet against each other rather than against the house, have always been legal in California. In fact, any game not specifically prohibited in statute or that is not a banking or percentage game may be played in this state, subject to the provisions of the Gambling Control Act and contingent upon local approval. Additionally, many California card clubs play card games that utilize a player-dealer format, for example, in games that are similar, but not identical, to the game of twenty-one, e.g., "California Blackjack," "Newjack," or "Twenty-First Century Blackjack," except the object of these games is to achieve a hand of 22 rather than 21. At various times, the courts have had to determine whether new card games are either derivatives of those games that are prohibited under existing law, or are banking or percentage games. For instance, the legality of the game of pai gow was called into question during the 1980's due to its rules that provided for a "player-banker." In {u Huntington Park Club Corp. v. County of Los Angeles u} , the Court of Appeal held that the game of pai gow was not an illegal banked game because the role of the player-banker continually and systematically rotates among each of the participants. In {u Oliver v. County of Los Angeles (1998) u}, the courts were asked to consider whether the newly introduced game of "Newjack" was prohibited under existing law, or if the game was inconsistent with previous judicial determinations regarding banking and percentage games. In {u AB 98 u} Page 3 Oliver, the trial court determined that Newjack was not a banking or percentage game, but instead violated existing law because the rules of the game (with a target number of 22) merely represented a variation of twenty-one, which is a game prohibited under existing law. This trial court decision was subsequently appealed to the Appellate Court, who held that Newjack was not one of the games specifically prohibited under current law, and that the question of its legality instead depended upon whether the game qualified as either a banking or percentage game. The court determined that Newjack was not a percentage game, but did violate existing law because the game had the "potential" of being played as a banking game. The court concluded that a game is a banking game if, under the rules of the game, it is possible that a player can maintain a bank or operate as a bank during the play of the game. 2. {u Purpose of the bill. u} According to the supporters of this bill, the current prohibition against the playing of twenty-one, which dates back to the year 1885, seems arbitrary and difficult to justify given the proliferation of copycat games that are now played in card clubs that use a target number of 22 rather than 21. Card clubs maintain that this situation has increased the chances for confusion among players and local law enforcement agencies (who enforce the play of illegal games) regarding the rules of the particular version of 22 the person may be playing. Moreover, local governments, who in some instances depend on card club license fees to support municipal services, also stand to gain from increased card club patronage. 3. {u Related Legislation u} . AB 1417 (Wesson), currently on the Assembly floor, defines a "banking game" as any wagering game where the house is a participant in the game with an interest in the outcome of any wager, i.e., covering all bets, paying all winners and collecting from all losers. The bill further clarifies that a game is not a prohibited banking game simply because the rules of the game allow one person to act as a bank, provided the position is offered to all players at the table. This bill is intended to address the court's holding in the Oliver case (see above) regarding the game of Newjack and the court's opinion that this game could potentially be played as a banked game, merely because a player could maintain the player-dealer position for an indefinite period of time. {u AB 98 u} Page 4 {u REGISTERED SUPPORT / OPPOSITION u} : {u Support u} Artichoke Joe's Casino California Commerce Club California Gaming Association Hawaiian Gardens Card Club Lucky Chances, Inc. {u Opposition u} Committee on Moral Concerns {u Analysis Prepared by u} : George Wiley / G. O. / (916) 319-2531