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May Tribes Rake The Pot?

21 October 2004

What is the difference between "and" and "or?"

If the answer is nothing, then tribal cardrooms have a legitimate advantage over privately owned cardclubs.

If, in fact, the words "and" and "or" are not synonymous, then Gov. Gray Davis illegally let tribes take too much from every pot.

On March 7, 2000, the voters of California approved Proposition 1A, amending the State Constitution to allow federally recognized tribes to offer some specified forms of gambling, including banking card games.

Although this tribal monopoly on casino-style games is being challenged in court as violating federal statutes and the United State Constitution, there is no doubt that, at the moment, tribal casinos may offer games like house-banked blackjack, which privately owned cardclubs may not.

Tribes may also spread poker, because tribes may offer any game permitted in the state.

Cardclubs may spread poker because it is a non-banking or round game. But they are prohibited from raking the pot, taking a percentage for themselves. May tribes rake the pot?

Cardclubs make their money by renting seats. Courts in the 1980s and '90s ruled that cardclubs may only charge per hand or per half-hour. Taking a percentage of the amounts bet or won was outlawed as a forbidden "percentage game."

Operators would rather rake the pot than charge per hand, because they can take out more money. As a player, you notice when you have to give the house a chip every time the cards are dealt. Raking the pot is less annoying. Losers have already lost, so they do not care if part of the pot goes to the operator. Winners do not mind sharing a small percentage. The same player psychology explains why winners, but not losers, tip dealers.

Here is the legal problem: Prop. 1A amended the State Constitution to allow tribes to conduct "slot machines, lottery games, and banking and percentage card games." The Constitution and federal law require that the state and tribes sign detailed compacts to spell out exactly how the casinos will be run. In the compacts Gov. Davis has signed - 62 so far with 35 more to go - tribes may offer "Any banking or percentage card games."

So, the Constitution tells the Governor to sign compacts permitting "banking AND percentage card games." What he actually signed permits "banking OR percentage card games."

One reason the situation is confused is that those court decisions were wrong. California law prohibits both banking games and percentage games. Everywhere, except California, a percentage games means a game where the house participates and has a percentage advantage. Every casino game is both a banking game, because the house takes on all players, and a percentage game, because the house is playing in each hand and has the odds on its side.

California courts made up a new definition of percentage game. Only in California is a game like poker, where the house never participates, turned into a percentage game if the house takes a portion of the wagers or winnings.

Under the compact, tribes may operate banking games, like blackjack, OR may operate percentage games, meaning non-banking games like poker with a raked pot. Is that permitted by the Constitution, which says tribes may operate "banking AND percentage games"? Did that mean that a game has to be both, like a traditional casino games, or may tribes conduct all banking games and all percentage games?

I don't know. And no one else does, either.

Perhaps it does not matter, because poker is such a small part of a tribal casino. But there is another conflict.

The Constitution says tribes may have "slot machines." But the compacts let the tribes operate "gaming devices."

It is only a matter of time before someone challenges some of the more inventive gaming devices being introduced into tribal casinos as not being "slot machines."

© Copyright 2003, all rights reserved worldwide GAMBLING AND THE LAW® is a registered trademark of Professor I Nelson Rose, Whittier Law School, Costa Mesa, CA

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Best of I. Nelson Rose
I. Nelson Rose

Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

> More Books By I. Nelson Rose

I. Nelson Rose
Professor I. Nelson Rose is an internationally known scholar, public speaker and writer and is recognized as one of the world's leading authorities on gambling law. A 1979 graduate of Harvard Law School, he is a tenured full Professor at Whittier Law School in Costa Mesa, California, where he teaches one of the first law school classes on gaming law.

Professor Rose is the author of more than 300 books, articles, book chapters columns. He is best known for his internationally syndicated column, "Gambling and the Law ®," and his landmark 1986 book by the same name. His most recent book is a collection of columns and analysis, co-authored with Bob Loeb, on Blackjack and the Law.

A consultant to governments and industry, Professor Rose has testified as an expert witness in administrative, civil and criminal cases in the U.S., Australia and New Zealand, and has acted as a consultant to major law firms, international corporations, licensed casinos, players, Indian tribes, and local, state and national governments, including Arizona, California, Florida, Illinois, Michigan, New Jersey, Texas and the federal governments of Canada and the United States.

With the rising interest in gambling throughout the world, Professor Rose has spoken before such diverse groups as the F.B.I., National Conference of State Legislatures, Congress of State Lotteries of Europe, United States Conference of Mayors, and the National Academy of Sciences. He has presented scholarly papers on gambling in Nevada, New Jersey, Puerto Rico, England, Australia, Antigua, Portugal, Italy, Argentina and the Czech Republic.

He is the author of Internet Gaming Law (1st & 2nd editions), Blackjack and the Law and Gaming Law: Cases and Materials.

I. Nelson Rose Websites:

www.gamblingandthelaw.com

Books by I. Nelson Rose:

> More Books By I. Nelson Rose