Cardroom-Dependent LA County Municipalities Warn of Bankruptcy Risk as California Moves to Enforce Blackjack Ban

California municipalities are assessing the fiscal fallout from finalized regulations prohibiting cardrooms from offering blackjack-style “player-banked” games. The regulation takes effect April 1 after officials announced it on Feb. 9. Cardrooms have until May 31 to submit their compliance plans.

In its Final Statement of Reasons, the California Department of Justice (DOJ) said the rules are intended to implement Penal Code §330, which prohibits “any game of twenty-one.” It rejected arguments that current cardroom variations materially differ from traditional blackjack.

Cities and businesses have outlined what the incoming ban will mean for their future. In submissions to the DOJ Bureau of Gambling Control, many detailed the risks of banning blackjack.

One letter cites the DOJ’s own economic impact study, which claims the state could lose over $500 million in annual tax revenue. The changes will affect more than 70 cardrooms that employ approximately 20,000 people.

The Los Angeles County Business Federation warned that Los Angeles County alone could lose more than 5,000 jobs.

Hawaiian Gardens: Two-Thirds of the General Fund at Risk

To understand the impact of the upcoming changes, Gambling Insider reached out to the City of Hawaiian Gardens, which stands to lose 70% of its general fund tax revenue according to filings.

It sits in southeast Los Angeles County, bordered by Cypress, Cerritos, and Long Beach. With a population of about 14,000 people, it ranks as the smallest municipality in LA County.

Despite covering less than one square mile, the city has dense housing. It is home to The Gardens Casino, one of the largest cardrooms in the state. It is a major employer in Hawaiian Gardens, with about 1,300 employees. The venue generates about $13 million in annual tax revenue.

In an email statement, Councilmember Victor Farfan said that almost two-thirds of the city’s $20 million in general fund revenue comes from the cardroom. This money directly supports essential city services like public safety and police. He said that a “sudden and significant reduction” in cardroom activity would place these services at serious risk.

Farfan also referenced the Bureau of Gambling Control’s analysis, acknowledging that up to 50% of all cardroom jobs and revenue statewide could be lost if the changes are implemented.

For a city with limited tax sources, even a partial reduction in casino revenue could destabilize its budget. Farfan said that the ban is “not an abstract policy debate; it’s a matter of economic survival” for the city.

Tough Decisions to Be Made

Farfan believes the secondary effects will reach further than municipalities. He says that “already strained public safety nets” such as public assistance programs, unemployment insurance, medical care, and housing support will come under even more pressure.

He highlighted that the costs “don’t disappear,” they “are simply transferred to taxpayers statewide.” Lower tax contributions and reduced local economic activity also factor into the equation.

Farfan said the city submitted formal objections, requested meetings with the Bureau of Gambling Control and the Attorney General’s Office, and provided public comment during the rulemaking process. Still, all of these efforts “were met with silence,” leaving Hawaiian Gardens “without meaningful dialogue, transparency, or collaboration.”

The councilmember said that Hawaiian Gardens will need to “confront the very real possibility of financial distress” if these rules take effect. Officials are exploring all possible options to protect residents, workers, and the community’s financial stability. However, he noted that the possible decisions “are deeply personal and extremely difficult.”

Chapter 9 municipal bankruptcy has entered internal discussions as a contingency scenario if revenue declines materially. Only a handful of California cities have pursued Chapter 9 protection in recent decades, often resulting in prolonged financial restructuring and service reductions.

These concerns extend beyond Hawaiian Gardens. Communities across the state face similar pressures. Cardrooms provide about 50% of Bell Gardens’ general fund and 40% of Commerce’s general fund. Major cities like Fresno and San Jose are also exposed.

In the formal rulemaking record, commenters specifically warned that cities such as Hawaiian Gardens, Bell Gardens, and Commerce could face closures, bankruptcy, or even disincorporation if cardroom revenue declines sharply. The DOJ acknowledged those concerns but stated they did not warrant changes to the proposed regulations.

Opposition From Many Quarters

Dozens of nonprofits have also weighed in, warning of likely drops in public protection alongside losses in revenue, scholarships, and funding. Cuts would hurt youth programs, social services, and after-school activities.

Advocates argue funding will decline or disappear if cardroom revenue falls sharply. One local association noted that Seven Mile Casino helps fund more than $35,000 in law student scholarships every year.

Lawmakers and local politicians raised additional concerns, including claims that the new regulations “exceed statutory authority,” could lead to significant increases in underground gambling, and reflect inconsistent DOJ standards between tribes and cardrooms.

In a letter to California Attorney General Rob Bonta, multiple labour unions outlined strong opposition to the rule change. They believe many cardrooms could close, potentially triggering municipal bankruptcy and even disincorporation in some areas.

Los Angeles County Supervisor Hilda Solis said that LA County cardrooms generate over $2 billion in economic activity.

The State’s Constitutional Position

State regulators maintain that the changes clarify enforcement of existing constitutional and statutory limits rather than creating a new prohibition.

California voters passed Proposition 1A in 2000, granting tribes exclusive rights to operate banked casino-style games on tribal land. More than 60 tribal casinos now operate across the state and will continue offering blackjack.

The DOJ has argued that certain cardroom blackjack-style games have become indistinguishable from prohibited twenty-one under Penal Code §330 and cited case law, including Oliver v. County of Los Angeles, to justify tightening player-dealer rotation requirements.

In its responses to objections connected with economic impact, the DOJ acknowledged that cardrooms “pay fair wages … and contribute to the local tax base like other businesses in their community.” Still, it emphasized that economic contributions do not override statutory prohibitions.

The Department also determined that no reasonable alternative would be as effective to affected parties while still upholding statutory limitations.

While cardrooms will lose revenue under the new changes, tribal casinos could gain an estimated $232 million annually as players look for cardroom alternatives. Others may cross state lines into Nevada and Arizona to continue playing blackjack. This highlights how enforcement of exclusivity may redistribute revenue within California’s gaming market.

With compliance deadlines approaching and layoffs already under discussion, city leaders face an uncertain road ahead.

Whether viewed as constitutional enforcement or economic disruption, the coming months will reveal just how deeply the blackjack crackdown impacts local economies across Los Angeles County.