CalMatters: Gambling Companies Spent Big to Defeat Three California Lawmakers

California’s card rooms lost a costly legislative fight this year as they sought to kill a bill that would allow their competitors, tribal casinos, to sue them.

But that didn’t stop the gambling halls from punishing a handful of lawmakers for their votes after Gov. Gavin Newsom signed the gambling bill into law.

In an extraordinary display of political retribution, California’s card room industry spent more than $3 million in the lead up to the November election to oppose four lawmakers who played key roles in the bill’s passage. Three of the candidates targeted by the card rooms ended up losing, including the rare defeat of an incumbent Democratic senator.

“We really don’t want to be the sort of, you know, the Rodney Dangerfield of industries. We want to be respected,” said Keith Sharp, a lawyer for the Hawaiian Gardens Casino, a card room in Los Angeles County. “We (will) work hard to continue to gain respect and protect our employees, protect our cities, protect our businesses.”

To the card rooms, the three defeats were a sign their money was well spent, even if the cash went to purely punitive purposes. Case in point: Two of the lawmakers who lost their races were vacating their Assembly seats and were running in non-legislative races. Had they won, it’s unlikely they’d deal very often with card room related issues.

Tribes have long outspent card rooms in state politics. Tribes have given candidates for state office more than $23.5 million since 2014. That’s more than double what oil companies have given the state’s politicians during the same years. Card rooms have spent only a fraction as much.

More recently, tribes have contributed $6.3 million to candidates since January 2023 while card rooms have donated at least $1.3 million. Those funds don’t include the $3 million the card rooms spent targeting the four candidates this fall.

The cash the card rooms poured into the four races sends a message to lawmakers that they’re also capable of spending big, including on political vengeance, said former Democratic Assemblymember Mike Gatto.

“Any time you have a group essentially announcing to the world that they are going to do vengeance spending, it does cause lawmakers to pay attention,” he said.

Card Rooms vs. Tribal Casinos Explained

The bill Newsom signed, Senate Bill 549, gives tribes the ability to ask a judge to decide whether card rooms are allowed to operate table games such as blackjack and pai gow poker. The tribes, which will be able to sue beginning Jan. 1, say California voters gave them exclusive rights to host those games, but they’ve been unable to sue the state’s 80 or so card rooms because tribes are sovereign governments.

The stakes are high since some cities receive nearly half of their budgets from taxes on card rooms, meaning a tribal victory in court could jeopardize money for police, firefighters and other local services. The card rooms insist their games are legal, but they also worry the cost of court fights could force them out of business.

Facing what they saw as an existential threat, they responded to the bill’s introduction last year with a massive lobbying blitz. Hawaiian Gardens Casino alone spent $9.1 million on lobbying, the second-highest amount reported to state regulators last year. Only the international oil giant, Chevron Corp., spent more.

Despite losing the legislative battle, card rooms spent more than $3 million on attack ads, text messages, mailers and other outreach to voters targeting the four candidates. The card rooms also bought ads supporting candidates running against them.

The ads came from independent expenditure committees funded by the card rooms. Under state and federal election rules, organizations not affiliated with a candidate can spend unlimited amounts of money supporting or opposing candidates through advertisements and other tactics as long as the actions are not coordinated with the candidate’s campaign.

Gambling Companies Blast Candidates with Attack Ads

Only one candidate, Laurie Davies, a Republican from Oceanside, won her race for reelection despite the card room’s cash onslaught.  And just barely. Only 3,870 out of 230,546 total votes separated her from her Democratic challenger, Chris Duncan.

The card rooms spent at least $1.3 million on outreach boosting Duncan and slamming Davies, according to state campaign finance reports. One mailer said she was aligned with “anti-choice radicals,” “MAGA extremists” and “Big Oil.”

Davies infuriated card rooms when she cast a vote that let the gambling bill advance out of a committee this summer, despite having a cardroom in her district.

Outgoing Democratic Assemblymember Evan Low of Cupertino faced similar attacks in his failed congressional bid. Low sat on the same Assembly committee as Davies and voted this summer for the gambling bill. Low also had a major cardroom in his Assembly district. Low’s campaign didn’t return a message seeking comment.

The card rooms spent at least $500,000 on ads attacking Low, according to the card rooms.

The card rooms also went after termed-out Democratic Assemblymember Brian Maienschein in his failed bid for San Diego city attorney. The card rooms spent at least $443,000 opposing Maienschein.

He got on the card rooms’ bad side when he cast a key vote that let the bill advance from the Assembly Judiciary Committee, which Maienschein chaired. Sharp, the lawyer for Hawaiian Gardens, said Maienschein also refused to meet with him and other card room representatives before the vote. Maienschein didn’t return messages.

A TV ad from the card rooms attacked Maienschein for his voting record before he switched his party affiliation from Republican to Democrat in 2019.

Fullerton Democratic Sen. Josh Newman, the lead author of the gambling bill, wasn’t spared even though he represented a competitive district that was important to the Democratic Party.

The card rooms spent at least $900,000 in that race that paid for ads and mailers opposing Newman and supporting his Republican opponent, Steven Choi, according to campaign finance reports.

Newman, the state’s most vulnerable senator who’d been recalled from office once before, ended up losing to Choi by 6,075 votes out of the 458,615 cast in the race. It was the first time since 1980 that a Republican flipped a Democratic senate seat in a presidential election. Newman had a $6 million fundraising advantage over Choi. Choi raised just $856,000.

In one card-room funded TV ad, Newman was portrayed as being soft on crime, and it attacked him for voting to give benefits to “illegal immigrants.”

In an interview with CalMatters, Newman said he didn’t think the card room ads made as much of an impact on the race as another independent expenditure committee that opposed him with more than $1 million from a prominent public employee union.

But Newman acknowledged the card rooms probably did send at least some voters to Choi.

“The margins probably matter in a race as close as mine,” Newman said.

Still, Newman told CalMatters he has no regrets about introducing the bill despite the blowback and the possible impact the card rooms had in his senate race. Newman said he believes the tribes deserve their day in court. 

But he said he doesn’t see the logic in the card rooms spending so much money on races after they already lost their fight in the Legislature.

“The question really is: If you shut the barn door after the horse is out, who are you really punishing?” he said.

This story was originally published by Ryan Sabalow of CalMatters. CalMatters data reporter Jeremia Kimelman contributed to this story.

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