What’s the deal with these California card rooms?By Aaron Stanley, CDC Gaming ReportsDecember 29, 2017 at 3:09 pmIf you’re a football fan, you may be familiar with the variety of websites that track NFL player run-ins with law enforcement, and even provide “Arrest-o-Meters” that tells how many days it’s been since the last arrest.Some internet entrepreneur or coder with extra time on his hands may want to consider doing something similar for California card rooms.Over the last few years, it seems that hardly two or three months passes without some type of incident at one of these gambling rooms, be it a temporarily closure, license revocation, fine issued by a regulator or an outright raid by law enforcement.Violations have included a laundry list of unsavory items ranging from failure to comply with Bank Secrecy Act provisions, poor anti-money laundering and know your customer practices, prostitution, racketeering and loan sharking.Richard Schuetz, a former member of the California Gambling Control Commission, points out that more federal raids have occurred at card rooms in the state since 2011 than in the rest of the U.S. commercial gaming industry combined.Others have dubbed the state’s card rooms as the worst-regulated sector of the U.S. gaming industry.Things seemed to be on the upward trajectory later in the year, particularly as the California Gaming Association – which represents the card rooms – brought in a FinCEN specialist to its annual meeting in October to present a workshop on the importance of building a “culture of compliance” in a gambling operation – something its critics say is lacking across the industry.If that message washed away the sins of the past, the clean slate didn’t last very long.Just over a month later, Artichoke Joe’s became the latest such incident when it was fined $8 million by FinCEN for a series of ugly charges including anti-money laundering compliance failures and turning a blind eye to loan sharking and other criminal activity on its property.So what’s the deal?Clearly, these situations are more convoluted than they may appear at the surface level. It appears to be a confluence of the political clout of the card rooms, growing competition with tribal gaming facilities, insufficient attention devoted to the topic at state regulatory and law enforcement agencies, as well as other factors.Perhaps the first place to look is the extent to which card rooms, an industry that has been around since the Gold Rush era, have been hurt by the introduction of tribal casinos.In 1999, there were upwards of 150 card rooms across the state, most of them mom and pop establishments. Today, that number has halved. Meanwhile, tribal gaming has emerged out of nothing to become a $8 billion industry in the state.It seems fair to assert that card room owners are feeling the pinch, and as a result may be tempted to cut certain corners to minimize costs or retain players.All parties are quick to blame the regulators for not doing enough, which may be a good sign in the sense that a good compromise is one in which no party is satisfied.It also seems clear that the state’s attorneys general over the past half decade have had bigger fish to fry than dealing with pesky card rooms. Former AG Kamala Harris was eyeing a U.S. Senate seat; current AG Xavier Becerra is spending his time taking on Donald Trump.Most of the cardrooms are also located in Democratic strongholds and employ people from demographic groups that typically vote blue, so there may not be a sense of urgency within the state’s Democratic political machine to take on this issue.It’s also important to note that the majority of card room operators in the state are indeed good actors that trying to do the right thing and foster a culture of compliance internally. But unfortunately, this is a classic instance of a bad apple spoiling the whole barrel.The industry’s New Year’s Resolution should be to make through the 2018 calendar year without a raid, fine or other type of compliance violation. That would go a long way toward restoring trust.