A controversial promotion has taken hold at Los Angeles-area card clubs, worrying gaming industry officials across the state who fear it could spell their death through big profit losses or legal retribution from Indian casinos.
Just a few days after Gardena officials blocked no-collection EZ Baccarat games at the 40-table Normandie Casino, Inglewood's Hollywood Park Casino essentially forced the hand of the neighboring city by moving ahead with the promotion.
Gardena gave the go-ahead the day after Inglewood's casino started offering the free games last week. But the decision has angered many Indian casino and card club leaders across the state, who are threatening legal action against all card clubs if they keep pushing this promotion.
"They're mad," Normandie Casino executive Lauren Miller said. "It's all just money and card club politics. They don't want smaller casinos like us to get any bigger. The other casinos offer ridiculous jackpots, hundreds of thousands of dollars. That would put us out of business. "
Some Indian casinos, including Pala near San Diego, are threatening to go after the entire banking structure in card rooms, which some say operate on tenuous legal ground. Bankers in card clubs are considered player-dealers and, theoretically, any player could act as a banker. But, in practice, bankers are always represented by outside banks that work inside the clubs. Still, each card game must be preceded by an offer to all players to act as the banker. If that is not done, legal concerns could arise.
Some card club leaders believe that if the industry abandons the no-collection promotion, they can avoid any legal action from the powerful Indian casinos.
This week, bus loads of seniors filed into the Normandie one afternoon and packed the EZ Baccarat tables to take advantage of the new sale.
"No collection is good, of course," player Su Lan said. "I play longer" when the card club per-hand collection fees aren't charged.
Though the deal is a sure way to bring players like Su Lan in the doors and keep them sitting at tables, some industry leaders say the promotion can't sustain itself.
EZ Baccarat is the fastest growing card game in the state, and involves players trying to get close to the number nine with two hands of two or three cards. Since card clubs don't have the "house banks" that Las Vegas and Indian casinos do, they rely on small, per-hand table fees collected from players and independent dealers who bank the games. Unlike their commercial and tribal counterparts, it is illegal for card clubs to have a stake in the outcome of games played in their rooms.
Dozens of card clubs statewide offer no-collection EZ Baccarat, which means they allow players to play hands for free. The clubs profit from this model by charging fees to the banker-dealers based on how much money is gambled, and by bringing in droves of new players attracted by the sale.
Normandie's closest competitor, Hustler Casino, is just down the street and is twice as big, with 89 tables. Hustler officials adamantly opposed the promotion, saying it would require them to increase costs to make the same profit margin. Though it is about the same size as the Hollywood Park Casino, Hustler officials believe the promotion will cause them to lose money. Hollywood Park casino officials did not return calls for comment.
But last week, after Gardena officials approved Normandie's request to offer no-collection games, Hustler quietly started offering the no-collection promotion to remain competitive with Normandie club.
Hustler Casino President Tom Candy pleaded with Gardena city leaders last month not to allow the promotion because he said it would lead to plummeting profits and, as a result, decreased tax revenue to the city. The Hustler and Normandie clubs together are the second largest tax generator in town.
"If something seems too good to be true, it probably is," Candy said of the no-collection promotion. "We would have to work much harder to achieve the same results. We'd have to increase our tables, increase our costs and basically increase our business over 50 percent to just generate the same amount of revenue that we're at right now. "
While larger cards clubs like Hustler, Commerce and Bicycle casinos see nothing beneficial in the promotion, smaller card clubs have found it to be a lifesaver.
Normandie club officials said they will likely benefit more from the promotion because they have room to add more tables and they have plenty of parking. Hustler, on the other hand, is largely built out, said Normandie's Miller. The promotion will only be profitable if it can draw in many new players and keep them, she said.
The 15-table Crystal Casino in Compton was the first Los Angeles-area club to offer the promotion last year. But the casino's co-owner, Haig Kelegian Jr., said he doesn't believe the Normandie, Hollywood Park and other larger casinos should offer no-collection EZ Baccarat.
"The only reason why we did it is because we're the smallest casino in the L.A. area," Kelegian Jr. said. "The only reason we brought in no-collection is because we had no business and we were basically dying. "
Kelegian Jr. said he agrees with Candy and representatives from other larger card clubs who say that, to benefit from the promotion and continue to compete, they will have to increase their costs and reduce their profit margins.
"Anyone in the business will tell you that's suicide for this industry in the L.A. market," he said.