The casino looks like any other in Vegas or Reno. Outside, palm trees line the entrance spotlighted against a terra cotta wall complete with Spanish tile. Inside it is bright as day, the carpets are multi-colored and gaudy, and all the brass shines like gold. The absence of money continually clinking out of slot machines is enough to realize Vegas is a far away land. But the most noticeable difference is the location of this glamorous hacienda. It is just off highway 80 in the small town of San Pablo. Grocery stores, Taco Bell, and many other California suburban staples surround the casino.

"We stick out like a sore thumb," says Heather Wilson, representative of Ladbroke’s Casino San Pablo.

In business for almost three years, this casino pulls in more than $30 million a year. Roughly 12 percent, or $3.73 million of that revenue goes to the city. City officials are very happy with the casino’s presence in town as it enables the city to set up recreational programs and hire more bureaucrats. The city also set up a board to oversee and keep the casino in check.

However, on January 1, 1998, the State will create its own arm to police casinos all over California. And, on January 1, 1999, it will also set up a Commission, appointed by the governor and confirmed by the Senate, to oversee every detail of the industry, from hiring to auditing books. The big danger in the currently lax oversight of gambling in California, state officials say, is the opportunity for organized crime. Currently, there is no single state commission or board regulating and watching the card rooms.

"The local commissions will still have power," says Matt Ross, spokesman for Attorney General Dan Lungren. "This [legislation] just increases the regulation." Ross points out between 40 and 70 percent of many cities revenues comes from card rooms. "They are receiving direct funds," he says. "It is very difficult to regulate under these circumstances." He cites the example of Crystal Park Casino in Compton. "On Oct. 1 we had to shut down that casino because they couldn’t account for an excess of $600,000," says Ross. "It was a difficult decision for the city. Not only do the card rooms create jobs for the community, but revenue for the city."

Lungren has been pushing this legislation for the past five years. However, it wasn’t Lungren’s legislation that passed Wilson’s desk, it was State Senator Bill Lockyer’s (D-Hayward) legislation that was finally approved by Wilson. The main difference in the legislation being the banning of campaign contributions to candidates. "The way it’s set up now, you can only receive $250 from any given card room," says Senator Lockyer, annoyed by the charges that his involvement with the legislation was to protect his contributions. "That was just a puritanical political statement. I am a first amendment advocate. Every judicial and legal opinion is a relevant form of free speech. I don’t mind limits, but I do mind outright bans." Lockyer says people are always ready to attribute political motives to his work rather than just look at the proposal. He says he got involved because the legislation was excessive for the task, which is to further regulate the card rooms. He says he questions how much Lungren’s proposal for regulation would be duplicated because the card rooms are already regulated by local police, Sheriff’s office and the FBI.

"I characterized it as a Cadillac solution for a motor scooter problem," says Lockyer. "Lungren proposed a regulatory system a few years ago that just seemed to be an expansion of his bureaucracy." Both Lockyer and Lungren agree that the major purpose for the legislation is to police sophisticated white collar crimes like laundering money and loan sharking. "No one was routinely going in and checking anyone’s books. Now there will be," says Ross.

Gambling in the State of California is very different than in Nevada or even on the reservations. The major difference is no games can be played in California where the player is betting against the house. So most casinos apply a per game or per hour fee, or a per sitting fee. This limits the types of games that can be played in California to card games.

Casino San Pablo divides the casino to the poker side and the California side. On the poker side, poker is played. It is fairly quiet with no one hovering over shoulders. The California side is the lifeline of the casino. Games like Pai Gow, a variation of Blackjack, and Super Pan nine are played. There is even a high stakes room where $5,000 chips exchange hands.

Even though the players don’t bet against the house, the casinos are still making money hand over fist. Only $4.9 million of the $30 million Casino San Pablo made in gross revenues was made from food and beverages. Inside the casino, players can dine in the restaurant or have a meal at the table. No drinks are on the house. It isn’t the huge amounts of money legally made by the casinos that state officials are worried about. It is the practice of skimming, a process of holding money and not reporting it to the state perfected by the mob in Vegas.

"There have been so many cases of criminal activity due to the card rooms," says Ross, "that it is hard not to notice the need for regulation." At the Garden City Card Club, 14 people pled guilty to skimming approximately $4 million throughout an eight year period. In Oxnard, two card club promoters were convicted of money laundering. Even city officials have become prey to the lure of card rooms and crime. Patricia Moore, councilwoman for the city of Compton, was accused of extorting more than $12,000 from Compton Entertainment, a company trying to open a card room in that city. Hollman Chueng, an independent contractor who operated Pai Gow tables at the Bicycle Club in Bell Gardens, was convicted of conspiracy, loan sharking and extortion. He was sentenced to 12 years in a federal prison.

Meanwhile there’s no question that California card clubs are raking in the dough. According to Lungren’s office, more than $9 billion is wagered in California card clubs alone. That is more than twice the amount wagered on both the lottery and horse racing combined. Revenues for all card clubs in California is estimated at $679.3 million dollars, and the top ten card rooms pull in $375.79 million of that enormous figure alone. Sally Wilson, public relations officer, explains that the city’s gambling commission has already established regulation. "We love them and they love us," she says.

"Individual cities do not have the money or resources to carry out full-fledged investigations," says Ross. "We’re not confident that putting a city in charge of regulating their biggest source of revenue would be such a good idea." The exact impact of the legislation has casino owners and their lawyers confused. "The various lawyers are meeting right now just trying to understand what it means," says Wilson. "It is really unclear what kind of effect it will have on us."

The legislation becomes effective January. First, a Division of Gambling Control within the Department of Justice will be established, which will be the law enforcement arm. Approximately 70 officers will be hired by July 1998. Second, on January 1, 1999, a five member Gambling Control Commission will be established along with a three member part-time Gambling Control Board, which will provide appellate review of the Commission’s licensing decisions.

Administrative bodies will regulate everything from cash and credit transactions, to internal and external audits. But regulations don’t stop there. The bill places restrictions on campaign contributions, establishes a per table fee schedule and requires any and all people involved with the casino to be licensed.

The impact of the legislation will not make individual city regulatory bodies obsolete, maybe just make them useless. And, the casinos operating legitimate establishments will have nothing to worry about as far as audits and policing. However, every gaming establishment, legitimate or otherwise, will be subjected to more and more bureaucratic paper shuffling and red tape. Ultimately, this legislation will stop California card rooms, like Casino San Pablo, from blooming into Bugsy Siegal’s laundered Vegas.

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