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California's Hawaiian Gardens Casino FINED $3.15M

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Things just seem to be going from bad to worse recently for the state of California and its gambling industry outlook. Not only was a raid conducted recently on an establishment posing as a thrift shop while actually providing illegal gambling, but now a legal land-based casino, the Hawaiian Gardens, is being hit with a fine of $3.15 million. The Hawaiian Gardens Casino, California’s second-largest cardroom, is said to have misled gambling regulators and also violated the Bank Secrecy Act (BSA), resulting in the huge settlement fine.

Hawaiian Gardens Fine

About the Hawaiian Gardens

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Despite being referred to as a “casino,” the Hawaiian Gardens, located in a city of the same name, is really more or less a cardroom. According to California law, only tribal gaming entities are allowed to offer house-banked games – that is, those forms of casino amusements wherein customers bet directly against the house.

Hawaiian Gardens, CaliforniaLocation of the City of Hawaiian Gardens in Los Angeles County, California

Because it’s a commercial facility rather than a tribal gaming hall, Hawaiian Gardens therefore cannot provide slots, video poker, or other typical casino diversions. Under convoluted rules that permit individual players to act as the banker, the casino is allowed to offer baccarat, blackjack, pai gow poker, and other card games that are traditionally found in casinos.

However, poker is the mainstay of this business – also known as “The Gardens” – because all the pots are contested among the players with the house merely charging a rake or tournament fee. Texas Hold'em, Seven Card Stud, and Omaha are listed as the formats of this pastime available. Hawaiian Gardens, which opened up shop in 1997, is thus part of the vibrant live cardroom scene in California. There are more than five dozen places to play cards in a brick-and-mortar setting within the state, which makes up a bit for the fact that there are no CA-licensed online poker sites.

Hawaiian Gardens CasinoThe Hawaiian Gardens Casino at Night

California Department of Justice Deceived

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In what seems to be an ongoing saga for the Hawaiian Gardens Casino, the charges brought against it now follow on from the initial $2.8 million fine that it received for money laundering lapses in July 2016. At that point, the casino settled with the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Its violations at the time extended all the way back to 2011, and it appears that Hawaiian Gardens hasn’t learnt its lesson yet.

According to the official Nov. 18, 2019 complaint – which was amended from a 2016 accusation – California Attorney General Xavier Becerra said that the casino failed to inform the state gambling regulators of the investigation that took place regarding FinCEN. Informing the state of these probes and investigations was a necessity under California’s Gambling Control Act of 1998. Despite the fact that the casino was under the watchful eye of FinCEN, it proceeded to file multiple license renewal applications to the Bureau of Gambling Control (BGC).

While submitting those applications, the venue did not mention any sort of regulatory probes that were taking place. It is because of this that the operators of the Hawaiian Gardens Casino were opened up to perjury charges. Not only that, but even after the FinCEN settlement was made public in 2016, the venue’s official stance on the matter was that it had “always engaged in honest and frank dialogue” as far as communication with the BGC was concerned.

AG Becerra Not Pleased

Having been found out once again, Hawaiian Gardens drew the ire of Xavier Becerra for its multiple years of attempts to deceive the California Department of Justice. He remarked:

There’s no excuse for failing to comply with the law and deliberately attempting to mislead regulators. In the gaming world, if you fail to play by the rules, expect to pay the price. Hawaiian Gardens Casino is paying the price. At the California Department of Justice, we will do all we can to prevent the marriage of money laundering and casinos.

Xavier BecerraCalifornia Attorney General Xavier Becerra

A $3.15M Fine Is Handed Out

As part of the approved decision on the Hawaiian Gardens establishment, the respondents to the accusation by Becerra jointly and severally agreed to pay the Bureau a penalty of $3,150,000. That penalty must be paid in full within 30 days of the Effective Date, Nov. 18.

To add to the Hawaiian Gardens monetary fines, the settlement also requires the operators to pay a further $40,000 in Cost Recovery. This, the official document states, is a reasonable cost of the investigation and prosecution relating to this matter. As with the previous fine, the extra $40,000 must be paid within 30 days.

Additional Penalties Beyond Fines

It wasn’t only monetary fines that were handed out to the Hawaiian Gardens Casino though. Along with that, it was ordered to complete a 24-month compliance period. The official wording in the document states:

Upon the effective date of the Decision and Order issued by the Commission adopting this Stipulated Settlement (Effective Date), each Respondent’s pending state gambling license renewal application will be granted. The renewed licenses shall be subject to Respondents’, and each of them, performing and complying with each and every condition and term of this Stipulated Settlement for 24 months (Compliance Period).

Even California’s Legal Establishments Can’t Get It Right

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There may have been a significant number of raids on Californian illegal gambling dens as of late, but even though this is the case, it appears that the state also has problems with those companies that are considered legal and licensed within California.

When the Hawaiian Gardens went through its settlement with federal officials in 2016, it was just one of several similar cases where various California cardrooms were issued with fines for violating the Bank Secrecy Act and other related statutes. The BSA is a law meant to stop money laundering, and when it was discovered that many of these cardrooms were utilizing a rather sloppy approach toward keeping track of the money passing through their venues, they were found to be in severe violation of it.

Therefore, the government had to take matters into its own hands, and fines were dished out left, right, and center to those establishments. The largest one was given to Artichoke Joe’s Casino, which bases itself out of San Bruno. In November 2017, an $8 million penalty was handed out for these violations although this figure was later reduced to $5 million as long as the casino stayed out of trouble in the future.

Artichoke Joe'sArtichoke Joe's in San Bruno Was Also Issued a Big Fine for Regulatory Failures

The fact that the Hawaiian Gardens Casino is still making such stupid moves with regard to the law won’t really serve to help with having certain forms of gambling legalized in the Golden State. After all, if the regulators can’t trust the companies that already hold licenses, how can they possibly think to extend gambling services to the online world as well?

Commercial Casino Chaos Benefits Native Tribes

Naturally, this will also provide California’s tribal gaming operators with some additional ammunition when it comes to their attempts at blocking the introduction of further potential gambling laws. The tribes have consistently protested against the cardrooms in a bid to keep a monopoly on casinos within the state.

Further to this, while attempts have been made to bring legal sports betting to the state of California, the tribes have excluded cardrooms from a ballot initiative for this type of wagering. This way, sports betting would only be possible in tribal casinos and racetrack establishments.

Playing Poker Legally in California

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While there may not be any legal online poker laws, or indeed legal online gambling laws, within California for the time being, that doesn’t mean that players can’t access such. It just means that offshore sites must be used instead. It is because of this that there are numerous platforms providing their services to residents of The Golden State. Thus, you can play poker as a Californian even if there's no reputable live cardroom near you.

Should you wish to find an online poker room that caters to Californians, then we recommend that you have a look through our complete guide to playing internet poker inside the state. Residents of other parts of the country may be instead better served by our USA offshore poker sites guide.