Larry Flynt Unable To Overturn California Casino Ownership Law

Larry Flynt Unable To Overturn California Casino Ownership Law October 31, 2017 July 23, 2018 Carolyn Dutton
 Legislation October 31, 2017 by Carolyn Dutton

Larry Flynt’s challenge to a California law, which prevented state residents to own out-of-state casinos, was dismissed by a Federal judge. It put an end to Flint’s plans of growing his gambling businesses outside of California when United States District Judge John Mendez ruled and dismissed with prejudice the claims of Flynt and his co-plaintiffs.

American publisher and adult entertainment tycoon Larry Flynt tried to venture into lucrative Nevada casino opportunities in 2014 and 2015 but was restricted by what he termed was an outdated Californian state law. Flynt along with father-and-son cardroom owners Haig Kelegian Sr. and Haig Kelegian Jr. sued the state for the right to invest in out-of- state casinos. Flynt currently owns two casinos in the state – the Hustler Casino and Larry Flynt’s Luck Lady Casino.

The California Business and Professions Code Section 19858 which is also known as the Gambling Registration Act was approved in 1986. The act was to provide standard and minimum regulations on cardrooms in California, which also effectively kept the mob out of California’s gambling operations since it limited the financial resources of cardroom operators. The law prohibited residents with California gaming licenses from investing in out-of- state casinos.

Even though this law exists, California still permits other forms of gambling such as poker and non-banked card games, where gamblers play against each other and not against the casino. Flynt and the Kelegians disputed that the Gambling Registration Act is already outdated, citing that the mob has been frozen out of Nevada casinos for decades. For its part, Nevada already updated its gambling laws and allowed publicly traded companies to venture in billion-dollar casinos based in Las Vegas.

This was why Kelegians and Flynt sued California Attorney General Kamala Harris, the California Department of Justice, and the California Gambling Control Commission. They wanted an order to block California from enforcing Section 19858 and for the court to deem it unconstitutional. Their argument also centered on a previous California ruling that fined Kelegian Jr. a sum of $210,000 for transferring the ownership of an out-of- state casino to his wife. They claimed that the ruling left a continuing harm on their business and left them unable to invest in other casinos.

Mendez, however, rejected the Flynt and Kelegian lawsuit because their quest for due process fell outside the two-year statute of limitations, and that they failed to prove the continuing harm they would have undergone due to the prohibition. The judge also wrote in the court’s decision that any attempt of the defendants’ side for further amendment will be deemed futile. Attorney Paul Cambria of New York said Flynt and the Kelegians will still file an appeal.

Carolyn is our legislation expert, with a background in law she is able to cover the current state of gambling around the world