Fold ’em: Lucky Lady shutdown ends card arcades in San Diego
Just over two years ago, Stanley Samuel Penn, the last man standing in what was once the card-arcade industry in San Diego, stood quietly in the court judge’s spacious courtroom. of US District Roger Benitez.
Penn was there to plead conditionally guilty for his role in a sports betting network that operated out of the Lucky Lady Card Room and Casino, a small 11-table operation on El Cajon Boulevard near 54th Street that Penn had owned for over four decades.
Under the deferred prosecution agreement, if Penn did not break any laws for a year, the case against him would be dismissed. But if he violates the agreement, he could be sentenced to five years in prison, Benitez told Penn, 81.
It was, the judge said, raising his voice so the hearing-impaired Penn would understand, “a pretty risky business on your part.”
Gambling is a skill, an opportunity and a real-time risk management. Penn has spent his life around risk and built a business on it. He didn’t hesitate.
“Your Honor,” he said in a transcript, “you will never see me again.”
It was a response that was both a promise and a sort of epitaph for the company he had worked for for 40 years.
Because last month, after a year of shutting down the business during the coronavirus pandemic, Penn sold the Lucky Lady property in the El Cerrito neighborhood to Family Health Centers in San Diego and closed the casino permanently.
And with that, San Diego’s once thriving cardroom industry has come to an end, and will likely never be seen again.
The Lucky Lady was the last legally licensed card club in a town that once had over 100 card rooms – Alibi on Richmond Street, Doc’s Lo-Ball Poker at 61st and El Cajon Boulevard, House of Cards on Ocean View Boulevard.
Penn is also one of the last owners of old-fashioned arcades in San Diego and the State: sole owners, often tavern owners who had a few tables in the back room, who ran the clubs. mainly offering poker games like a small family. – owned business.
In recent years, they have been replaced by a new breed, more corporate and better capitalized, which seeks to change the image of the industry from cramped and sweaty rooms to airy places resembling casinos. Much to the dismay of the tribal casinos that dominate the state’s gaming market, card rooms now offer a suite of casino-style games, not just poker.
Over time, new regulations and financial compliance requirements placed new requirements on businesses that many could not or were not interested in meeting, said Jarhett Blonien, a lobbyist who represents the card rooms of the State.
“A guy like Stanley Penn has been used to functioning a certain way for a long time,” said Blonien. “New regulations are coming, and he’s not used to doing it that way. Tighter regulation has overtaken some of these moms and dads. “
Penn, now 83, did not respond to multiple interview requests sent to him and via attorneys. He did not violate the terms of his deferred prosecution agreement, and all charges were dropped in April 2020.
“It’s the end of the one-man gambling hall owner,” said Richard Schuetz, a former member of the California Gambling Control Commission who has worked in the gambling industry in positions ranging from dealer to casino at Las Vegas border and is now a consultant. . He said the long-standing image of card rooms like Penn’s – “seven old guys sitting around a coffee table throwing coins into a jar” – no longer holds up.
“It’s a profitable business and you can see it,” he said. “They make a lot of money, not poker in general, they make casino games. That’s what the tribes are crazy about. Enter these places now, they are like full-fledged casinos.
Ryan Stone, one of the owners of Seven Mile Casino in Chula Vista, is one of the new generation of owners. Co-founder of the Monarch group which develops large apartment real estate projects, he and his partners entered the gaming industry in 2014 by purchasing a card room outside of Sacramento and then buying the card room. Village Club in Chula Vista about a year later from Harvey Souza whose family had owned the card room since 1946.
Stone said the card rooms have been “under-optimized in almost every way” by longtime owners. “We see the California cardroom industry as a ripe space for revitalization,” he said. “We have taken archaic businesses and reimagined them into a premium entertainment experience for the local community. “
But that can’t happen in San Diego, where the industry’s death knell came in 1983, when city council passed legislation banning the sale, rental, or transfer of any existing license. This meant that when existing licensees retired, died or abandoned them, the card room would also close.
The wording of the ordinance reflected the attitude towards gambling at the time – gambling halls “attract criminal elements to the city”, and the law was necessary “to eliminate the deleterious effects. that these establishments have on the safety, well-being and morals of the City, ”he read.
In 1996, a state law imposed a moratorium on the issuance of any new card room licenses, thus capping the size of the industry in the state. There are now 86 active licenses in the state that have increased in value with the state moratorium. Only the city of San Diego had a law prohibiting the sale or transfer of the license.
By 2000, attitudes towards gambling had changed dramatically and voters in the state paved the way for tribal casinos to deliver Las Vegas-style legal gambling, which now dominates gambling in the state. By that time, the number of card arcades in San Diego had fallen to a handful and continued to decline.
Then, in 2015, a federal indictment indicted two dozen people in an international sports betting network who used the Palomar Casino – at the time the only other card game room in town besides Lucky Lady – to launder the profits. The licensed owners of Palomar were already in trouble with state regulators for handing over the operation of the club to their daughter without obtaining state permission. Eventually, they agreed to relinquish the license and close the club.
That left the Lucky Lady, but in July 2016, Penn was one of 14 people indicted in an investigation into an illegal sports book that came out of the card room that included years of wiretapping by the FBI, a confidential informant. and surveillance.
The card room continued to operate under different management for months as the case progressed. Eventually, main bookmaker Sanders Bruce Segal was sentenced to 37 months in prison. The remaining defendants received either probation or time served.
But what FBI wiretapping, competition from tribal casinos, and police investigations failed to do, the coronavirus and its impact did. While the closure of the Lucky Lady means the city of San Diego is out of clubs, the Oceans 11 club in Oceanside continues to operate, as well as Seven Mile.
Eric Miller lives next to the card room. While some in the neighborhood have criticized the club on social media, Miller said that in the eight years he’s lived there, he hasn’t seen any big problems.
“The place kind of stays to itself,” he said. “As someone who lived next door, I think they were a very good neighbor.”
Prior to the charges, the owners of the Palomar and Lucky Lady scrambled to persuade the city to change the ordinance and allow the licenses to be sold so the clubs could continue. The proposal came out of a council committee but was never voted in full by council due to pending investigations and indictments.
Prior to the sale of the Lucky Lady property, representatives from Seven Mile met with board member Sean Elo-Rivera to change the order again, Elo-Rivera said. State records show Penn’s license expires in November. The council member, whose district includes the card room, said there had been a proliferation of illegal underground gambling dens in his district in recent years.
He said he would not oppose a further review of the ordinance, especially if it stifled the growth of illegal gambling dens.
“The important thing is to use data and facts,” he said. “If by not allowing a legal operation in the city you are probably increasing the level of illegal activity, that seems to me to be a factor to take into account in determining the way forward.”