All In, No Way Out: Gambling the City Budget
The City of Hawaiian Gardens depends on one card room for most of its revenue, a high-stakes system now under strain.
Image: City of Hawaiian Gardens Archives
When The Gardens Casino closed during COVID-19 in March 2020, Hawaiian Gardens, a one-square-mile city built on card room revenue, lost nearly half of its annual budget within weeks. The closure triggered immediate consequences: forty percent of the city's workforce was laid off. This vulnerability did not emerge overnight. Decades of legal rulings, tax reforms, and policy compromises had steadily bound the city’s fortunes to card room revenue. Hawaiian Gardens reflects a broader pattern across Los Angeles County, where small, fiscally constrained cities rely on a single precarious industry for survival. The case underscores how policies intended to sustain local economies can, over time, deepen their structural weaknesses.
The story begins with a pivotal 1941 appellate court decision that ruled draw poker legal in California so long as operators did not take a percentage of winnings. For decades, the card club model was concentrated in only a few cities, most notably Gardena. That changed in 1978, when Proposition 13 reshaped municipal finance across the state. By capping property tax increases and rolling back assessments, Proposition 13 reduced a core source of funding for local governmentsand forced cities to search for alternative revenues. In Los Angeles County, several cities with declining tax bases began licensing card clubs to bolster constrained budgets. For many cities, card rooms represented a politically acceptable mechanism for capturing outside dollars while sparing local property owners higher tax burdens.
Image: City of Hawaiian Gardens Archives
For Hawaiian Gardens, incorporated in 1964, this remained an abstract model until the mid-1990s when the city faced growing deficits and potential disincorporation. To avoid bankruptcy, local officials approached physician and bingo operator Irving Moskowitz to expand an existing facility into a full-service card room. The Gardens Casino opened in 1997 and quickly became the city's financial dominant revenue source.
State policy then solidified this dependency. In 1997, California enacted a temporary moratorium on new cardroom licenses under the Gambling Control Act. Originally set to expire in 1999, the restriction has been extended multiple times and was most recently renewed through 2043 under Assembly Bill 341. By insulating Hawaiian Gardens from additional competitors, this protection secured a steady revenue stream but created a single point of failure: the city's fiscal stability became inseparable from one business.
Evidence of the risks embedded in this arrangement emerged well before the pandemic. Between 2009 and 2014, federal investigators cited The Gardens Casino for extensive violations of anti–money laundering regulations, including failures to report suspicious transactions. The casino ultimately paid nearly six million dollars in federal and state finesbut faced no criminal prosecutions, and operations proceeded without interruption.
Today, Hawaiian Gardens faces a new and potentially more destabilizing threat. In 2024, Governor Gavin Newsom signed Senate Bill 549, which allows California’s tribal casinos to bring certain legal challenges against competing cardrooms. The Gardens Casino responded by spending more than nine million dollars on a lobbying campaign to oppose the measure. If litigation succeeds, Hawaiian Gardens could lose its primary revenue source entirely, as could other municipalities that have tied their budgets to card room operations.
