Attorney General Becerra Issues Emergency Order Closing Magnolia House Casino

SACRAMENTO – California Attorney General Xavier Becerra today issued an emergency order to close the Magnolia House Casino (Magnolia House) for failing to meet its obligations under the California Gambling Control Act of 1998, which requires all gambling establishments to operate in a manner suitable to protect public health, safety, and general welfare. Despite numerous warnings from gambling regulators, Magnolia House failed to take corrective actions or respond adequately to requests for information. The California Department of Justice’s Bureau of Gambling Control issued the emergency order to close the card room after multiple reviews of its finances revealed that it was seriously underfunded, threatening significant losses to patrons and players.

“There’s no excuse for failing to comply with the law and attempting to ignore regulators,” said Attorney General Becerra. “If you want to operate a gambling establishment in this state, then you must to do your part to uphold the public’s trust. Magnolia House hasn’t done that and it’s putting its patrons at risk. At the California Department of Justice, we’ll take decisive action when appropriate and that’s why we’re issuing an emergency order to shut this operation down.”

The emergency order follows an accusation filed last week against the gambling establishment noting serious concerns about its operations. In addition to its inability to maintain sufficient funds to cover the cost of patrons cashing out their chips, the accusation alleges that Magnolia House failed to deposit funds from third-party providers into separate, specifically-designated, and insured accounts in accordance with the Gambling Control Act. In addition, the card room allegedly illegally used or converted funds held in trust to cover operation expenses it could no longer meet. Moreover, under the Gambling Control Act, gambling establishments are required to make full and true disclosure to gambling regulators of all information necessary to carry out the state’s policies relating to licensing and control of gambling. Despite this requirement, Magnolia House allegedly failed to adequately respond to written requests for information regarding deposits from undisclosed sources even though extensions were given. Instead, the card room provided misleading and incomplete information and failed to supply any of the requested documents. 

Magnolia House is a 10-table card room in Rancho Cordova, California. The card room will remain closed unless it is able to demonstrate that it has addressed its funding issues in compliance with its obligations under the Gambling Control Act and has received approval to reopen from the Bureau of Gambling Control. If Magnolia House is unable to do so, a hearing will be set before the Office of Administrative Hearings to address the emergency closure order along with the accusation.

Attorney General Becerra is committed to protecting the interests of the people of California and upholding the state’s laws and regulations. Just last month, the Attorney General secured a $3.1 million settlement against the Hawaiian Gardens Casino for misleading gambling regulators and violating federal laws intended to protect against money laundering. In November 2019, special agents with the Bureau of Gambling Control arrested two individuals for their alleged involvement in an embezzlement scheme that resulted in the theft of more than $200,000 from the Red Hawk Tribal Casino. In October 2019, Attorney General Becerra brought charges against three individuals for an alleged mortgage fraud scheme that disproportionately targeted elderly Californians across the state and resulted in the loss of more than $7 million. In July 2019, the California Department of Justice announced the arrest of several individuals for allegedly operating a tax fraud and identity theft scheme targeting military service members in San Diego County.

A copy of the emergency order is available here. A copy of the accusation is available here.