SACRAMENTO, Calif. — Hustler founder Larry Flynt, eager to diversify his business holdings and invest in several casinos across the country, has filed a federal lawsuit claiming that a California statute placed into law under the guise of crime prevention has unfairly cost him money.
The suit against the state of California and Attorney General Kamala Harris, among numerous other state agencies, claims that because Flynt owns a pair of cardrooms in Southern California he is precluded from striking casino ownership deals past the state line.
According to California Business and Professions Code Section 19858, an individual who has an ownership interest in an out-of-state (or foreign) gaming entity of more than 1 percent can’t operate a card club in California. Section 19585 was an attempt in 1986 by lawmakers to keep organized crime out of California gambling operations by limiting cardroom operators’ financial resources.
In the suit filed Wednesday, Flynt claims Section 19858 is discriminatory and imposes a criminal law barrier to otherwise lawful interstate investment. He also noted that he has “forfeited the opportunity to invest in numerous out of-state casino-style gambling entities to his financial detriment.”
The adult entertainment mogul and Southern California casino operator revealed in the suit that he has explored gambling investment opportunities in Las Vegas; Laughlin, Nev.; Reno, Nev.; Cripple Creek, Colo.; and Tunica Miss.
“Mr. Flynt was and remains unable to make any sort of investment in those entities in excess of a one-percent ownership investment lest he surrender his California cardroom gaming licenses, which he would be forced to do,” the suit said.
Flynt owns Hustler Casino, Larry Flynt’s Luck Lady Casino, both in Gardena, Calif., and is in the works to purchase another casino in Cudahy, Calif.
He said in the suit that Section 19858 has outlived its purpose because casinos are now thoroughly regulated in order to sniff out organized crime holdings.
Flynt was joined in the suit with co-plaintiff Haig Kelegian Sr. and Haig Kelegian Jr., who have interests in Southern California’s Bicycle Club, Commerce Club, Crystal Casino and Ocean’s 11 Casino.
Flynt and the other plaintiffs note that the state has enacted laws to allow exemptions from ownership restrictions and that publicly traded corporations that own casinos in other states are operating tribal casinos throughout California.
California allows certain types of gambling, including poker and other non-banked card games where gamblers play against each other and not the house. The state has different rules for tribal casinos, which are allowed to operate banked-card games and slot machines, and also allows residents to bet on horse racing.
