LOS ANGELES—Hustler magnate Larry Flynt took home a partial victory last week is his nearly four-year fight to overturn a California state regulation that prohibits casino owners from owning or investing in gambling establishments in other states. In June of 2020, United States District Judge John Mendez blocked the state’s attempt to throw out Flynt’s ongoing lawsuit. But on January 14, Mendez granted Flynt an even more significant win.
The 1986 law was designed to keep organized crime elements out of California’s then-two-year-old gambling industry. But Flynt has contended in his lawsuit that the rule is “archaic” due to strict regulations in California and other states designed to banish the criminal syndicates, such as the Mafia, who once held a tight grip on the gambling business nationwide.
Flynt also argues, according to a report by Courthouse News, that in an era when gambling generates billions in state tax revenue, the California law has caused him to miss out on investment opportunities in out-state-casinos, and may even force him to sell the other businesses in his adult entertainment empire even if one of his business partners holds a financial stake in an non-California casino.
The state had made a motion to throw Flynt’s case out of court. Last June, Judge Mendez put that decision on hold, and last week he dismissed California’s attempt to stop the lawsuit completely.
In his ruling, Mendez said that California’s law may be an unconstitutional attempt to regulate interstate commerce, a duty reserved for the U.S. Congress.
“If a state statute ‘directly regulates or discriminates against interstate commerce, or . . . its effect is to favor in-state economic interests over out-of-state interests,’ it is ‘struck down . . . without further inquiry,’” Mendez wrote in his 12-page opinion. But Mendez stopped short of ruling that the California law was, indeed, unconstitutional, leaving open the possibility that it may constitute an “evenhanded” regulation that affects interstate commerce only “indirectly.”
If that were the case, the law may yet be upheld.
Flynt co-owns two California gambling establishments, Hustler Casino and Larry Flynt’s Lucky Lady Casino, both in the Los Angeles suburb of Gardena. He and his business partners, Haig Kelegian Sr. and Haig Kelegian Jr., sued the state in 2016 after the younger Kelegian was slapped with a $210,000 fine when a company owned by his wife invested in a Seattle casino.
The Kelegians reportedly have investments in numerous other California casinos and card clubs.
In 2016, then-Governor Jerry Brown vetoed a bill that would have created some exemptions from the out-of-state ownership regulations, but said at the time that he wanted the legislature to “thoughtfully examine those laws and amend them so that all participants in the industry receive the same benefits and opportunities.”
Photo By Will Brady / Wikimedia Commons
