My understanding of the law is that cruise ships could not stop in 2 consecutive California ports and offer gambling in between. For instance, a cruise ship to Alaska could not start in San Diego, sail to San Francisco & pick up additional passengers, then head to Alaska, while opening the casino between San Diego and San Francisco. Same prohibition in a round-trip cruise-to-nowhere out of any California port. The reason the San Diego cruise is legal is because it goes to Baja California; therefore it's an international cruise.

BTW, the "2 consecutive ports" prohibition law was recommended to be changed in the California legislature, for the obvious reason that cruise lines would never schedule a second California port on their cruises. I don't know if they have acted on this change yet.