Zoe Sharp
Last week, media outlet San Jose Spotlight reported that the state legislature passed Assembly Bill 341, which seeks to limit the number of licenses and tables for cardrooms, with some exceptions. Should Governor Gavin Newsom sign the bill into law, the ban will remain in effect until January 1, 2043.
The legislative measure comes three years after San Jose voters approved Measure H, under which the two casinos in San Jose, Bay 101 and Casino M8trix, would be allowed to add more table games. In return, operators would be required to pay additional taxes.
There is Still Hope for San Jose’s Cardrooms to Expand Gambling Operations
San Jose may need to scrap its gambling expansion plans for the coming 20 years as the state Legislature voted in favor of Assembly Bill 341, under which no new card rooms would be allowed to open in California, and existing ones would be prohibited from adding new table games.
The bill includes a provision, exempting San Jose from the ban, but it is unclear whether or not the California Gambling Control Board will approve it. In an interview with San Jose Spotlight, General Manager Ron Werner said that he believes San Jose will be allowed to realize its gambling expansion plans. Given that the Assembly Bill becomes law, it will limit the expansion to 10 table games per casino.
In 2020, 73% of San Jose voters approved Measure H, under which the two casinos in San Jose would be allowed to host a maximum of 64 table games each if operators agree to pay the city 1.5% more in taxes, or a total of 16.5%. Under the new tax regime, the city was expected to generate approximately $15 million in tax revenues, and money would go to support community projects such as fire protection, emergency response, infrastructure, youth programs, and homeless prevention.
Cardroom Operators in San Jose Pay Additional Taxes Without Being Allowed to Expand
But the state of California rejected the city’s request to allow Bay 101 and Casino M8trix to add 15 more table games each in 2021 and in April this year. The Gambling Control Commission explained that the maximum number of table games per card room in San Jose is 49, and the existing gambling venues have already reached this limit.
Under the state’s Gambling Control Act, cities are not allowed to increase the number of table games in card rooms by 25% or more than the number of table games they had on January 1, 1996. In 1992, San Jose capped the number of table games in each card room at 40. Four years later, the city adopted a citywide limit of 181. But the Gambling Control Commission considers 40 as the maximum number of table games per casino.
Although the state imposed a moratorium on cardroom expansion, the 1.5% tax increase on casinos has been implemented. Derrick Seaver, Chief Executive Officer and president of the San Jose Chamber of Commerce, commented that operators should not pay higher taxes as they were not allowed to add more table games. In 2021, Bay 101 decided to legally challenge the state’s decision, urging the Commission to overturn its ruling. The case is still pending.