San Jose Spotlight: San Jose Delays Regulatory Rollback For Local Card Rooms

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San Jose Police Department officials said the approval, made without council deliberation, marks the final step in a reform push launched in June.
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They said the new rules will help create a fairer regulatory environment for the casinos — which contribute tens of millions of dollars in taxes each year to the city — without sacrificing public safety. Backers said the package of five rule changes marks the final step in a reform push launched in June intended to lighten the administrative burden placed on the city’s two licensed card houses, Casino M8trix and Bay 101 Casino. The new regulations target so-called “player-dealer” card games — such as blackjack, baccarat and Pai Gow — in which players, rather than the e wallet casino australia no deposit bonus, act as the “bank,” paying winners and collecting from losers. In a Feb. 19 letter sent to Attorney General Rob Bonta, city officials warned the regulations, which set stricter rules for certain types of gameplay, would devastate San Jose’s two card rooms — as well as the city’s finances. San Jose officials are urging California regulators to rescind new rules for the state’s card rooms, warning of dire economic fallout if restrictions take effect as planned in the coming months.
The legal battle came to an end with a 2020 settlement between the two parties, which made a wealth of regulatory concessions, such as allowing card room owners to play at poker tournaments in their casinos. In 2020, voters approved a ballot measure allowing for the expansion of card rooms at the behest of both casinos, which agreed to paying higher taxes in exchange for more tables. “With resources scarce as they are, a further reduction in fees and less oversight will reduce our ability to proactively manage risk to the community and may result in increased crime, negative social impacts and further burden our understaffed police department.” San Jose police officers who license and inspect the city’s card rooms support the move, but asked councilmembers not to lax oversight any further — citing risks of loan sharking, embezzlement, follow-home robberies and gambling addictions that damage families. In 2020, San Jose voters overwhelmingly passed Measure H, a law that both imposed higher taxes on the card houses and also allowed them to expand the number of card tables they operate.
“While cardrooms remain a legal business that provides tax revenue to the city, there are negative externalities that must be managed,” Steve Slack, president of the San Jose Police Officers’ Association, said in a letter to councilmembers. “They also believe, as we do, that the City’s other oversight measures are reasonable, cost-effective and necessary.” The City Council on Tuesday unanimously agreed to lower regulatory fees for the city’s two licensed card rooms — Bay 101 and Casino M8trix — from $1 million to $857,000 per card room annually, while cutting two civilian positions in the San Jose Police Department’s Division of Gaming Control. In that same memo, councilmembers stopped short of endorsing an outright freeze on Measure H’s tax hike, which has brought in an estimated $15 million in additional revenue each year. But in 2021, the California Gambling Control Commission denied the city’s request for more tables, finding that the city’s card rooms had already reached the maximum limit imposed by state law.
San José Spotlight is an award-winning nonprofit newsroom dedicated to fearless journalism that disrupts the status quo, uplifts marginalized voices, holds power to account and paves the way for change. Meanwhile, news of the restrictions has sparked concern among people who frequent San Jose’s card rooms. Officials with the California Gaming Association have said card rooms throughout the state are preparing legal action in response to the new rules. Among the bevy of rule changes carried out in recent months, the City Council voted in August to reduce annual fees for each card room from $1 million to $857,000. “We make 85% of our revenue off player-dealer style games, and about a third of that is blackjack,” he told San José Spotlight. But Rob Lindo, vice president and director of Casino M8trix, said the new rules strike at the heart of his company’s business model.
The rules also effectively ban blackjack, along with close variants, from non-tribal casinos. New state regulations targeting so-called “player-dealer” card games could impact tax revenue the city receives from its local card rooms. City leaders say the decision rectifies sections of their gambling policy described as “duplicative” with state laws. They say it’s a necessary rebalance after the card rooms suffered a major setback at the hands of state regulators.
San Jose’s gambling industry — including the two card rooms as well as third-party companies that operate banked games — employs roughly 2,000 people, according to Lindo. The California Department of Justice said in a memo the changes are intended to close loopholes that have allowed card rooms to skirt regulations. Under California law, only casinos located on tribal land may directly operate banked games, in which the casino takes the role of the house.
Any Four of a kind or better beaten by a better hand. Nevertheless, Rodriguez said he’s willing to learn to play new games if his old favorites are suddenly taken off the table. “I don’t feel too good about taking (blackjack) out since it’s been here for so long,” Jose Rodriguez told San José Spotlight outside Casino M8trix after finishing a hot streak of play.