San Jose asks voters if card room measure is worth the gamble

San Jose is betting on Measure H to boost its coffers by millions.

Measure H would increase the gross revenue tax for Bay 101 Casino and Casino M8trix to 16.5 percent from 15 percent. Officials say the ballot measure is a byproduct of legal battles between the city and Bay 101, and San Jose recently approved a settlement agreement with the card room. The tax increase would generate roughly $15 million annually to the city’s general fund.

Measure H, which needs a simple majority to pass, would also increase the total number of card tables permitted in the city to 128 from 98.

“In a time when we could really use the revenues, this is going to be really beneficial to the city,” Councilmember Raul Peralez told San José Spotlight.

The City Council voted 10-1 in August to place the measure on the November ballot, with Mayor Sam Liccardo casting the dissenting vote. Liccardo has long opposed gambling in San Jose, citing the vice for causing social problems in the city.

“This whole thing is a sellout to the card room industry,” Liccardo said. “We could (have) easily put a simple tax increase on clubrooms on the ballot. The polling showed that voters would have overwhelmingly supported it … Instead, we inserted provisions that benefit the industry.”

“Is this really our path to social and economic success?” he added. “The answer is no. Everywhere you see growth of casinos, you see the deleterious impacts.”

Bay 101 officials did not respond to requests for comment.

But not everyone is convinced that the modest expansion of gambling would be detrimental. Some elected leaders say the measure would bring crucial funding for the city as it faces massive budget deficits and cuts in service due to COVID-19, .

“We’re not talking about a huge expansion of gambling,” Councilmember Johnny Khamis said, who noted the measure would allow the two card rooms to add 15 additional tables each. “We’re (not) adding an entire establishment.”

“You’re not going to stop people from gambling. You’re not going to stop people from doing the things that they want to do,” Khamis said.

The measure would also levy a new tax on companies that provide banking services at the card rooms, which Peralez said would generate a significant portion of tax revenues. He noted some third-party providers of proposition player services have been generating revenues ranging from about $10 million to $30 million annually without needing to pay taxes.

If voters pass the measure next month, it would be the first time in a decade that card rooms in San Jose can increase the number of their tables. In 2010, voters approved Measure K which increased taxes to 15 percent from 13 percent, and increased the cap of 40 card tables to 49 per establishment. Now, Measure H would increase the number of tables permitted in each card room to 64 from 49.

The proposed tax hike and the new tax would take effect Jan. 1 if oters approve Measure H.

Robert Lindo, vice president at Casino M8trix, said Measure H would bring much needed tax revenue and jobs.

“Gambling is a legal business in California and maintaining these highly regulated businesses is crucial for the safety and well-being of the citizens of San Jose,” he said.

Lindo said the additional funding can provide support for a variety of city services such as street repair, 911 emergency response and assistance for the city’s most vulnerable people.

Khamis agrees.

“It’s a fair way of getting general fund money,” Khamis said. “It’s a win-win situation. It doesn’t affect the vast majority of the population.”

Contact Nicholas Chan at [email protected] or follow @nicholaschanhk on Twitter.