San Jose casinos could lose a big bet
Casino M8trix, one of two card rooms in San Jose, is pictured in this file photo.

    A San Jose ballot measure on gambling is turning into a one-way benefit and none of it’s going to the casinos as originally intended.

    San Jose voters approved Measure H in 2020, allowing the city’s two casinos—Bay 101 and Casino M8trix—to add more tables in exchange for paying higher taxes. Since the measure passed, the state has squashed the decision to add more tables twice, but the card rooms are still paying additional taxes.

    Now a state ban threatens any expansion for the next 20 years.

    The state Legislature approved Assembly Bill 341 this week, which prevents new card rooms from opening and existing ones from expanding, with some exceptions. If Gov. Gavin Newsom signs it into law, the ban would expire Jan. 1, 2043.

    Measure H promised voters a maximum of 128 tables—64 between both card rooms—when the San Jose City Council voted to place the measure on the November 2020 ballot. That’s an increase of 15 tables each. If AB 341 becomes law, it will cap the expansion to 10 per casino.

    The bill contains an amendment to exempt San Jose from the ban, but it’s not clear if the California Gambling Control Commission will allow the expansion. The commission denied the city’s request for more tables in 2021, and again on April 20 of this year.

    Bay 101 sued the commission in response, but General Manager Ron Werner is hopeful about the AB 341 exemption.

    “The author of the bill assured us that he felt the language was sufficient to (allow San Jose to expand),” Werner told San José Spotlight. “We’re optimistic for the future.”

    Still, his casino is in litigation with the state. Because of that, gambling commission spokesperson Fred Castano said he couldn’t comment on the potential impact of AB 341. San Jose is likely to reapply for more gaming tables, “so we can’t say anything that may pre-judge that application,” Castano added.

    Representatives for Casino M8trix declined to comment.

    San Jose Councilmember Dev Davis, who sits on the California Cities Gaming Association, said the city attorney “carefully crafted” the wording on Measure H to comply with state law.

    “Our city lobbyists have worked hard to ensure the measure is fully and appropriately recognized at the state level and will continue working towards that end,” Davis told San José Spotlight. “This measure was important for San Jose, because this new revenue goes to the general fund and helps provide services for all our residents, especially our most vulnerable.”

    Still paying taxes

    Measure H increased the gross revenue tax for the city’s two card rooms to 16.5%, estimated to bring in $15 million annually.

    Derrick Seaver, CEO and president of the San Jose Chamber of Commerce, said the tax should not be collected since the casinos still haven’t gotten the tables they and voters were promised.

    “It should be one or the other. If the position is the state moratorium is going to prevent them from expanding, then the city should stop collecting the taxes,” Seaver told San José Spotlight. “It keeps things in good faith and fair.”

    He said while Measure H may only affect the local casinos, the city’s actions send a bad message to the business community at large.

    “One of the things that business relies on significantly is consistency (with the city),” Seaver said. “This potentially sends a message that in certain areas, consistency is not there, and that will have a chilling effect on business.”

    Contact Jana Kadah at [email protected] or @Jana_Kadah on Twitter.

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