San Jose is asking voters if measuring card area is well worth the gamble

by Nicholas Chan
October 21, 2020

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

Measure H would increase gross income tax for Bay 101 Casino and Casino M8trix from 15 percent to 16.5 percent. Officials say the election move is a by-product of litigation between the city and Bay 101, and San Jose recently approved a settlement agreement with the card room. The tax hike would raise approximately $ 15 million annually to the city’s general fund.

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

“At a time when we could really use the proceeds, it will be of great benefit to the city,” Councilor Raul Peralez told San José Spotlight.

The city council voted 10-1 in August to include the measure in the November election, with Mayor Sam Liccardo voting against. Liccardo has long spoken out against gambling in San Jose and cited the vice for causing social problems in the city.

“This whole thing is a sell-off for the card room industry,” Liccardo said. “We could easily have put a simple clubroom tax hike on the ballot. The poll found that the majority of voters would have supported this … Instead, we’ve included provisions that benefit the industry.”

“Is that really our path to social and economic success?” he added. “The answer is no. Anywhere you see casino growth, you see its harmful effects.”

Bay 101 officials did not respond to requests for comment.

But not everyone believes that modest expansion of gambling would be a disadvantage. Some elected leaders say the move would bring crucial funding for the city as it faces massive budget deficits and service cuts due to COVID-19.

“We’re not talking about a huge expansion of gambling,” said councilor Johnny Khamis, who noted the move could add 15 additional tables to the two card rooms. “We’re (not) adding an entire facility.”

“They are not going to stop people from playing. They are not going to stop people from doing the things they want to do,” said Khamis.

The measure would also impose a new tax on companies providing banking services in the card rooms, which Peralez said would generate a significant portion of tax revenue. He found that some third-party proposition player service providers have made between $ 10 million and $ 30 million a year in revenue without paying taxes.

If voters pass the measure next month, it will 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 from 13 percent to 15 percent and raised the cap from 40 card tables to 49 per facility. Now Measure H would increase the number of tables allowed in each card room from 49 to 64.

The proposed tax increase and the new tax would take effect January 1, if voters 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 this highly regulated business is vital to the safety and wellbeing of San Jose citizens,” he said.

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

Khamis agrees.

“It’s a fair way to get general fund money,” said Khamis. “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.

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