Casinos In San Jose Face Challenges; Expansions Thwarted, Taxes Racking Up

Casinos In San Jose Face Challenges; Expansions Thwarted, Taxes Racking UpSource: Wikipedia / Cristiano Tomás
Tony Ng
Published on May 20, 2023

San Jose's Bay 101 and Casino M8trix find themselves in a predicament as, despite having Measure H approved back in 2020 promising expansion of their gaming tables and increased taxes, a potential state ban may now prevent expansion while the tax hike continues unabated according to San José Spotlight. Measure H had initially aimed to allow the two casinos to add more tables in exchange for paying higher taxes, attempting to increase the city's revenues; however, the state has twice squashed the decision while the casinos still pay the additional taxes.

In a concerning development, this week the state Legislature approved Assembly Bill 341, which prevents new card rooms from opening and existing ones from expanding, with some exceptions as reported by San José Spotlight. Should Governor Gavin Newsom sign this bill into law, it would hinder the envisioned expansion plans for Bay 101 and Casino M8trix for the next 20 years, capping their expansion to only 10 tables per casino instead of the 15 initially promised in Measure H. Despite containing an amendment that exempts San Jose from the ban, the fate of the casinos' expansion remains uncertain, as the California Gambling Control Commission has not made it clear whether it will allow it.

As San Jose's struggle for expansion dates back to 2020, other concerns arise. Casino M8trix filed a lawsuit against the city of San Jose in early 2021, seeking to have the Santa Clara County Superior Court invalidate Measure H and rule it unenforceable, arguing that it may be invalid as per Mercury News. The California Bureau of Gambling Control allegedly concluded that the city's plan to expand the number of card tables violated state law. If the card room's request for additional tables is deemed illegal, Casino M8trix contends that the tax hike should be voided as well.

Despite this ongoing legal battle, Derrick Seaver, CEO and president of the San Jose Chamber of Commerce, believes that the tax collection should cease until the casinos have their desired tables as mentioned in San José Spotlight. In his view, it would maintain good faith and fairness between the casinos and the city. Furthermore, Seaver points out that this situation sends a negative message to the larger business community regarding consistency with the city, potentially having a chilling effect on business.

This tax hike and expansion matter has been polarizing since its inception, with San Jose Mayor Sam Liccardo opposing Measure H due to potential social impacts as reported by CBS News. The mayor argued that child neglect and domestic violence issues could arise from increased gambling, believing that social costs would outweigh the revenue gains. On the other hand, Councilmember Raul Peralez, whose district includes the two card clubs, supported Measure H, stating that the extra revenue was crucial for funding city services, including police and fire services, road maintenance, and parking enforcement.

While the outlook for San Jose's casinos remains uncertain, the fact remains that they are paying higher taxes without seeing the expansion they had anticipated, noted by San José Spotlight. As the state and city navigate these thorny legal and regulatory issues, the future of these two casinos and their impact on the business community hangs in the balance. With no clear resolution in sight, one can only hope that a fair and mutually beneficial outcome is achieved for both the casinos and the city of San Jose.