As San Jose leaders search for alternative revenue streams to fund city services, the City Council on Tuesday voted 10-1 to place a measure on the fall ballot to up taxes on cardrooms and third-party proposition players and expand the number of tables.
If approved by voters, the measure would increase the tax on cardrooms making at least $10,000 a year from 15 to 16.5 percent starting January 2021. The city would also impose a tax on third-party proposition player services—also referred to as “props.”
Under state law, props act like bankers in various games and operate separately from the cardroom. According to the measure, the city plans on taxing props’ monthly revenues at varying rates: 5 percent for revenues up to $25 million, 7.5 percent for revenues between $25,000,0001 and $30 million and 10 percent for revenues over $30 million.
The final portion of the measure would be to increase the total number of tables in the city by 30, or 15 per business in the city’s two cardrooms: Bay 101 and Casino M8trix. Altogether, the measure could generate approximately $15 million a year to support fire protection, disaster preparedness, 911 response, youth programs and homeless residents.
Mayor Sam Liccardo, who cast the sole dissenting vote, said that while he supported the tax increase, he was opposed to expanding the number of tables.
“I think we all know there’s many ways to gamble, certainly people can go online and gamble but there’s certainly enough studies out that demonstrate that proximity matters,” the mayor said during the virtual council session. “There are a lot of newer studies though that really help us understand some of the impacts between gambling, particularly problems with gambling and a lot of challenges we have already in the community, certainly domestic violence, suicide [and] child neglect.”
Councilman Johnny Khamis said that while he agreed with Liccardo, “gambling will happen whether it’s legalized or not.”
“Having us being able to monitor the gambling and actually use our own police force to make sure everything is being done legitimately actually helps and not hurts our community,” he said.
Dave Knopf, the assistant chief for the San Jose Police Department, told the council that the department was supportive of the ballot initiative. “I think any measure to bring additional monies into the city, especially at this time is a plus,” he said. “We don’t see any additional impacts to the PD as far as calls for service with the addition of the tables.”
Lee Wilcox, the chief of staff to City Manager Dave Sykes, said that both Bay 101 and M8trix Casino came to support the tax after extensive negotiations.
During the 2018-19 fiscal year, the current cardroom tax, which was approved by voters in 2010, generated $18.9 million in revenue.