San Jose tries to save poker rooms by joining a casino union

Jon Pill
Posted on: January 12, 2021 05:32 PST

The city of San Jose has joined the California Cities Gaming Authority in an effort to protect its casinos, which have suffered badly from the effects of 2020.

The CCGA is not exactly a regulatory body, despite the name. Instead, it is a Joint Powers Authority, a kind of city-level union into which cities can opt. Membership comes with responsibilities, but it mostly allows the cities to co-ordinate their ordinance against the state regulators. San Jose hopes that joining will help to save the Bay 101 and the M8trix, its two major casinos.

Although membership costs $30,000 a year. It is well worth it to preserve the ~$25 million per (non-COVID) year the casinos bring in.

The San Jose Spotlight reported Bena Chang, assistant to San Jose City Manager, as saying: “The bottom line for us is that card rooms really do provide the city with some needed revenue that goes into our general fund and provides basic city services.”

Cards against humanity

California's shutdowns have hit the casino industry, along with most of the hospitality industry, hard. When the state first lifted its lockdown, casinos jumped at the chance to open again with outdoor seating and plexiglass screens. Just a few months later they were told to put the new equipment away as Southern California hunkered down against yet another wave of COVID.

After being closed for 8 months of last year, Rob Lindo, vice-president of Casino M8trix, explained they had lost "approximately 65% of our revenue. We spent hundreds of thousands of dollars preparing COVID-19 prevention protocols, purchasing cleaning supplies, masks, gloves, face shields, tents and temperature screening technology so we could operate the card room and restaurant outdoors."

But all to no avail.

The CCGA is lobbying the State Bureau of Gaming Control to nix a pair of rulings that could hit Californian casinos' income hard.

The two rulings are intended to remove the loopholes in a California law that states that "banked card games – games where the casino has a stake in the outcome – are not allowed outside of tribal casinos."

This gives tribal casinos a monopoly on the standard versions of games like blackjack and baccarat.

Californian casinos have long taken the route of offering these card games using a model based on the old mid-20th Century style of baccarat play. In this format one player acts as the "house" and other players bet against them. The house rakes the hands or charges per seat, much like at a poker table.

To complete the loophole, the casino's dealer is allowed to step in as the "house" if no player wishes to take the role. One of the new rulings would require games like this to break up if a player refuses the role as "house." The other would fully ban any game that is " too similar to 21/Blackjack."

Lindo expressed his concerns about the new interpretation of the law. He said, "We are absolutely concerned about any changes to the current and long-standing laws and regulations governing how games operate in California card rooms such as ours. The player-dealer style games offered in California card rooms have been deemed legal and attempts to change those rules pose a serious threat to our business and its continued viability."

The CCGA and Lindo are counting on their cities' reliance on their tax income to have the cities help lobby the state on the casinos behalf. Doing so may save the Bay 101 and M8trix casinos.

But it might push the focus of these cardrooms away from poker, towards more profitable table games. And it could have longer-term impacts on the profit of and relationship with tribal-casinos.

Either result would prove yet another unfortunate and unexpected consequence of COVID.

Featured image source: Flickr