San Jose officials are urging California regulators to rescind new rules for the state’s card rooms, warning of dire economic fallout if restrictions take effect as planned in the coming months.
In a Feb. 19 letter sent to Attorney General Rob Bonta, city officials warned the regulations, which set stricter rules for certain types of gameplay, would devastate San Jose’s two card rooms — as well as the city’s finances. San Jose officials said the city takes in roughly $30 million in annual tax revenue from the casinos, known as Casino M8trix and Bay 101.
“The regulations would dramatically reduce the tax revenue that the city receives from its licensed cardrooms, forcing cuts that would affect both City employees and the residents who rely on these vast services,” Emily Lam, who directs the Office of Administration, Policy and Intergovernmental Relations, wrote in the city’s letter. “The City of San Jose has included this revenue in budget forecasts for years, and any loss of revenue would severely disrupt city operations.”
Bonta, along with the Bureau of Gambling Control, proposed the changes, which were approved by the California Office of Administrative Law earlier this month. The changes begin to take effect April 1.
The new regulations target so-called “player-dealer” card games — such as blackjack, baccarat and Pai Gow — in which players, rather than the casino, act as the “bank,” paying winners and collecting from losers. Under California law, only casinos located on tribal land may directly operate banked games, in which the casino takes the role of the house.
Among the changes, the rules impose a time limit on how long one player may hold the role of dealer at a table. The rules also effectively ban blackjack, along with close variants, from non-tribal casinos. Games that do not have a house, like many varieties of poker, will not be affected.
The California Department of Justice said in a memo the changes are intended to close loopholes that have allowed card rooms to skirt regulations.
But Rob Lindo, vice president and director of Casino M8trix, said the new rules strike at the heart of his company’s business model.
“We make 85% of our revenue off player-dealer style games, and about a third of that is blackjack,” he told San José Spotlight.
The front entrance for Casino M8trix, one of San Jose’s two licensed card rooms. (Keith Menconi/San José Spotlight)
Without blackjack, among the most popular draws for card rooms, and with the new restrictions for player-dealer games, Lindo predicts casinos could lose customers. In turn, Lindo said the card rooms may be forced to respond with layoffs.
San Jose’s gambling industry — including the two card rooms as well as third-party companies that operate banked games — employs roughly 2,000 people, according to Lindo.
“It will definitely involve a downscaling,” Lindo said. “We really believe that people need to be aware that this threat is coming within the next five-to-six months.”
Bay 101 declined to comment.
The expected loss of tax revenue would hit San Jose when it is already struggling financially. The city’s latest budget forecast projects a $55 million-to-$65 million deficit for fiscal year 2026-27, as a lagging local economy has slowed revenue from sales and property taxes.
San Jose leaders had already been pushing to relax local regulations imposed on the city’s card rooms. Among the bevy of rule changes carried out in recent months, the City Council voted in August to reduce annual fees for each card room from $1 million to $857,000.
Outside of San Jose, card room advocates are rallying opposition to the pending regulatory crackdown. Officials with the California Gaming Association have said card rooms throughout the state are preparing legal action in response to the new rules.
“Attorney General Bonta and the Bureau (of Gambling Control) have unilaterally implemented extreme regulatory changes that will harm thousands of working families and the dozens of California communities that depend on cardroom taxes,” California Gaming Association President Kyle Kirkland said in a statement.
Bonta’s office did not respond to a request for comment.
Contact Keith Menconi at keith@sanjosespotlight.com or @KeithMenconi on X.