Two southeast Los Angeles cities proposed a sales tax increase to offset the financial impact of California’s blackjack ban, which officials said would devastate their local economies.
Commerce and Bell Gardens will both place measures on the June ballot proposing a 0.25 percentage point increase in sales tax to recoup general funds the cities would lose due to the ban.
The officials declared fiscal emergencies for their cities and decried state Atty. Gen. Rob Bonta’s decision to move forward with the ban at a news conference Thursday. The mayors for Commerce and Bell Gardens were joined by officials from both cities to announce the plan.
“The threat to our city is here,” said Commerce City Manager Ernie Hernandez.
California’s new regulations, to be enacted in April, are meant to end a legal interpretation that allowed card clubs to offer blackjack and other banked games where players play against the house. Those games are only meant to be offered in Indian casinos, but card clubs had long used designated outside dealers to get around the restriction.
Cardrooms have until the end of May to submit a plan showing how they intend to comply with the rules.
Officials said the tax measures are necessary to protect the city’s budgets.
“If we don’t act now, we risk the ability to protect the community,” said Michael B. O’Kelly, the Bell Gardens city manager. “We are acting because we must, not because we want to.”
Bell Gardens Mayor Miguel De La Rosa said cardrooms have been legal in the state for decades.
“They gave cities like ours the ability to responsibly build our budgets,” De La Rosa said. “Now, that foundation is being pulled out from underneath us.”
The ban will cause slowdowns and reductions of the city’s basic daily services, including police and fire departments, as well as senior and recreation programs, Hernandez said.
The proposed measure could recoup at least $4.5 million in Commerce, only a fraction of the expected $8-million to $18-million loss as a result of the ban, said Mayor Kevin Lainez.
Bell Garden risks losing about 40% of its general funds if the ban is enacted, O’Kelly said. About a third of those funds would be recouped by the tax increase.
Officials said Bonta refused to meet with them or address their concerns, and urged the state to take action to stop the ban from taking place.
Bonta’s office didn’t immediately respond to a request for comment.
Card club operators said the ban is an existential threat for the industry. The state has over 70 cardrooms employing about 20,000 workers. The ban could cut those jobs by half, according to the California Gambling Assn.
In Los Angeles County, cardrooms bring in more than $2 billion in economic activity and generate about 9,000 jobs, according to Los Angeles County Supervisor Hilda Solis.
The regulations are a turning point in a decades-long fight between tribal casinos and the cardroom industry.
Indian tribes retained the right to conduct Nevada-style casinos on reservations in 2000, a form of gambling that is otherwise prohibited through the state’s Constitution.
Cardrooms had since sidestepped the ban by giving players the option to take turns dealing the game and relying on third-party businesses to employ people who act as bankers.
Lainez and De La Rosa urged their constituents to pass the measure this summer.
“This is a terrible situation,” Lainez said. “We are a vulnerable community. We are a community of color, and if you look at the cardroom cities all across the state, they are also communities of color.”