San Jose officials are calling on state regulators to withdraw newly approved gambling regulations that they say could significantly disrupt the city’s finances and threaten more than 1,000 local jobs. In a letter dated Feb. 19 and addressed to Attorney General Rob Bonta, city leaders warned that the new rules governing California’s card rooms would dramatically reduce tax revenue generated by the city’s two licensed casinos, Casino M8trix and Bay 101.
According to city officials, San Jose receives approximately $30 million annually in tax revenue from its card rooms, funds that have long been factored into municipal budget forecasts. In the letter, Emily Lam, director of the city’s Office of Administration, Policy and Intergovernmental Relations, stated that any sharp decline in that revenue would force difficult decisions affecting city services, employees and residents. She cautioned that the anticipated losses would severely disrupt operations at a time when the city is already facing financial strain.
The regulatory changes, proposed by Bonta in coordination with the Bureau of Gambling Control and approved earlier this month by the California Office of Administrative Law, are scheduled to take effect April 1. The rules primarily target so-called player-dealer games, including blackjack, baccarat and Pai Gow. In these formats, players rotate in the role of the “bank,” covering payouts and collecting losses, rather than the casino directly acting as the house.
Under California law, only tribal casinos are permitted to operate traditional banked games in which the casino assumes the role of the house. State officials say the updated gambling regulations are intended to close loopholes that have allowed card rooms to operate games closely resembling prohibited banked formats. A memo from the California Department of Justice indicated the changes are designed to ensure compliance with state law and clarify enforcement standards.
Among the key provisions is a time limit on how long a single player may serve as the dealer at a table. The rules also place stricter limitations on games that closely mirror blackjack, which is not permitted in non-tribal card rooms. Games that do not involve a house, such as most poker variations, will not be affected by the changes.
Industry representatives argue that the regulations strike at the core of their business model. Rob Lindo, vice president and director of Casino M8trix, said player-dealer games account for approximately 85 percent of the casino’s revenue, with blackjack representing roughly one-third of that share. He warned that eliminating or restricting these offerings could drive customers away, reducing overall revenue and potentially leading to layoffs.
City officials echoed those concerns, noting that Casino M8trix and Bay 101 together support more than 1,000 jobs in San Jose. They argue that any economic impact would extend beyond casino operators to employees, local vendors and the broader community that depends on card room tax revenue.
The debate comes as San Jose confronts broader fiscal challenges. The city’s latest budget forecast projects a deficit ranging from $55 million to $65 million for the 2026–27 fiscal year, driven in part by slower growth in sales and property tax revenue amid a cooling local economy. City leaders have recently sought to ease local regulatory burdens on card rooms, including voting in August to reduce annual fees for each establishment from $1 million to $857,000.
Beyond San Jose, card room advocates across California have signaled opposition to the new rules. Officials with the California Gaming Association have indicated that legal action may be pursued, arguing that the regulatory changes could harm working families and communities statewide that rely on gambling-related tax revenue.
As the April implementation date approaches, San Jose officials continue to press state regulators to reconsider the scope and timing of the new gambling regulations, warning that the financial consequences for the city could be both immediate and severe.
