San Jose Cuts Cardroom Fees as California AG & Tribes Turn Up the Heat

San Jose has voted to cut annual regulatory fees for its two cardrooms, a move that comes just as California‘s long-simmering battle between the cardrooms and Native American tribes intensifies.

On August 19, the San Jose City Council unanimously approved reducing the yearly fee for Bay 101 and Casino M8trix from $1 million to $857,000 each. That will lower city revenues by $440,000.

As a way to balance the lost revenue, the council eliminated two civilian positions in the Police Department’s Division of Gaming Control. These jobs oversaw audits and license processing. The city states that other audit staff will continue this work.

City officials defended the position, saying state regulators already provide extensive oversight of cardrooms. They added that the decision corrects sections of their gambling policy described as “duplicative” with state laws.

Police leaders, while welcoming the city’s attention to efficiency, cautioned against relaxing oversight. In a letter, Steve Slack, president of the San Jose Police Officers’ Association, warned:

“With resources scarce as they are, a further reduction in fees and less oversight will reduce our ability to proactively manage risk to the community and may result in increased crime, negative social impacts and further burden our understaffed police department.”

Cardrooms Under Fire Statewide

The fee cut comes as California’s cardrooms face growing pressure from two directions.

For decades, California’s Native American tribes have argued that cardrooms infringe on their exclusive gambling rights under state compacts.

The latest chapter in the saga is a lawsuit filed by the tribes earlier this year under Senate Bill 549. The bill, signed in 2024, rectified a previous court ruling that the tribes lacked standing, enabling them to file a complaint in Superior Court to challenge whether cardrooms were violating the law by offering these games.

Earlier this month, the tribes suffered a setback. Sacramento County Superior Court Judge Lauri Damrell tentatively ruled that the Indian Gaming Regulatory Act preempts their state-law claims. Still, Judge Damrell’s ruling is tentative, meaning the tribes can appeal.

California’s Attorney General Rob Bonta has also targeted cardrooms. A few months ago, he proposed sweeping new regulations that would fundamentally change how cardrooms operate.

His proposal includes the prohibition of games resembling blackjack, restricting third-party player services, and forcing players to rotate as dealers.

Some industry estimates suggest that if implemented, the changes would cost cardrooms $464 million. Additionally, there is a potential loss of 5,000 jobs over 10 years. Many city officials, business owners, and members of the general public have voiced opposition to Bonta’s proposals.

A High-Stakes Year Ahead

San Jose’s move doesn’t put the city in open opposition to tribes or the Attorney General, but it does subtly align it with cardroom operators.

By cutting costs and loosening local oversight, San Jose is signaling its reliance on cardroom revenues. That’s a stance that multiple smaller municipalities have also supported. San Jose could also be preparing for the possibility that statewide changes could hit its budget.

As the tribes plan to appeal the recent ruling and rely on Senate Bill 549 and Bonta’s regulations, which are likely to advance, California’s gambling landscape could undergo a significant shift.