Blackjack Rule Change Forces Tough Budget Choices in Two Cities

Two Los Angeles County cities are turning to voters after California changed the rules on blackjack at cardrooms. Commerce and Bell Gardens will ask residents in June to approve a quarter-cent sales tax increase as local officials warn of damage to city budgets and public services.

Good to Know

• Commerce and Bell Gardens will vote in June on a local sales tax increase.
• Both cities say the measure is meant to offset losses tied to the blackjack ban.
• City leaders declared fiscal emergencies and criticized Attorney General Rob Bonta.

Two Cities Turn to Tax Votes as Revenue Pressure Builds

The proposed tax increase is modest on paper, but city leaders say the budget problem behind it is not. At a March 26 news conference, officials from both cities said California new blackjack rules have put a major hole in local finances.

Bell Gardens Mayor Miguel De La Rosa said: “They gave cities like ours the ability to responsibly build our budgets. Now, that foundation is being pulled out from underneath us.”

Bell Gardens city manager Michael B. O’Kelly said the city had little room to wait. “If we don’t act now, we risk the ability to protect the community,” he said. “We are acting because we must, not because we want to.”

Commerce city manager Ernie Hernandez warned that the effect will reach daily operations. He said the rule change will slow services and force reductions. “The threat to our city is here,” he added.

Commerce Mayor Kevin Lainez said the tax increase could bring back at least $4.5 million, though that would cover only part of a projected loss of $8 million to $19 million. In Bell Gardens, O’Kelly said the city expects a 40% hit and would recover only about one-third of that amount through the tax measure.

Blackjack Rule Change Hits Long Running Cardroom Model

The new rules, which take effect this month, shut down the path cardrooms used to keep offering blackjack and other house-banked table games. Under California law, those games are reserved for tribal casinos. Cardrooms had kept them alive through Third-Party Proposition Player Services, or TPPPS, where outside providers acted as the bank.

That structure had been under attack for years. Tribal operators argued it broke their exclusivity over house-banked gaming, and state regulators have now acted in a way that cardrooms say threatens their business model. Cardrooms have until May to explain how they plan to comply.

The fight reaches beyond gaming floors. Operators say the ban puts the wider cardroom economy at risk. The industry includes more than 70 rooms and nearly 20,000 workers statewide. The California Gambling Association has said as many as half of those jobs could be lost.

In Los Angeles County alone, County Supervisor Hilda Solis said cardrooms support more than $2 billion in economic activity and around 9,000 jobs each year.

Officials in Commerce and Bell Gardens also said Rob Bonta refused to meet with them or address their concerns. They used the news conference to call on the state to stop the ban. Bonta office did not immediately respond to an effort by Gaming America to confirm that claim.

Lainez and De La Rosa urged voters to back the June measures. Lainez said the burden falls hardest on communities like theirs. “This is a terrible situation. 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.”

FAQ

Why are Commerce and Bell Gardens holding tax votes?

Both cities want a quarter-cent sales tax increase to offset revenue losses tied to California blackjack ban.

What changed under California rules?

The state closed the cardroom model that allowed blackjack and other house-banked games through outside proposition player services.

When do cardrooms need to respond?

Cardrooms have until May to say how they will comply with the new rules.

How much could Commerce lose?

Commerce projects losses of $8 million to $19 million, with the tax increase expected to bring back at least $4.5 million.

How much could Bell Gardens lose?

Bell Gardens expects a 40% revenue loss and says the tax measure would recover only about one-third of that amount.

How large is the wider cardroom industry in California?

The sector includes more than 70 cardrooms and nearly 20,000 workers, according to industry figures.

What did local officials say about the wider effect?

They said the budget hit could affect public services and land hardest on vulnerable communities of color.

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