In Depth:
Measure H, if approved by a majority of the voters, would enact an ordinance amending the San José Municipal Code to increase the rate of the current cardroom tax, add a new tax on the gross revenues of funding sources that is defined to include third-party providers of proposition player services (“TPPPS”), and increase the number of card tables in the City. A TPPPS, under contract with a cardroom, banks the games offered and may cover the payment of bets, since cardrooms are prohibited under California law from banking the games.
The increased cardroom tax and the new tax imposed on gross revenues of Funding Sources are general taxes which means the tax revenues may be used for any general governmental purpose.
Measure H would increase the cardroom tax rate on gross revenues of the cardrooms from 15% to 16.5%, and adds a new tax on the gross revenues of fundings sources at one of the following rates:
- 5% for total annual gross revenues up to $25 million
- 7.5% for total annual gross revenues between $25 million and $30 million
- 10% for total annual gross revenues greater than $30 million
For example, a funding source’s total annual gross revenues of $35 million would be taxed at a rate of 10% on the entire $35 million, leading to tax owed of $3.5 million. Measure H would increase the number of card tables in city cardrooms by 30 (15 tables per cardroom), bringing the total number of card tables in San Jose to 128 (64 in each of the two cardrooms in the City). Currently, only 98 tables are allowed in the City (49 at each of the two cardrooms).
If approved, the measure would go into effect on January 1, 2021 and remain until repealed by voters or suspended in whole or in part by the City Council.
Source: City Attorney's Impartial Analysis of Measure H
