California Cities Consider Sales Tax Increase Amid New Cardroom Regulations

Potential Sales Tax Increase in Two California Cities

Two small cities located in southwest California are preparing residents for a possible sales tax increase on the upcoming June ballot. This measure is a response to newly introduced state gambling regulations and their anticipated impact on local government budgets.

Proposed 0.25% Sales Tax Increase

The cities of Commerce and Bell Gardens have announced plans to propose an increase of one-quarter of a cent on sales tax within the next few months. This comes as both municipalities face fiscal emergencies, largely due to projected losses stemming from revenue declines in their local cardrooms.

Commerce’s city manager, Ernie Hernandez, warned of the imminent threat to the city’s financial health. Bell Gardens’ city manager, Michael B. O’Kelly, emphasized the urgency of the action, stating that they are responding out of necessity to safeguard the community’s future.

Both cities rely heavily on their respective casinos — Commerce Casino and Bicycle Casino (locally known as “the Bike”), situated just outside downtown Los Angeles. These gaming establishments provide a significant source of funding that supports vital public services such as law enforcement, firefighting, road upkeep, and community programs.

In Bell Gardens, revenue from cardroom operations generates over $17 million annually, constituting more than 40% of the city’s general fund. The potential loss of even a portion of this revenue could seriously disrupt everyday municipal services.

Commerce’s mayor, Kevin Lainez, estimates that the proposed tax increase could generate at least $4.5 million; however, this would only offset a fraction of the anticipated $8 to $18 million loss the city faces under the new regulations.

Impact of New State Gambling Regulations

The concerns arise from updated rules scheduled to take effect on April 1, issued by the California Attorney General’s office. These regulations focus on so-called “California Games,” which are modified versions of traditional card games such as blackjack and pai gow poker.

Cardrooms have historically used these game formats to comply with state restrictions since house-banked games are largely limited to tribal casinos. In these games, players rotate the role of dealer instead of the house acting as the bank, with the cardroom earning through fixed fees per hand.

The new rules will enforce stricter controls. For example, the player-dealer position must rotate more frequently; failure to do so will result in the game ending. Additionally, the involvement of third-party providers who currently function as dealers will face limitations.

Marketing restrictions will also be implemented. Cardrooms will no longer be permitted to use terms like “blackjack” or “21” in advertising their games, and some familiar gameplay features will be removed.

Operators warn that these changes will slow down the pace of the games and reduce revenue. Meanwhile, state estimates predict these rules could lead to losses of tens of millions of dollars annually and result in hundreds of job cuts.

For the cities of Commerce and Bell Gardens, the implications are significant. Should cardroom revenue decline, residents may face increased tax burdens. Ultimately, voters will decide the course of action through the upcoming ballot measures.