Bay101 Casino, City Of San Jose Settlement Could Lead To Gambling Expansion

Posted on October 1, 2020 - Last Updated on October 7, 2020

After nearly a decade, the city of San Jose has worked out a Bay101 lawsuit settlement. The deal between the cardroom and the city increases the cardroom’s operating costs in one way, but also opens the door for it to collect more revenue.

Part of that will be up to the city’s voters, however. The settlement also brings the city more into line with state laws on gambling.

Details of the Bay101 lawsuit settlement with San Jose

On Sept. 22, the San Jose City Council approved the terms of the settlement 10-1. As part of the deal, Bay101 will drop its lawsuits against the city, one of which arose all the way back in 2013.

At the heart of the suit were fees  the city levied upon the cardroom. Bay101 deemed them “unconstitutionally excessive,” especially given the limits that the city placed upon its business.

In 2015, a superior court judge disagreed. That court ruled that the fees, which hit over $786,000 in 2006, were not arbitrary or excessive in comparison to the standards set forth by state law.

Unlike California cardrooms in other cities, San Jose did not allow jackpots, limited the number of tournaments the cardroom could offer, and banned ownership of more than one cardroom.

The settlement could change all of that.

The city council will consider amending its gambling laws, including allowing owners to play at tournaments hosted by the facilities they own. In exchange, the cardroom will drop its resistance to ever-escalating fees levied by the city.

For example, Bay101 will pay $250,000 in 2021 to problem gambling treatment programs. That annual amount will increase by 3% each year as well.

The biggest potential change is on the ballot for San Jose residents this November, however. If voters approve, it could offset the fees.

How will San Jose residents vote in the fall?

Currently, San Jose limits Bay101 to 49 tables. The ballot measure would increase that number to 64 if it passes. That could mean hundreds of thousands of dollars in new revenue.

Additionally, if the city does increase the number of tournaments and allows jackpots, that should help Bay101 keep those tables full. That will be paramount to the cardroom’s future.

The settlement did not include any cessation of fees or slowdown to annual increases of the fees, so the opportunity to bring in more revenue is crucial for Bay101.

The option to possibly open other locations in the city could help as well.

Much of the future of this situation remains up in the air, but the current composition of the city council seems to be favorable to gambling interests.

On top of voting for the settlement, the city approved plans for the cardroom to operate in a new outdoor venue earlier this month.

What’s certain is that Bay101 won’t appeal its lawsuits. The rest of the circumstances are up to the council and the city’s voters this fall.

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Derek Helling

Derek Helling is a freelance journalist who resides in Kansas City, Mo. He is a 2013 graduate of the University of Iowa and covers the intersections of sports with business and the law.

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