Rancho Cordova puts tax on card rooms to voters

The city of Rancho Cordova is asking voters in November's election to approve a first-in-the-county tax on the gross gambling revenues for card rooms.

The city drafted the ballot measure primarily to achieve consistency in payments by each of the two card rooms in the city, said Vice Mayor Linda Budge.

"It's really a good compromise for all parties," Budge said last week. "The city and the residents get revenues and we've done it in a manner that is the least onerous" to casino operators.

The council, in a 4-1 vote July 16, approved the ballot measure. If approved by voters, the city would tax card rooms' gross gambling revenues at 2 percent starting in January 2014.

The next year, under the language of Measure L, the city would impose a tax of 3 percent on a casino's first $5 million and 4 percent on revenues above $5 million.

Rancho Cordova's card rooms – Rancho's Club Casino on Folsom Boulevard and Cordova Casino on Prospect Park Drive – are among nine card rooms in Sacramento County.

The rate the council ended up bringing to voters is less than what it previously approved in June: a tax rate of up to 5 percent on gross gambling revenues. That tax rate drew an emotional appeal from the owners of Rancho's Club Casino, an online review of the meeting shows.

"Rancho's club cannot afford this tax," said Veronica Marquez, whose parents began operating the casino in 1987. "We'll be forced to close its doors and 22 employees will go unemployed."

She and her father, Ruben Marquez, asked for a delay in imposition of the tax until 2015.

"The 5 percent would have been terrible," Ruben Marquez said later. "It would have possibly killed both card rooms and there would have been no money for the city.

"So it was a good decision from the City Council. That may save us."

Councilman Ken Cooley, the lone dissenter in last week's decision, argued unsuccessfully to let the higher, 5 percent, tax go before voters as planned. That would give future councils greater flexibility to collect any amount below that rate, he argued.

Other cities charge more, he noted. The city of Lodi taxes its card room at 9 percent. And the card room tax in San Jose is 15 percent, up from the 13 percent collected until voters in 2010 approved an increase.

Card room tax collections are estimated at $15.3 million for the current fiscal year, a spokesman for the city of San Jose reported.

Other cities that tax gambling revenues include Fresno, which has a progressive tax that starts at 9 percent and can rise to 13 percent, Assistant City Manager Joe Chinn said. Emeryville's tax is 9 percent; and Stockton's tax is 2.5 percent.

The Rancho Cordova measure, if it wins approval, will generate about $140,000 for the city in 2014 and an estimated $210,000 in 2015.

Other card rooms in Sacramento County are not taxed on gambling proceeds.

Folsom has one card room; Citrus Heights has two. And the city of Sacramento has four. The Sacramento City card room operators pay $250 per table each calendar quarter.

Meanwhile, owners of the two Rancho Cordova card rooms have been discussing consolidating locations.

Cooley said he is concerned that the lesser rate could lead to expansion of gambling interests in the city.

"I'm not an opponent of gaming," Cooley said.

But he expressed concern about "a major move to grow and consolidate gaming in Rancho Cordova."

"The (ballot measure) was written to make the gamers happy," he said.

• Read more articles by Loretta Kalb

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