v . 0 0 5 P a g e | 1
July 28, 2026
ITEM TITLE
Gaming Operations: Amend Chula Vista Municipal Code Chapter 5.20 “Gambling” Incorporating Chula Vista Gaming Plan Provisions in Accordance with State Law
Report Number: 26-0228
Location: No specific geographic location
Department: City Manager
G.C. § 84308 Regulations Apply: No
Environmental Notice : The Project qualifies for a Categorical Exemption pursuant to the California Environmental Quality Act State Guidelines Section 15301 Class 1 (Existing Facilities).
Recommended Action
Place an ordinance on first reading amending Chula Vista Municipal Code Chapter 5.20 “Gambling” incorporating the Chula Vista Gaming Plan as an appendix in accordance with State law (First Reading).
SUMMARY
Prior to enactment of the City’s Gaming Plan in 199 6, cardroom operations were regulated by way of City ordinance. The ordinance was amended by the City Council on six different occasions between 1977 and 1995 for various reasons. The Gaming Plan created a structure under the City code where future changes would be adopted by resolution, thereby preserving local authority over cardroom operations.
Recent conversations with the California Department of Justice ’s Bureau of Gambling Control , responsible for the development of policy, regulatory oversight and enforcement of the State ’s gaming laws , have determined a need to codify the existing regulations of the City’s Gaming Plan into Chula Vista Municipal Code (“CVMC”) Chapter 5.20. This updated ordinance readopts the Gaming Plan, as amended by City Council in December 2023, as an appendi x. Subsequent amendments to the Gaming Plan shall be by ordinance as permitted by State law and the City Charter.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed project for compliance with the California Environmental Quality Act (CEQA) and has determined that the project qualifies for a Categorical Exemption P a g e | 2
pursuant to State CEQA Guidelines Section 15301 Class 1 (Existing Facilities), because the proposed project would not result in a significant effect on the environment, create a cumulative impact, damage a scenic highway, or cause a substantial adverse change in the significance of a historical resource. Thus, no further environmental review is required.
BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable.
DISCUSSION
Background
Cardrooms are one of California’s oldest forms of legal gambling with operations ranging from “mom and pop” storefronts, to larger, more sophisticated establishments. Historically, card clubs were regulated by local governments. Beginning in the mid -1980s, the State gradually increased its regulatory oversight. The stated primary purpose of this increased oversi ght by the State was to attempt to prevent criminal activity from being associated with these businesses.
In 1984, the State Legislature enacted the Gaming Registration Act, which required the Office of the Attorney General to provide uniform, minimum reg ulation of California card rooms. However, the scope of the Attorney General's authority was extremely limited, and funding was inadequate. Recognizing the need for broader oversight of California's gambling industry, the State Legislature enacted the Gambling Control Act in 1998 (Business and Professions Code §§ 19800-19987).
The Gambling Control Act developed the California Gambling Control Commission (“CGCC”) and the Bureau of Gambling Control (“Bureau”) in the California Department of Justice. The five-member CGCC, appointed by the governor, is responsible for , among other things, setting policy, establishing regulations, making determinations of suitability for gaming employees and other individuals and entities, issuing licenses, and administering the provisions of the Gambling Control Act. The Bureau is the State law enforcement authority with special jurisdiction over gambling activities within the State. The Bureau is also the entity that receives applications and fees and conducts criminal background investigations and audits.
Local governments also regulate California card clubs . Gaming interests must s ecure a gaming ordinance which then must be approved by the Bureau and CGCC . Local ordinances establish the hours of operation, table size and number, wagering limits and m ust be approved by the host jurisdiction. The regulatory activities of these agencie s are mostly funded by licensing and penalty fees collected from gaming establishments.
Card Rooms
The State of California currently has a moratorium until 20 43 on the issuance of "new" card club licenses.
With a few minor exceptions, the moratorium, which was enacted in 1995, has limited the ability of local governments to amend their gaming ordinances. The State Legislature has extended the moratorium several times over the past 20 years, most recently in 2023.
P a g e | 3
All controlled games (pai-gow, poker, etc.) and gaming activities (jackpots, bonuses, tournaments, etc.) must be approved by the Bureau and must comply with local gaming ordinances prior to their play at a licensed gambling establishment within California.
History of the Chula Vista Gaming Plan
Prior to enactment of the City’s Gaming Plan in 1995, cardroom operations were regulated by way of City ordinance. The ordinance was amended by the City Council on six different occasions between 1977 and 1995 for various reasons.
The City ordinance, codified in CVMC section 5.20.030, establishe s the number licenses authorized for issuance as a formula based on population, at the rate of one license per 40,000 residents. At the time the ordinance was last amended in 1995, this meant Chula Vista had a total of four licenses. The ordinance also established a limit of eight tables per single license, with an additional limit of 12 tables for each consolidated license (meaning two licenses under one cardroom).
The Gaming Plan concept was introduced to the City Council on November 28, 1995, because the City Attorney’s Office determined that then-pending State laws would have the effect of preempting local control by City code. By creating a structure under the City code where future changes would be adopted by resolution, the Gaming Plan preserved local Chula Vista authority over its cardroom operations. T his gave the City Council the authority to adopt or make amendments to the Chula Vista Gaming Plan by resolution after a public hearing. Under this revised structure, the initial Gaming Plan was adopted in February 1996.
In 1998, the Gaming Plan was amend ed at the request of the City Council to eliminate the issuance of additional licenses without a vote of the electorate. At that time, there were a total of four licenses issued in the City. Two were held by Chula Vista Bay Club, Inc. and two were held by Harvey Souza.
In 2000, the Gaming Plan was amended again, this time to deactivate two of the outstanding four licenses and consolidate the remaining two licenses under Mr. Souza’s ownership. This was accomplished by Mr.
Souza acquiring two licenses from C hula Vista Bay Club, Inc. and returning them to the City. Other updates in the 2000 action include: 1) expanding the hours of operation; 2) allowing additional game types; 3) increasing bet limits; 4) allowing alcohol service ; 5) increasing license fees; 6 ) enhancing employee screening; and 7) allowing backline betting with enhanced security requirements.
In 2009, consistent with State law changes, the maximum number of gaming tables allowed increased from 12 to 16.
In 2012, again consistent with State law changes, the maximum number of gaming tables allowed increased from 16 to 18.
In 2015, again consistent with State law changes, the maximum number of gaming tables allowed increased from 18 to 20. Other changes included increas ing the number of tables that could operate as “Class II” or “Class IA” tables (allowing “backline” betting and other “higher stakes” games ) to 15. In consideration of these changes , the Village Club Card Room, managed by Harvey Souza , agreed to increase the quarterly license fees from $5,000 to $7,100 per table. These changes, and others, were requested and granted in anticipation of the Village Card Room moving its operations from 429 Broadway to a new establishment at 271 and 285 Bay Boulevard, now known as the Seven Mile Casino. An Operating Agreement was also entered P a g e | 4
into to implement the license fee increase in consideration of a five-year “vesting” of operations under then- applicable Gaming Plan regulations.
In 2019, Gaming Plan was amended again, increasing the maximum number of gaming tables from 20 to 26 and increasing the number of players allowed at the 15 “backline” betting tables from 16 to 24 per table. In consideration of these changes, the quarterly license fee per table increased from $7,758 to $9,000 for fiscal year 2019-20, increasing to $9, 540 for fiscal year 2020 -21, including a conversion to a percentage rate formula upon the opening of a resort hotel on the Bayfront. The operator also received a five-year operating agreement with the option to extend for an additional five years upon the opening of a resort hotel on the Bayfront.
In 2023, changes to State law required amendments to the City’s gaming ordinance and the Gaming Plan in order for Seven Mile Casino to realize the 2019 approval of increased tables. The amendment to the ordinance allowed Seven Mile Casino to hold more than two licenses in one location by clarifying that, upon a licensee’s acquisition of a second license, the two licenses shall be deemed consolidated. Upon acquisition of a thir d license, the first two licenses continue to remain consolidated, but the third license shall not be consolidated. Upon acquisition of a fourth license, the two sets of licenses shall both be deemed consolidated into two pairs.
History of Village Club Card Room (now Seven Mile Casino) Ownership and Operations The Village Club Card Room operated at 429 Broadway from 1946 until 2015. Harvey Souza managed the business from 1963 to 2015. In 2015, the Village Club Card Room moved its operations to a 20 -table cardroom located at 271 and 285 Bay Boulevard. The relocated business was renamed “Seven Mile Casino”.
On March 3, 2015, the City Council approved Resolution 2015 -057, ratifying Chief Bejarano’s approval of Stone Chula Vista Holdings, LLC members ’ “financial interests” in Village Club Card Room’s license after reviewing their applications and conducting background checks. The Stone Chula Vista Holdings, LLC members were told they would need to re -apply for approval with the Chief of Police if and when they proposed to exercise their option and obtain a direct interest in the cardroom license. In 2016, the Stones South Bay Corp. exercised its option and entered into agreements to purchase 100 percent of Seven Mile Casino from VC Inc., conditioned upon approval of the State Gambling Commission and the City.
In February 2017, the City Attorney’s Office reviewed the transfer and ownership documents in connection with this transaction and found no issues of concern in its review. The Police Department reviewed and approved the Seven Mile Casino security plan, financial interests, experience and expertise to operate a cardroom in accordance with State gaming laws and approved of the transfer.
On March 23, 2017, the State Gambling Commission issued a Temporary State Gambling License to Stones South Bay Corp. and approved the transfer of the interests in Seven Mile Casino from VC Inc. to Stones South Bay Corp. The State Gambling Commission’s approval was preceded by a substantial due diligence review of Stones South Bay Corp. principals including review of the various financial and ownership interests of the principals and entities involved in the transfer, and confirmation of compliance with the Business and Professions Code.
P a g e | 5
In 2019, the City Council approved a five-year operating agreement with Seven Mile Casino and in 2025, the City Council approved a one -year operating agreement with Seven Mile Casino with up to four, one -year extensions absent any changes in State law that alter their current business operations.
Ordinance Update
The CGCC has reviewed and approved the City’s ordinance as compliant with the Gambling Control Act 24 times between 2001 and 2023. In the latest State license renewal, the CGCC raised concerns about the City’s Gaming Ordinance and gaming plan for the first time.
The City Attorney’s office prepared amendments to the City’s gaming ordinance (CVMC Chapter 5.20) addressing the concerns raised by the CGCC. These include cl arifying that a gambling establishment operating under two consolidated licenses may operate a maximum of 20 tables, and that if four licenses are issued, the maximum number of tables permitted citywide shall be 40. In addition, the proposed revisions incorporate the Gaming Plan, as amended by City Council in December 2023, as an appendix to the Ordinance.
The proposed amendments were submitted to the Bureau for review in compliance with Business and Professions Code section 19961.1 and in light of the rest rictions and limitations contained in the Gambling Control Act.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware, and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
There is no current-year fiscal impact as a result of this action.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact as a result of this action.
ATTACHMENTS
1. CVMC Chapter 5.20 – Redline version
2. Gaming Plan – Redline Version
Staff Contact: Tiffany Allen, City Manager
Roy Sapa’u, Deputy City Manager/Director of Development Services Adrianna Relph, Special Projects & Legislative Manager