Clovis helps financially struggling casino raise profit in hopes of a tax payoff
The Clovis City Council has passed new regulations meant to help its financially struggling casino, the 500 Club, expand with the hope it will generate more tax revenue for the city.
In November, the city will adopt a new fee structure that shifts from a percentage-based commission on gaming gross revenue to a flat rate of $35,000 per table per year. This change will provide the city with a more stable income and incentivize casinos to expand their businesses, according to a city resolution.
The proposal was brought to the council by the city’s sole licensed card room, the 500 Club Casino. Located at 771 W. Shaw Ave., the casino has faced years of declining revenue since the pandemic while paying a substantial licensing fee of up to 10% of its gaming income in recent years.
The current percentage-based licensing fee structure was adopted in January 2018, coinciding with a change in ownership of the 500 Club Casino. The percentage was 6.25% of gross gaming revenues minus promotional chips collected in the first year. It increased to 10% for the third year and thereafter.
“I think towards 2019, we started talking to the city as it was getting to 10%. Like, 6% is manageable, but 10% is a lot,” said Jarhett Blonien, legal counsel for the 500 Club. “They were like, ‘well yeah, let’s see how it goes, and then we could talk about it.’ We proposed this back in 2019, COVID hit, and then things got kind of weird.”
During the pandemic, the 500 Club reached its peak in gaming revenue and contributed $1.27 million to the city’s General Fund in fiscal year 2021-22, according to the resolution submitted to the city council.
“We had to reopen outside. It kind of forced you to shrink your operation, so you didn’t have as many amenities, such as a full kitchen or as much staff and as many tables, because it was in a tent outside,” Blonien said. “But business-wise, it was surprisingly strong, because no one had anything else to do. The entertainment options were limited. It did provide a boost during those years.”
However, as the pandemic subsided and more businesses returned, the 500 Club experienced intensified operational pressure. The particular challenges came from the reopening of its Fresno competitor, Club One Casino, which doubled its table capacity. Relocating from downtown Fresno to Granite Park on North Cedar Avenue in late 2021, Club One Casino now operates a mere three miles from the 500 Club.
Casinos also have had to deal with changes in state regulations. Last week, a regulation from the state Department of Justice proposed to ban modified versions of blackjack and other banked card games from poker rooms. Both Club One Casino and the 500 Club are offering these games, such as Spanish 21.5 and Pure 21.5.
“I know card rooms are under the gun with the Indian casinos every year. Every two years, some legislation goes through trying to tie the hands of card rooms, making their lives from difficult to impossible,” Councilmember Drew Bessinger said. “Our Indian casinos do a good business. They’re good neighbors. But there needs to be a fairness quotient here, and this is a fair action by the city to make sure that the 500 Club can stay afloat and also bring money to the city.”
The 500 Club has faced an annual revenue decline of 5%, according to the resolution.
Under the new licensing fee structure, the casinos pay a fixed rate of $35,000 per table per year to the City of Clovis. The fee would adjust every four years based on inflation. The newly added tables — Clovis is allowed to add two tables every four years in accordance with a state law that passed in 2023 — would be charged half the rate for the first four years.
The 500 Club currently has 21 tables and will generate $735,000 in annual revenue for the city’s General Fund for the next four years.
Though the casino will bring less revenue to the city in the short term compared to the previous fee structure, the rate will gradually increase as the card room expands and inflation grows, reaching $1.8 million in 20 years, staff told the council.
“This provides stability and encourages growth of the business and revenue. We would love to see all businesses grow in Clovis,” said Andrew Haussler, the city manager.
Blonien said the advantage of the new rate is flexibility. If the number of customers decreases, the 500 Club could reduce the number of tables to control the cost of licensing fees. Meanwhile, the discounted rate for adding new tables allows the casino to grow its business and enables the casino to grow its business and host poker tournaments and games that could not be held in a smaller venue.
The 500 Club is not worried about competition from Club One Casino, Blonien said. Businesses synergize, just like all the casinos are next to each other on the Las Vegas Strip, he said. Plus, Club 500 has its own distinctive selling points, he said.
“It’s smaller, more intimate. People go where they know they’re comfortable,” Blonien said. “So customer service, and the dealers they know, and people who’ve been here for a long time. They just get comfortable.”
