SJ-MC tit. 16, ch. 16.38 — RESTRICTIONS ON CONTRACTING, EMPLOYMENT, INTERESTS IN BUSINESS, LICENSING, AND FINDER'S FEES | San José Municipal Code (Supp. No. 5: codified through Ordinance No. 31341, enacted August 25, 2026) — San Jose

San José Municipal Code § 16.38.010 Restrictions on contracting with or employment of specified persons.

16.38.010 - Restrictions on contracting with or employment of specified persons. A. As used in this Chapter, the term contract or agreement refers to any contract or agreement for goods or services of any kind or nature whatsoever. B. A Cardroom Permittee, Stock Owner Licensee, or Employee shall not enter into any contract or agreement with a person whose license under this Title has been denied, suspended or revoked or with any business enterprise under the control of that person. C. A Cardroom Permittee, Licensee or Employee shall not employ or enter into any contract or agreement with a person whose license or permit under this Title has not yet been issued unless that contract has a condition precedent that any performance by either party under the contract of any activity for which a license or permit is required under this Title cannot commence unless and until the license or permit is issued. D. A Cardroom Permittee, Stock Owner Licensee, or Key Employee shall not employ or contract with any person in any capacity for which he or she is required to be licensed under this Title if the person has been denied a license or work permit, or if his or her license or work permit has been suspended or revoked. E. A Cardroom Permittee, Stock Owner Licensee, or Key Employee shall not enter into any contract or agreement with any person whose application for a license under this Title has been withdrawn with or without prejudice, or with any business enterprise under the control of that person, for the period of time during which the person is prohibited from filing a new application for licensure. F. If an Employee who is required to be licensed pursuant to this Title fails to apply for a license within the time specified by this Title, is denied a license, or has his or her license revoked, the Employee shall not be employed or used in any capacity in which he or she is required to be licensed and he or she shall not be permitted to exercise any influence over the operation of the Permitted Cardroom or the Gambling Operation taking place at the Permitted Cardroom, or any part thereof. G. If an Employee who is required to be licensed or permitted pursuant to this Title has his or her license or work permit suspended, the Employee shall not be allowed to perform any services in any capacity in which he or she is required to be licensed or permitted and shall not be permitted to exercise any influence over the operation of the Permitted Cardroom or the Gambling Operation taking place at the Permitted Cardroom, or any part thereof, during the period of suspension. H. If the Cardroom Permittee or Stock Owner Licensee designates another Employee to replace the Employee whose employment has been terminated pursuant to this Section, the Cardroom Permittee or Stock Owner Licensee shall require the newly designated Employee to apply for a license. I. A Cardroom Permittee or Stock Owner Licensee shall not pay to a person whose employment or services have been terminated pursuant to this Title any remuneration for any service performed in any capacity in which the person is required to be licensed or permitted, except for amounts due for services rendered before the date of service of the statement of decision or before the date that a notice of regulatory action becomes a final decision. J. A Cardroom Permittee or Stock Owner Licensee shall not pay a person whose license or work permit under this Title has been suspended any remuneration for any service performed during the period of suspension in any capacity in which the person is required to be licensed, except for amounts due for services rendered before the date of service of the statement of decision to suspend the license or before the date that a notice of regulatory action to suspend the license becomes a final decision. K. Except as provided in this Section, a contract or agreement for the provision of goods or services to a Cardroom Permittee or for the conduct of any activity at a Permitted Cardroom, which is to be performed by a person required by this Title to be licensed or permitted, shall be terminated upon service of the statement of decision suspending or revoking that person's license or work permit or upon the date the notice of regulatory action suspending or revoking that person's license or work permit becomes final. L. In any case in which a contract or agreement for the provision of goods or services to a Cardroom Permittee, or for the conduct of any activity at a Permitted Cardroom, is to be performed by a person required by this Title to be licensed or permitted, the contract or agreement shall be deemed to include a provision for its termination without liability on the part of the Cardroom Permittee or Stock Owner Licensee upon service of the statement of decision suspending or revoking that person's license or work permit or upon the date the notice of regulatory action suspending or revoking that person's license or work permit becomes final. M. In any regulatory action brought under this Title or in any judicial action brought by the City to terminate a contract pursuant to this Section, it shall not be a defense that the contract or agreement does not expressly include a termination provision described in this Section, and the lack of express inclusion of the provision in the agreement shall not be a basis for enforcement of the contract or agreement by a party thereto. N. In the case of an applicant for a license or work permit, the prohibitions in this Section are effective immediately. Except as otherwise provided in a cease and desist order under Section 16.34.300, et seq., in the case of a suspension or revocation of a work permit or Licensee, these prohibitions are effective upon the service of the Cardroom Permittee of the statement of decision to suspend or revoke the license or work permit, or upon the date that a notice of regulatory action to suspend the license becomes a final decision. O. The restrictions in Subsections B. and E. shall not apply to personal contracts or agreements unrelated to the Cardroom and/or Cardroom Operations if the Cardroom Permittee, Stock Ownership Licensee, Employee or Key Employee provides the Administrator with a copy of the executed contract or agreement ten (10) Business Days prior to the earliest date performance is due under the executed contract or agreement for the purpose of determining whether the contract or agreement meets the requirements of this Section. (Ords. 28517, 30616.)

San José Municipal Code § 16.38.020 License application denial and revocation; interest in business.

16.38.020 - License application denial and revocation; interest in business. A. With regard to any person who has had his or her license application denied or his or her license under this title revoked, all of the following shall apply: 1. Except as provided in this section, the person shall not be entitled to profit from his or her investment in any business that has applied for or been granted a license or that holds a cardroom permit under this title. 2. The person shall not retain his or her interest in a business that has applied for or been granted a license or that holds a cardroom permit under this title beyond a period to be prescribed by the administrator. 3. The person shall not accept more for his or her interest in a business that has applied for or been granted a license or that holds a cardroom permit under this title than he or she paid for it, or the market value on the date of service of the statement of decision to revoke the license or upon the date the notice of regulatory action to revoke the license becomes final, whichever is higher. B. Nothing in this section shall be construed as a restriction or limitation on the powers of the administrator or chief of police as specified elsewhere in this title. (Ord. 28517.)

San José Municipal Code § 16.38.030 Restrictions on licensing.

16.38.030 - Restrictions on licensing. Any person whose license has been denied or revoked pursuant to this title or whose application for a license has been withdrawn with prejudice shall be disqualified from reapplying for any license or work permit for a period of seven years from the date of the final administrative decision denying or revoking the license or withdrawing the application for a license with prejudice or from the final judicial adjudication thereof, whichever is later. (Ord. 28517.)

San José Municipal Code § 16.38.040 Restrictions on finder's fees.

16.38.040 - Restrictions on finder's fees. A. The term "finder's fee" means any compensation in money in excess of the sum of five thousand dollars, or real or personal property or anything of value that is valued in excess of the sum of five thousand dollars which is paid or transferred or agreed to be paid or transferred to any person in consideration for the arranging or negotiation of an agreement for any of the following purposes: 1. The acquisition of an interest in a cardroom, gaming establishment or registered company; or 2. To finance the gaming operations of a cardroom or licensed gaming establishment; or 3. To provide goods or services to the cardroom permittee; or 4. To secure the services of a key employee. B. The term "finder's fee" shall not include: 1. Compensation to a financial source. 2. Normal and customary compensation to employees of the cardroom permittee for negotiating or arranging financing for the cardroom permittee if negotiating and arranging financing is part of their normal duties. 3. Normal and customary payments for bona fide professional services rendered by lawyers, accountants, engineers, appraisers, or other licensed professionals. 4. Underwriting discounts paid to a member of the National Association of Securities Dealers, Inc. 5. Normal and customary payments for bona fide services rendered by human resource and executive search firms. C. No cardroom permittee, licensee, employee, funding source, funding source owner, funded player or funding source employee shall allow, permit or suffer the payment of any finder's fee without the prior approval of the chief of police, acting upon a recommendation of the administrator based upon an application on forms prescribed by the administrator. An application for approval of payment of a finder's fee shall make a full disclosure of all material facts. The chief of police may deny any such application if the person to whom the finder's fee is proposed to be paid does not demonstrate that he or she is suitable to hold a license under this title or if payment of the fee is otherwise inconsistent with the public interest and the policies of this title. (Ord. 28517.)