California gambling regulators have delayed making a decision on whether to renew the license of San Jose cardroom Casino M8trix. The cardroom’s license is set to expire on May 31 but what would ordinarily be a routine proceeding was thrown out of whack earlier this month after the state attorney general accused M8trix’s owners of skimming tens of millions of dollars in profits in order to reduce their tax obligations and social program contributions. (Details of the accusations can be found here.)
M8trix owners Eric Swallow, Peter Lunardi and Jeanine Lunardi have been accused of improperly steering millions of dollars earned by the cardroom’s 49 tables to limited liability corporations also owned by the trio. The payments were listed as expenses, although the Bureau of Gambling Control claims there is scant evidence that these corporations provided much of anything in the way of services or materials. The trio has denied any wrongdoing but an administrative law judge is expected to consider the accusations at some future date.
The payments allowed M8trix to effectively reduce its annual profits to zero in three of the four years between 2009 and 2012. As a condition of its licensing, Casino M8trix is required to pay either 5.15% of its annual profits or $125k, whichever is greater, to local problem gambling programs. For most of its operating life, M8trix has paid only the $125k.
On Thursday, the California Gambling Control Commission voted 3-1 to defer a decision on M8trix’s license to give them more time in which to ponder the accusations. The date for the future hearing is to be announced on Friday. The San Jose Mercury News quoted chairman Richard Lopes saying the “safest route” was not to rush to judgment. Commissioner Richard Schuetz, who cast the lone dissenting vote, had sought to approve the license renewal while imposing future conditions on M8trix. The cardroom’s owners didn’t attend the hearing.
The accusations against M8trix’s owners are all the more surprising given that the cardroom’s previous owners – back when it was known as Garden City – were also caught skimming, albeit on a much smaller scale. Swallow has repeatedly criticized city officials for blocking plans to allow M8trix to offer gambling on top-floor suites of the $50m tower it opened two years ago. Regardless of the outcome of the Commission’s hearing, it would appear doubtful that M8trix will be able to reopen the expansion debate anytime soon.
