SACRAMENTO -- Signaling growing doubt about the future of San Jose's newest card room, state officials Thursday postponed a decision on renewing Casino M8trix' license pending a future hearing to consider accusations that the owners improperly hid profits.
The four-member California Gambling Control Commission voted 3-1 Thursday to schedule a hearing to gather more evidence before deciding Casino M8trix's fate, delaying a final vote on the embattled card room's license. The regulatory panel indicated a hearing date several months from now would be set Friday.
Casino M8trix' license expires May 31 and Thursday's renewal hearing would ordinarily be a formality. But on May 2, the state attorney general's bureau of gambling control filed papers accusing Casino M8trix' owners of hiding millions of dollars in profits by paying a network of gambling service corporations they also own. The alleged profit-hiding deprived a San Jose gambling addiction program of funding required under an agreement with the city and potentially resulted in underpaid taxes as well, the accusation said.
The hearing that the attorney general's office sought before an administrative law judge to consider those accusations will now be consolidated with the licensing hearing sought by the commission, a spokeswoman said. The state attorney general's office declined to comment.
Though Casino M8trix's license expires Saturday, it may continue to operate pending the renewal hearing.
Casino M8trix' owners, who have denied the accusation through a spokesman, did not attend Thursday's hearing. Casino spokesman Sean Kali-rai reiterated the company's belief that the state's claims are "unfounded" and declined to comment further.
The gambling control commissioners deliberated at length Thursday about how to proceed in light of allegations that one called "very serious."
But in the end, the wait-and-see approach the commission adopted was "the safest route," chairman Richard Lopes said.
Commissioner Tiffany Conklin warned against rushing into a decision that might have unintended consequences.
For example, had the commission voted Thursday to pull Casino M8trix's license or impose conditions on its continued operation, the card room's lawyers could have asked a judge to review the proposals, effectively putting the punishment on hold, Conklin said.
Commissioner Richard Schuetz, who voted against postponing the decision, favored imposing conditions on the card room before allowing it to remain licensed.
Casino M8trix's $50 million swanky tower near Mineta San Jose International Airport opened less than two years ago, offering poker and baccarat among other games and pitching itself as a banquet and entertainment destination.
Formerly known as Garden City card room on Saratoga Avenue, Casino M8trix had been locked in a legal battle with City Hall over police refusal to authorize additional gambling in top-floor suites, citing concerns it would frustrate regulatory efforts, but City Attorney Rick Doyle said the lawsuit was recently dismissed.
"They may be less interested in that issue now because they're fighting for their lives legally," said Doyle, who added that San Jose gaming officials will decide over the next several weeks whether to take action against Casino M8trix's city operating permit.
San Jose Councilman and mayoral candidate Sam Liccardo wants the city to move quickly against the card room, but said he knows there are "$16 million reasons" why it might not, referring to tax revenue generated through legal gambling in San Jose by the city's two card rooms, M8trix and Bay 101. Either way, holding a public hearing to discuss allegations against Casino M8trix is a good first step.
"If tens of millions or hundreds of millions of dollars have been illegally skimmed to avoid taxes or other legal commitments," Liccardo said, "the commission has a right to know and the public has a right to know."