The Seeno family's Nevada casino operations have agreed to pay a $1 million fine, admitting that since 2011 their director of slots used a slot machine key to obtain important competitive data from 10 rival casinos, according to a tentative settlement reached last week by the East Bay developer's company and gaming regulators.
For at least two years, Ryan Tors, a Peppermill Casinos Inc. executive, had been going into competing casinos as part of his job for that casino chain, opening slot machines with an unauthorized key and capturing the diagnostic and payback percentages, according to the proposed settlement filed Feb. 13 -- the same day the Nevada Gaming Control Board filed a three-count complaint against the company co-owned by the Seenos.
In a separate lawsuit, Grand Sierra Resort, a Peppermill rival, sued the Seenos' chain and got a judge to ban Tors from entering any of its properties. Tors has not been criminally charged, according to Reno police, but he is named in the lawsuit, in which the Grand Sierra Resort claims the Reno casino used the proprietary information to gain a competitive advantage.
On Thursday, the Nevada Gaming Commission will vote on whether to accept the fine settlement. The agreement specifies that there is no evidence Peppermill used rivals' slot machine data to its own advantage, but if any new information arises, it can issue further punishments.
A Seeno spokesman distanced the family from the fine.
"The Seenos were not involved in the incident and have not been involved in the negotiations with the Nevada regulators resolving the matter. The settlement was negotiated and entered into by Peppermill management," said Sam Singer, a spokesman for the family. "This is an issue involving those that have managed the Peppermill casinos before and during the Seenos' ownership. The Seenos' only understanding is that management did not believe they were engaged in inappropriate conduct. The Seenos have since been advised that the conduct did not violate any criminal laws but did violate certain gaming regulations which resulted in the complaint and settlement."
The settlement and lawsuit are the latest legal twists for the powerful Contra Costa County family, who own stakes in seven Nevada casinos in Las Vegas, Reno, Wendover, Henderson and Sparks. William Paganetti Jr. is the president and co-owner of the Peppermill chain; however, various Seeno family members own 15 percent pieces of each casino, adding up to majority control of the individual properties.
Neither the lawsuit nor the settlement mention the Seenos by name, referring only to Tors' affiliation with "management."
"The Board's investigation revealed that Peppermill Casinos' management knew of, approved of, and directed Mr. Tors' conduct of obtaining theoretical hold percentage information from the slot machines of other casinos using a 'reset' key," according to the settlement, which was signed by Paganetti.
The Peppermill Casinos released its own statement: "This is certainly a regrettable situation and the Peppermill apologizes for the obvious lack of judgment on the part of its executive staff. The Peppermill has never been subject to regulatory action in all of its 43 years and does not intend on being subject to censure again."
It would not be the Seenos' first run-in with gambling regulators. In 2002, the gaming board fined Albert Seeno Jr. $775,000 for various character issues, including destroying red-legged frog habitat in a Pittsburg housing development and because family members were consorting with what the gaming board considered "unsavory" characters, such as felons and Hells Angels associates.
The slot machine spying allegations came to light after Grand Sierra Resort filed a lawsuit Aug. 2, 2013, in Washoe County court, asking for more than $30,000 in damages for the theft of trade secrets. On Nov. 15, Washoe County Judge Patrick Flanagan granted the restraining order against Tors.
According to the lawsuit, on July 12, Tors entered Grand Sierra Resort, used a key to open up six slot machines and accessed the "confidential and proprietary information contained within the machines, including each machine's diagnostic screens and payback percentages."
Security agents spotted Tors and detained him, according to the documents. Tors said the slot probing was "part of his employment duties" and he would "visit other gaming establishments to obtain information concerning the marketing strategies of those casinos," according to the lawsuit.
A Grand Sierra Resort attorney and Tors' attorney declined to comment.
The settlement states Tors used the key to access slot machines in at least 10 casinos from Reno to Wendover to Sun Valley and Sparks.
A gambling expert said a slot machine can provide a competitor with a wealth of information, including how often machines pay off players, how often they are played and how much is paid out.
"It definitely makes it unfair if one person knows what the competition has," said professor David G. Schwartz, director of the Center for Gaming Research at University of Nevada in Las Vegas. "The payback rate, for a lot of casinos, especially in Reno, is something they promote."
The gambling historian said he has never heard of such a scheme and called the fine "significant."
Contact Matthias Gafni at 925-952-5026. Follow him at Twitter.com/mgafni.