San Jose-based card room Casino M8trix is suing the city in a bid to have a ballot measure that was overwhelmingly approved by residents declared invalid, The Mercury News reports.
In November, 73 percent of San Jose voters approved Measure H, which proposed hiking taxes on the city’s two card rooms, Casino M8trix and Bay 101, in return for allowing them to increase their table-game capacity. Casino M8trix wanted to increase its current quota from 49 tables to 64.
It was a win-win situation for the city and the card rooms, until the state intervened and made it win-lose.
$1 Million Tax Headache
Two weeks before the election, California’s Bureau of Gambling Control wrote to city officials informing them it would be illegal for the card rooms to add more tables. Under the California Gambling Control Act, a city is prohibited from increasing a card room’s quota of tables by one quarter or more than it had been on January 1, 1996.
The city and the state are currently in disagreement about how many tables were in play in 1996.
Meanwhile, Casino M8trix wants to ensure that it does not become the collateral damage and is taking pre-emptive measures.
A lawsuit filed in the Santa Clara County Superior Court seeks to have the Measure H invalidated unless the tables are part of the deal. Otherwise, the card room could be on the hook for an extra $1 million annually with nothing to show for it.
Tables Turn
The lawsuit argued there is “no evidence” that voters would have approved the tax hike – from 15 percent of gross gaming revenues to 16.5 percent – had it not been tied to the increase in tables.
“The unlawful provisions of Measure H are not severable from the lawful provisions,” the lawsuit states. “… the evidence of voter intent indicates that it was approved as a full and comprehensive amendment to the city’s gaming ordinance.”
Measure H was expected to generate $15 million for the city annually to fund emergency services, street repair, and to address homelessness.
San Jose city attorney Nora Frimann told The Mercury News that she believes Casino M8trix can have the additional tables, despite the state’s contrary position. She declined to comment further, other than to say the state was working to make it happen.
Casino M8trix has filed an application with the California Gambling Control Commission for the extra tables, which is pending. The card room’s lawyers said it had filed the lawsuit as a “preventative measure.”
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