Cantor Gaming says its recent regulatory troubles and bad publicity for underpaying some sports bettors isn’t cause for ending its lease at the Cosmopolitan in Las Vegas.
Yet, Cantor Gaming in Clark County District Court on Thursday says Nevada Property 1 dba The Cosmopolitan of Las Vegas on Dec. 7 sent two letters “purporting to declare a default and a right to terminate the lease” for the race and sports book and mobile gaming operations Cantor Gaming has at the resort.
Cantor Gaming says one letter gave it a 30-day termination notice based upon lease terms, while the other gave a 60-day termination notice based upon lease terms and the Cosmopolitan Compliance Program.
Both letters cited recent gaming regulatory matters that were resolved, Cantor Gaming says.
Cantor Gaming says it entered into a 10-year lease with the Cosmopolitan on Oct. 25, 2010, and an amended lease agreement runs through October 2025.
One matter cited by the Cosmopolitan in its two lease-termination letters is “software glitch” that caused some bettors to be underpaid and some bettors to be overpaid on parlay wagers.
Another matter cited is former Cantor Gaming Vice President Michael Colbert facilitating an illegal gambling operation called “Jersey Boys,” in which illegally paid runners placed wagers on behalf of out-of-state bettors and others.
Colbert on Aug. 21, 2013, in the Eastern District of New York federal court pleaded guilty to one felony count of participating in an illegal gambling conspiracy.
In October, the Financial Crimes Enforcement Network (FinCEN) fined Cantor Gaming $12 million for violating federal anti-money laundering rules.
FinCEN said Cantor Gaming “facilitated high-risk and high-dollar wagering on sporting events representing over 30 percent of all sports wagers in Nevada.”
Cantor Gaming says the Cosmopolitan cited the FinCEN fine in its lease termination letters, and it “hardly is alone in the gaming industry in being compelled by the United States Department of the Treasury, Financial Crimes Enforcement Network to upgrade its policies, including the payment of monetary fines.”
“Numerous Nevada gaming licensees have entered into such agreement with FinCEN and other government regulators in the face of the government’s increased focus upon anti-money laundering efforts, including payment of fines,” Cantor Gaming says.
Cantor Gaming says it resolved its regulatory issues, maintained its “good regulatory standing,” and never has had governmental regulators suspend or cease some or all of its operations.
“Cosmopolitan’s opportunistic assertion that a resolved regulatory matter is grounds for termination violates the lease’s terms,” Cantor Gaming says.
Cantor Gaming says the Cosmopolitan has been “reaping millions in rent and revenues” from its race and sports book and mobile gaming operations, and the resort does not have a “legally permissible means to terminate the lease during its term.”
Cantor Gaming also says it spent $5.5 million to improve the Cosmopolitan’s race and sports book operation and install mobile wagering, and the lease agreement gives it the exclusive right to operate the book and mobile wagering on the property.
The lease also obligated Cantor Gaming to secure all government licenses and construction permits for the book and mobile gaming, and Cantor Gaming says it “expended considerable resources” doing so.
Cantor Gaming says there are only “narrow circumstances where early termination is permitted” of the lease agreement, and even then the Cosmopolitan would be obligated to pay an early termination fee based upon a formula provided in the lease.
Cantor Gaming wants the court to enjoin the Cosmopolitan against ending the lease agreement with it and seeks monetary damages, interest, costs and attorney’s fees for breach of contract and exclusive rights.
Officials for the Cosmopolitan declined to comment and only issued an official statement attributed to The Cosmopolitan of Las Vegas, which says: “As a matter of company policy, we do not comment on pending litigation.”
Las Vegas attorney Todd Bice of the Pisanelli Bice law firm filed the complaint on behalf of Cantor Gaming
