Mesquite Gaming recently called for toughening a state bookmaking regulation meant to monitor potential money-laundering activity. It comes at a potentially awkward time for the casino industry, but maybe that’s a good thing.
The company operates the Casa Blanca and Virgin River casinos in Mesquite, a southern Nevada town about 100 miles north of Las Vegas, on Interstate 15 near the Utah state line. The casinos include full-service sports books. Their only competition is from the Eureka Hotel & Casino, which offers customers a William Hill US satellite sports book that operates at a lower level of regulatory compliance because it grosses under $1 million a year. And there’s the rub.
“We believe the current practice of exemption these satellites from reporting winning sports wagers of $10,000 or higher facilitates money laundering, increases the risk of criminal activity through third-party betting, impedes the efforts of law enforcement in identifying such activity, and could potentially damage the integrity of gaming in the State of Nevada,” Mesquite Gaming Corporate Compliance Officer Catherine Catanzaro wrote in a July 9 letter to Nevada Gaming Commission Chairman Tony Alamo and Nevada Gaming Control Board Chairman A.G. Burnett.
Mesquite Gaming’s representatives argued in a Control Board workshop on Thursday that the current regulations not only give its competition an unfair edge, but encourage illegal activity. They reiterated points made in a July 8, 2016, letter that the company’s owner and CEO, Anthony Toti, wrote to the federal Financial Crimes Enforcement Network (FinCEN), saying that current regulations aid “in money laundering and messenger betting as the patrons know there is no report to the IRS of their wagering activity if less than $10,000, no report on their winnings over $10,000, and no personal information is required.”
That’s kicking it up a notch.
On William Hill’s behalf, longtime Nevada gaming attorney Scott Scherer said the matter appeared more about competition than regulation. There was no ongoing scandal anyone present appeared able to name. He pointed out that the bookmaking giant followed the law to the letter, and increased demands would not only burden the diminutive operator in Mesquite, but the control board’s tax, license, and audit divisions.
The matter was referred to staff to determine whether tweaking the regulation would substantially stress the GCB’s busy auditors and analysts. But from the sound of things, the numbers are already being generated and what amounts to one more line item won’t be determined to be a heavy burden — especially since GCB investigative experts consider the change to be the closing of a money-laundering loophole.
So why is a regulatory tempest involving small casinos and sports books playing out in the diminutive Mesquite market a good thing for Nevada’s casino industry?
Competition aside, the Mesquite Gaming petition identifies a flaw in the regulations that’s potentially attractive to money launderers. It also gives bookmaking behemoth William Hill a business advantage. It may do business with small gaming licensees, but it’s a major player at a time of great change in the sports betting industry. By one count it controls 104 of the 190 non-restricted sports book licenses active in Nevada.
As a bookmaking power, it only makes sense that its betting network should operate under the tougher reporting obligations and definitions contained in Title 31 of the Code of Federal Regulations.
In the wake of the American Gaming Association’s recent call for the eventual expansion of legalized sports betting outside Nevada, this issue gives the regulators and the regulated a chance to embrace a new and important dynamic. The AGA has embarked on a three-to-five-year plan to repeal a federal law, and Nevada can’t be seen as lagging in any area of regulation.
From my bleacher seat, Mesquite Gaming has already won its argument simply by raising the issue of money laundering and due diligence when it did. In the wake of the nasty and costly Cantor Sports scandal at M Resort, and with the industry’s unprecedented effort to press for legalized game wagering legalization nationally, no one with an ounce of sense wants to have to argue against increasing regulations.
But don’t confuse the issue with the opportunity.
By tightening its regulations, Nevada authorities would close one more loophole and illustrate to a skeptical world that the state where sports betting is legal continues to run a tight ship when it comes to regulating the industry.
And that’s always a good thing.
John L. Smith is a longtime Las Vegas journalist, columnist and author. Contact him at jlnevadasmith@gmail.com. Follow him on Twitter @jlnevadasmith.
