MGM Resorts International apologized for accepting nearly $5 million in wagers from illegal bookmakers and accepted a fine of $8.5 million from the Nevada Gaming Commission Thursday.
For the most part, commissioners didn’t lambast MGM, saying it has a history of compliance, and instead blamed the problem on bad actors within the organization.
The Commission voted 4-0 to accept the settlement between MGM and the Gaming Control Board, with Commissioner Abbi Silver abstaining. The cases involved the MGM Grand accepting more than $4 million in wagers and nearly $1 million at The Cosmopolitan of Las Vegas, which wasn’t operated by MGM at the time of the alleged infractions that took place in 2021.
MGM was previously fined nearly $7.5 million by the federal government as part of a non-prosecution agreement.
“I must say that this story has captivated our industry,” said Commissioner George Markantonis, “the subsequent investigations and penalties imposed. It’s so disappointing for all of us who work in the industry.”
Markantonis, however, said he hopes it sends a message throughout the industry that if any employee sees something, they should report it. “I highly recommend to every organization to look at their procedures in that regard.”
Commissioner Brian Krolicki said he appreciated MGM for its presence in the state as the largest employer, but that doesn’t change what the Commission needs to do.
“This is a clarion call to the entire industry in Nevada and beyond that things such as compliance are critical,” Krolicki said. “We will accept nothing less but perfection. We understand nothing is perfect.”
Krolicki said he appreciates the response from upper management in trying to address what its employee did and for taking responsibility. The tone at the top is vital and there needs to be a culture of compliance, he added.
“We’re sitting up here to make sure this industry lives up to the highest levels. We’ve said gold standard and best in class multiple times. We’re Nevada and we’ll do nothing less than that. I think your representation, despite the discomfort of the topic, really does represent trying to incorporate best practices.”
Krolicki said Nevada regulators have done a good job of tackling the issue and the fine will make “this type of activity harder, more expensive, and more exposed.”
Commissioner Rosa Solis-Rainey called the MGM cases different from what’s been seen in other instances, because the company has had a strong culture of compliance. “You’ve undertaken great effort to put in best practices over the years.”
Krolicki said MGM has banned 2,600 customers in the last decade and filed 46,000 suspicious activity reports with the federal government.
“I believe you’re at the cutting edge of compliance today,” Krolicki said. “With the decisions you made, hiring you’ve done, and training programs that you have and reward of compliance for employees, you should be proud of it. If there’s a message here, this Nevada company is doing its finest work as you expand (abroad). You’re an exceedingly compliant company and we’re proud of that.”
MGM private counsel Scott Scherer said the company has always taken compliance seriously and done a good job historically, but can do better. He said the case originated with the failure to file the suspicious activity reports over bookmaker Wayne Nix with the federal government, but some were filed. While MGM didn’t own The Cosmopolitan at the time of the case involving bookmaker Matthew Bowyer, it accepts responsibility.
Scherer said MGM has sought to be a leader in anti-money-laundering compliance since 2014. “We believe MGM had a good AML program in place and striving to be a leader in the industry, but obviously it wasn’t good enough and relied too heavily on employees to follow their training and do the right thing.”
Scherer said it’s unfortunate that the case exposed a weakness in that program when employees forget their responsibilities or decide not to fulfill them “because they are going rogue or that’s what they think customers, supervisors or peers would want them to do. That’s a failure, and they need to be reminded.”
Scherer said they understand they’re responsible for their employees and are making fixes to keep it from occurring again. He called the settlement agreement fair for both MGM and the state of Nevada.
Historically, the fines imposed by the Commission in similar cases have been a fraction of what the federal government imposed, Scherer said.
Stephen Martino, MGM’s senior vice president and chief compliance officer, said while it had a good compliance program in place, it can do better. It has put in place several measures to improve its training and seek more information from customer sources of funds or players risk being banned. It has increased its spending on anti-money-laundering compliance by more than $1 million. They’re initiating an awareness campaign for all employees, including dealers and caddies at Shadow Creek golf course, he said.
When he joined the company in 2016, Martino said the company filed just over 3,500 suspicious activity reports and last year it was 7,934.
Martino said the case wasn’t a matter known to the company until they received a federal subpoena, and that the employees responsible paid a price for it with job losses.
“I have had to sit before regulators either in this jurisdiction or elsewhere and take responsibility for mistakes made by the company,” Martino said. “I am here to do that today. I believe we’ve had and continue to have an effective compliance AML program, but mistakes, errors in judgments and poor decisions are made in any organization that includes people. Could we have done better? Yes, we could have done better. Were we consistent with industry best practices? Yes we were, and that’s what we’re striving to do.”
