Nevada gaming regulators Thursday chastised Penn Entertainment executives over nationwide compliance issues dealing with minors in their casinos, self-excluded individuals playing at their properties, and delays in updating policies and practices to deal with ongoing problems.
The Nevada Gaming Commission criticized Penn when considering a routine matter of a continuous or delayed public offering that was approved. Penn has 43 casinos, including two in Nevada: M Resort Spa Casino in Henderson and Cactus Pete’s Resort Casino in Jackpot in the northeast part of the state.
Commissioner Rosa Solis-Rainey cited compliance issues dating back to 2020 that were raised by regulators in previous reviews.
Chris Soriano, vice president, chief compliance officer with Penn, said that the company is in the process of ratifying their reviewed policies at an upcoming compliance committee meeting Aug. 15.
“What is the delay in getting that accomplished?” Solis-Rainey asked. “(Gaming Control Board Chair) Kirk Hendrick asked that it be done earlier this year.”
Soriano said they wanted to do a review with outside counsel to involve its interactive business and incorporate best practices and study the issue from the bottom up. “It took us a little longer than we would have liked, but we wanted a set of really robust policies and that’s where we landed.”
Solis-Rainey asked about interim measures to stop a recurrence of violations and said Penn’s response didn’t satisfy the Gaming Control Board’s request.
“We’re open to more enhanced ways of meeting with our properties and following up,” Soriano said. “We’re in a situation where we deal with 20 different regulators in various jurisdictions, some of which focus on different items and issue regulatory violations differently.”
Soriano said they’re studying how to come up with a corporate policy that applies across the organization, but still recognizes the individual sensitivities in various states.
“A number of states are very heavy on issuing violations if sensitive keys leave the property,” Soriano said. “So how do we control human error and come up with better policies and standardize those?”
Under their new policy implemented in the last quarter, the company has distributed information to general managers and meet with them on an ongoing basis if they see recurring violations. “We’re studying if that works or if we need to come up with something better,” Soriano said.
Solis-Rainey said that addresses the communication aspect, but not the internal controls, saying those are two different things.
“I realize and appreciate you’re in different jurisdictions and one size may not fit all as far as internal controls, but they need to be reviewed,” Solis-Rainey said. “I’m looking at the list of recurring violations throughout the company and you have a lot of repeat violations for things that are avoidable. There’s no reason that many minors should interact with staff. There shouldn’t be a reason why that many people self-excluded, but get payouts without being identified. Those are very concerning to me and saying you’re going to tell management about it isn’t enough. You need to amend the controls on a per-property basis to satisfy your overall policy. We need action. Talking about it is not enough.”
Solis-Rainey said the Gaming Control Board has had to devote resources to do reviews in such a short period and called it unacceptable.
“I understand, Commissioner,” Soriano responded. “We will take that back and do property-by-property reviews of internal controls. One area we’ve been exploring is whether the training of the staff is adequate. We can write a good set of controls, but I also think we can take a look at staff training and make sure those controls are being properly implemented.”
Soriano said they plan to meet with the Gaming Control Board in September to follow up on the matter. “It’s something we take very seriously and continue to work on.”
Solis-Rainey said she worked in gaming operations for nearly 12 years and doesn’t recall a set of keys going home more than twice across 14 jurisdictions.
“The number of incidents you’re having where people are taking keys home suggests to me those controls are not in place, and this needs to be a top-down approach,” Solis-Rainey said. “Your employees are not going to take it seriously if management doesn’t take it seriously.”
Commissioner George Markantonis said he shares those same concerns and suggested the company tie performance metrics to compensation. He added that it works well in operations.
Commissioner Brian Krolicki admitted he was piling on, saying Soriano “is in the hot seat” and appreciated his comments dealing with 43 properties and different accounting systems.
“To bring all of those together is quite the challenge, but if we have a theme, you can bring it back to compliance,” Krolicki said. “There’s been quite the correspondence trail between Penn and the Gaming Control Board, and one of the recent letters from you was about pride in what you’ve done in compliance. You have a lot of work to do. There’s sincere frustration with the lack of speed and seriousness. I don’t want to make it so difficult for you, but we’re watching. It’s important and has to be done. You have a tremendous company, but the compliance has to keep pace with the majesty of Penn and your operations. You’ve heard this loud and clear that the compliance issues have to be essential and tackled. I know you’ve made progress, but it has to be completed.”
Commissioner Abi Silver said it’s been surprising to see the reports and Penn’s response to the Board. “I haven’t seen so many violations in one report,” Silver said.
