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September 2, 2014

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Casino fined $2.26 million over allegations of prostitution

INDIANAPOLIS -- An Ohio River casino must pay a $2.26 million fine and close for more than two days over allegations it entertained guests with prostitutes and money for gambling during a golf outing last year.

The action Monday by the Indiana Gaming Commission was its toughest sanctions since the state's first casino opened in 1995.

On a 4-1 vote, the commission approved an agreement with Belterra Casino in Vevay, about 35 miles southwest of Cincinnati, that it be closed from 6 p.m. Oct. 6 until just after noon on Oct. 9 as part of its punishment.

The casino's license will be suspended during that time but it must pay wagering and admissions taxes it would have expected to pay if it remained open.

Employees also must be paid as if the casino was open and the company must expand its 308-room hotel by 300 more rooms in the next two years. If it fails to meet the deadline, $5 million in escrow would be forfeited to the state as a fine.

The commission also approved an agreement that forces R.D. Hubbard, the former chairman of Belterra's parent company, Pinnacle Entertainment, to sell his stock in the company, pay a $740,000 fine and surrender his Indiana casino license.

The commission stopped short of revoking Belterra's license and forcing Pinnacle to sell the casino. But some members said their trust in the company had been shaken seriously, and their decision to give it another chance should not be taken lightly.

"They have been more difficult to deal with than any other (casino) company in the state," Commission Chairman Donald Vowels said.

The company's new chairman and chief executive, Daniel Lee, said the company agreed to the penalties so it could move forward.

"Certainly we have tried to be responsive in any way we can. We are doing our best," Lee said.

According to commission documents, eight or more women, referred to several times as "hookers," were flown to the casino on a jet leased by Pinnacle to entertain guests at a golf outing in late June 2001.

The guests, who were chosen by Pinnacle officials, attended the tournament by invitation. They and the women also attended parties on two nights in the Celebrity Room, an area adjacent to a concert arena.

The parties were so raucous that comedian Howie Mandel and singer Waylon Jennings had to stop concerts because of disturbances in the Celebrity Room, according to commission documents.

Also during the weekend, Hubbard told Belterra casino workers to give money and casino chips to the guests for gambling without completing necessary paperwork.

The commission said Hubbard was primarily responsible for the events. He resigned his position on the company's board in April as regulators were investigating the matter.

Jack Thar, the commission's executive director, said the sanctions were appropriate. He said the casino had "new management at the top," and they seemed to realize the importance of operating "at the property level" instead of just the corporate level.

Commission member Dale Gettelfinger voted against the agreement. He said the company's board of directors had been negligent in supervising Hubbard and suggested the company should be forced out of Indiana.

Lee said the episode was a "wake-up call" to board members, and "to a man they were embarrassed." They are now meeting more regularly, he said.

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