Las Vegas Sun

April 25, 2019

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Columnist Jeff German: Sports betting put under microscope

JEFF GERMAN is a senior investigative reporter. His column also appears in the Las Vegas SUN on Tuesdays and Thursdays. He can be reached at 259-4067 or on the Internet at [email protected]

WHEN state gaming agents arrested Nancy Lucile Brinkley at Lake Tahoe earlier this month, there was barely a mention in the news media.

But her arrest was important to the state Gaming Control Board's stepped-up campaign to stop illegal gambling rings across the country from laying off bets in Nevada sports books.

Brinkley was the first to be charged under a new law enacted by the Nevada Legislature last year to take messenger bettors off the streets.

A messenger bettor is someone who gets paid to place wagers for another person or group. Usually, a messenger will carry a beeper or cellular phone to keep in touch with the leader of the betting ring anywhere in the country, as the line on a sporting event changes.

Though it's against federal law to bet across state lines, hiring messengers has become a convenient method for illegal bookies to place wagers in Nevada casinos to balance their books and minimize their risk. Today's advances in wireless communication make it easy to disguise the origin of a phone call.

Control Board Chairman Bill Bible wants the practice stopped before it undermines the state's $2.5 billion-a-year legal sports betting industry.

To open up the debate, he has proposed a series of admittedly "Draconian" regulations aimed at protecting the industry.

At the heart of Bible's proposal is a rule forcing Nevada books to demonstrate that none of the bets they accept originate from outside the state.

He also has suggested requiring books to identify and keep records of all bettors who place wagers of more than $3,000.

Not surprisingly, the sports betting industry is less than excited about Bible's ideas.

"If Chairman Bible views messenger betting as a serious problem for the state of Nevada, then it ought to be eliminated through traditional law enforcement methods," says Barry Lieberman, general counsel for Coast Resorts Inc.

To Lieberman, that means hiring more undercover agents to conduct surveillance in sports books, subpoena telephone records and monitor cellular phone conversations.

Lieberman says Bible's regulations will further drive legitimate bettors from Nevada books to off-shore operations in the Caribbean Islands. Many gamblers already prefer to do business in the islands, where there virtually are no regulations, he says.

"It's not fair to ask the industry to bear the burden of proof," adds Lieberman, who believes the Control Board should study the fiscal impact of the regulations on the industry before taking action.

Bible hopes to reach a compromise with the sports books. He wants to avoid setting up an elaborate bureaucracy to curb the flow of illegal bets to Nevada.

"The easiest way is to have the industry police itself as it does in other areas of gaming," he says. "I think most sports books have a real good idea as to who the messenger bettors are, and we're going to have to develop a system where they can identify them for us."

The Brinkley case illustrates how Nevada casinos are being used by illegal betting operations.

Brinkley is accused of being the main messenger in an illegal bookmaking ring that laid off as much as $200,000 a week in bets at Lake Tahoe casinos. Agents believe the operation would have had a tougher time staying in business without the ability to utilize runners like Brinkley to place wagers at legitimate sports books.

Last spring, the Douglas County Sheriff's Department alerted gaming agents to the Lake Tahoe operation.

Such tips, which usually come from law enforcement agencies outside Nevada, have been more frequent in recent years, as lawmen have pursued illegal gamblers with more enthusiasm.

In August 1995, gaming agents, at the request of the New York attorney general's office, seized more than $800,000 in Las Vegas in a raid on a massive sports betting ring dubbed the "Kosher Boys."

Daniel Kramer, the mastermind of the New York-based operation, was alleged to have used messengers to place hundreds of thousands of dollars in bets each week at Las Vegas sports books.

Among those searched in the raid was Jack Franzi, the longtime oddsmaker for Coast Resorts, which owns the Barbary Coast and Gold Coast casinos. Franzi denied involvement in the Kosher Boys ring and was never charged with a crime. But he was forced out of the industry last year after gaming agents learned he was changing the betting line at the two casinos to accommodate his own wagers and was phoning in bets to sports book employees from outside the state.

The Control Board later filed a nine-count complaint against Coast Resorts Chairman Michael Gaughan for failing to keep tabs on Franzi's free-wheeling activities. Gaughan agreed to pay a $200,000 fine.

A year after New York authorities contacted the Control Board about the Kosher Boys, they called again about another, even bigger betting ring. Like the Kosher Boys, this illicit enterprise was laying off massive amounts of money in Las Vegas. But this one posed a much bigger threat. It was linked to New York's feared Genovese and Bonanno mob families.

In November 1996, as part of the probe, Nevada gaming agents and Metro Police seized a ton of cash from the sports betting business of well-known Las Vegas gambler Howard Lederer. Recently, Lederer and his associates agreed to forfeit $500,000 and plead guilty to gaming crimes in New York.

Last March, the Control Board was asked to assist Las Vegas FBI agents and Ohio federal authorities in yet another illegal betting case. More than $200,000 was seized from safe deposit boxes and telephone betting accounts at several Las Vegas casinos. A federal grand jury in Columbus, Ohio, indicted the alleged ringleader, Jerry Crouch, in August on gambling charges.

The Franzi revelations, meanwhile, sent shockwaves through the industry, strengthening Bible's resolve to put a lid on illegal betting transactions. Until his fall from grace, Franzi was a man of stature in the sports betting world.

But the real driving force behind Bible's campaign to tighten up the sports books is a fear that if Nevada doesn't police itself, the federal government will.

Bible remembers the raging debate in Congress several years ago that resulted in legislation banning sports betting basically everywhere in the country except Nevada.

The Professional and Amateur Sports Protection Act was supported by every major sports association, including the NFL, NBA, major league baseball and the NCAA. Even Pop Warner Football joined the crusade to protect what the bill called America's "national pastime" -- sports competition.

As more illegal gambling investigations find their way to Nevada's legitimate sports books, the risk of federal intervention will only increase.

Some members on the National Gambling Impact Study Commission, which is examining the social and economic impact of gaming, are looking for ways to embarrass the state's No. 1 industry. This issue is tailor-made for the federal panel, which by no small coincidence includes Bible as a member. The commission last week expressed an interest in examining sports betting when it comes to Las Vegas on Nov. 10-11.

Today, on Super Bowl Sunday, the biggest betting day of the year, Nevada sports books are too busy taking in all the action to worry about the future.

In the coming weeks, however, as Bible brings the debate to a head, the sports books may come to realize that they have no choice but to police themselves.

The alternative is to risk throwing away a $2.5 billion-a-year business.