Fiesta agrees to $125,000 fine

CARSON CITY -- The Fiesta hotel-casino in North Las Vegas agreed Wednesday to pay a $125,000 fine for allowing one of its major horse race bettors to make special wagers in which he could not lose.

The Fiesta and its executive vice president, Joseph Maloof Sr., signed a stipulation saying the state Gaming Control Board could prove its case. They said they did not intentionally or willfully violate state rules.

In its original complaint filed last year, the Gaming Board sought a fine of up to $1.7 million but a settlement was reached. The state Gaming Commission is expected to accept the stipulation today at its Las Vegas meeting.

The complaint involved Andrew Berg, who bet $5.4 million on the ponies over a 10-month period. In order to keep his business, the casino arranged special wagers he could not lose.

From September 1997 to September 1998, Fiesta said it lost $569,084 to Berg on his special bets on quinella wagers. The casino also claimed a tax benefit on these bets. Under the negotiated settlement, Fiesta said it would not show this as a loss and will pay $35,567 in taxes on this amount.

Deputy Attorney General Keith Kizer also said Fiesta has agreed to pay another $1,400 in taxes on money that was won by Berg on these special wagers.

Kizer said overall the penalty on Fiesta is about $165,000. No other complaint by the Board is pending against the Fiesta.

State books have used special wagers to refund money to their best customers since the practice of giving overt refunds was outlawed in 1997. In December, the state Gaming Commission officially prohibited the practice. But Gaming Control Board officials argue that the special wagers were already outlawed by the 1997 law prohibiting refunds.

In a special wager, a book customer is offered a bet that is almost impossible to lose. For instance, they might be allowed to bet a field of horses against a long-shot. If any of the field horses beat the long-shot, the customer wins.

The Fiesta and Maloof said they agreed to the settlement "to avoid litigation and economize resources." It was signed by George and Michael Maloof of the Fiesta and their lawyer William Urga and Gaming Board Chairman Steve DuCharme, member Dennis Neilander and Kizer.

The complaint said in May 1997, the Fiesta entered into an agreement with Berg that promised him an 8 percent rebate on his daily pari-mutuel wagers and an additional 2 percent at the calendar month end if his wagers exceeded $300,000 for that month.

The Control Board said the Fiesta paid Berg twice the compensation of a normal patron on quinella wagers, in which the player picks the first or second place finishers in a race but not necessarily in their order.

The complaint said that in order to create the impression that Berg's quinella wagers were public, the Fiesta posted each race about 5-30 minutes before the start but allowed players to wager only up to $10 on each race.

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