Nevada regulators see nothing new in Illinois report about Jack Binion

Horseshoe Gaming LLC of Las Vegas has cleared one regulatory hurdle in Illinois, but President Jack Binion faces another challenge there -- and his company faces a separate investigation in Louisiana.

Late last year, the Illinois Gaming Board voted to award a gaming license to Horseshoe Gaming, which has since acquired Empress Entertainment Inc. Empress operates riverboat casinos in Joliet, Ill., and Hammond, Ind.

The Illinois board voted for approval despite a recommendation by its staff that the license be rejected because of a "disturbing pattern in Mr. Binion's business practices of an unwillingness to comply with existing laws, rules and/ or guidelines."

Robert Strobel, a Chicago attorney for Binion and Horseshoe, called the report's conclusions "absurd."

"I think the report was rejected by the Illinois Gaming Control Board for good reason," Strobel said. "It is filled with inaccurate facts and misleading innuendo."

The controversy over the case has apparently caused a shake-up in Illinois -- on Thursday, Illinois Gaming Board Chairman Robert Vickrey announced his resignation under fire from anti-gambling critics over the Binion case. In his letter to Illinois Gov. George Ryan, Vickrey made no mention of the case, saying he was resigning because the commission job was taking time away from his duties as a businessman in LaSalle, Ill.

Citing unnamed sources, the Chicago Tribune reported that Ryan was infuriated by the Binion vote and called Vickrey to rebuke him prior to the resignation. Ryan denied this conversation occurred.

"I can say categorically that the governor has never called to express any point of view regarding actions of the board," Vickrey told the Tribune.

Ryan appointed board member Gregory C. Jones, a former U.S. attorney from Chicago, to replace Vickrey as chairman. Jones abstained on the Binion vote.

Although it has ignited a firestorm of controversy in Illinois, three other states where Binion and Horseshoe hold licenses -- Nevada, Mississippi and Indiana -- are not prepared to act on the allegations raised in the Illinois report.

"Mr. Binion has been the subject of a number of investigations and the result of some of those investigations has been disciplinary action," said Steve DuCharme, chairman of the Nevada Gaming Control Board. "He is currently a licensee in good standing, and there doesn't appear to be anything in this document that would jeopardize his license in Nevada at this point."

Binion still must be licensed as a key individual by the Illinois board, and a background investigation into Binion is continuing. The board did not consider the controversial staff report in its decision because the first licensing vote addressed the suitability of the corporation, not Binion as an individual, Vickrey said prior to his resignation.

"We must approve the entity, then the investors in the entity as key people," Vickrey said. "The entity has been approved. (Key people) will take another several months."

When asked how much the staff report would influence the decision on Binion, Vickrey said he could not comment because of the ongoing investigation.

But Strobel expressed confidence Binion would have no difficulty getting the key employee license.

"There's no way you can look at Jack's history in the gaming industry for the past 40 years and conclude anything other than he deserves a key person license," Strobel said. "We are very confident he will earn a key license in due course in Illinois."

Binion and Horseshoe face a similar review in Louisiana, where the company is facing a license renewal investigation -- and has found itself caught in the state and federal investigations surrounding the activities of former state Gov. Edwin Edwards. A federal indictment accuses Edwards of racketeering and extortion.

Horseshoe received a license in 1994 to operate a riverboat casino in Bossier City, La. -- the time period Edwards is accused of manipulating the gaming licensing process. Five casino operators that received licenses in that time period are now under renewal investigations by the Louisiana Gaming Control Board.

Binion told Louisiana regulators that he had been called before the Edwards grand jury to testify, but that he asserted his Fifth Amendment rights at this hearing, the Illinois report states.

The Illinois report focused on three Louisiana shareholders in the Bossier City casino who did not invest in the property. The report suggests that the three shareholders were given stakes in exchange for local political influence, and calls the decision to give them stakes "highly irregular and contrary to customary formalities."

Strobel responded that Louisiana regulators, at the time, looked more favorably on applicants that could demonstrate significant local ownership.

"The ownership of the Louisiana casino has been a matter of public record from the very outset," Strobel said. "It's been fully disclosed to Louisiana regulators, and they've never had a problem with it. The notion that there's something improper about having local partners in a Louisiana casino is absurd on its face."

The Illinois report indicates that the Louisiana investigation is ongoing, but that the status "remains unclear," because the Louisiana board is currently focusing on the license renewal of Players International, the Atlantic City company being acquired by Harrah's Entertainment. A review of the Horseshoe case isn't expected until later this year, the Illinois report states.

Hillary Crain, chairman of the Louisiana Gaming Control Board, said the board would examine the Illinois report as part of its investigation.

"If we know of materials in other states, we check them," Crain told the Associated Press. "I know the investigators are familiar with the Illinois report."

The Indiana Gaming Commission, which approved Horseshoe in August, was already familiar with the issues raised in the report and will not revisit the Horseshoe application, commission spokeswoman Jennifer Arnold said.

"There were no surprises, no new issues (in the Illinois report)," Arnold said. "When the Indiana Gaming Commission examines an application, it looks at the viability of the company and the integrity of the individuals. Nothing that we found during the course of this investigation jeopardized the integrity of the company or any individual key to the company, and that's evidenced by the favorable vote by the gaming commissioners."

Horseshoe also holds a license for a riverboat in Tunica, Miss., but Mississippi has no plans to open an investigation because of the report, said commission spokeswoman Ashley Skellie. The report did not cite any instances of questionable behavior in Mississippi.

"Unless there's criminal activity (Binion) is involved in right now, we don't investigate," Skellie said. "As long as everyone's doing what they're supposed to be doing, that's fine with us."

The Illinois report also drew heavily from Binion's activities at Binion's Horseshoe, the downtown Las Vegas casino managed by Binion from 1964 to 1998. Some of the information came from the Nevada Gaming Control Board, but the vast body of information was drawn from testimony filed in a legal fight between Binion and sister Becky Behnen for control of the Horseshoe.

This lawsuit was settled out of court in 1998. Under the settlement, Binion sold all but 1 percent of the Horseshoe's stock to Behnen.

DuCharme said the board was already familiar with the allegations in the Illinois report and had investigated many of the charges raised in the Behnen lawsuit. Binion holds a Nevada gaming license due to his 1 percent ownership in the Horseshoe.

One inaccuracy in the report, DuCharme said, was the report's reference to a $1 million fine levied against Binion for improper currency transaction reporting. The report referred to this as the "largest in the history of the Nevada gaming industry."

That's incorrect, DuCharme said. The largest individual fine -- $1.5 million -- was handed down against Imperial Palace owner Ralph Engelstad in 1989. Engelstad received the record fine after Gaming Control Board agents found a huge collection of Nazi memorabilia at the hotel-casino. The investigation also found Engelstad had hosted two parties honoring the birthday of Adolf Hitler.

The Illinois report also claimed that Binion had tried to mislead the board over Gene McCarlie's role at the Horseshoe. The report claims that from 1986 to 1992, McCarlie worked as casino manager at the Horseshoe, but was not licensed. The report then states that Binion intentionally mislead the board by designating McCarlie as a "host" rather than casino manager.

But the report is inaccurate in saying that Nevada law requires all casino managers to be licensed, DuCharme said.

"We never found subsequent proof that would lead us to believe there was intentional misrepresentation," he said.

The Illinois report also provided numerous examples of what investigators saw as questionable behavior that did not result in investigations by Nevada authorities. These allegations were primarily taken from Behnen's lawsuit.

One well-cited example provided by the report was Binion's decision to provide $2 million bail money to Kamel Nacif, a well-known high-roller and regular Horseshoe client.

In a second notable case, Binion personally bankrolled two of his friends in a poker game played at the Horseshoe, the report states, without informing the third player. This would be banned in Illinois, the report says, because it would be considered a case of an owner or manager wagering at his own casino.

"A number of these issues were looked at by the Gaming Control Board, but they did not rise to the level of disciplinary action," DuCharme said.

Still, DuCharme took care not to criticize Illinois investigators for taking issue with actions that Nevada decided not to punish.

"Each gaming jurisdiction has to set their own standards," he said.

Strobel branded the accusations of financial mismanagement as "a laundry list of nonsense."

"Jack Binion has been the premier operator in every market he's been in for the last 40 years," Strobel said. "That's like saying Michael Jordan doesn't know how to play basketball."

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