Monday, July 3, 2000 | 11:21 a.m.
Sun staff and wire reports
The Nevada Gaming Control Board will examine the report that led to Jack Binion's denial of a gaming license in Illinois to determine if action against Binion's Nevada license is warranted, a Nevada gaming regulator said today.
"What we need to do first is take a look at the facts upon which Illinois based its decision," said board member Dennis Neilander. "That will determine our next course of action."
Binion holds a Nevada gaming license due to his 1 percent ownership of Binion's Horseshoe in downtown Las Vegas. The last review of this license came in 1998, when Binion transferred virtually all of the Horseshoe's stock to sister Becky Behnen. Neilander said a denial in Illinois wouldn't necessarily mean Binion's Nevada license is in jeopardy.
"(The denial) is under Illinois standards," Neilander said. "We'll have to look at that conduct under our own standards."
Illinois regulators on Friday deemed the chief owner of Empress Casino in Joliet unfit to hold a license, leaving the riverboat casino's future in limbo.
The five-member Illinois Gaming Board voted unanimously to deny an owner's license to Horseshoe Gaming Inc. Chief Executive Jack Binion, after a report that staff investigators uncovered questionable business practices and compliance issues involving Binion in Nevada, Louisiana and at the Joliet casino.
Board Administrator Sergio Acosta would not specify what the objections were, but they will be outlined in a written notice of denial that will be sent to Binion. Binion then will have five days to ask for an administrative hearing, Acosta said.
Binion owns controlling interest in Horseshoe Gaming, which bought the Empress casinos in Joliet and Hammond, Ind. for $629 million last year.
He did not attend the meeting but his attorney, Anton Valukas, said Binion and Horseshoe will appeal the decision. A spokesman would not say if Binion would sell his interest in the boat if he lost on appeal.
"I feel that the information we provided the staff and the board was information which would more than justify the board following the lead of Indiana, Louisiana, Mississippi and Nevada," in granting Binion a license, he said.
Valukas would not say what the Gaming Board's concerns were or what information he provided.
Although the casino's license technically expired Friday, it remains in effect until the board issues a final denial, Acosta said. Such a denial probably would be automatic if Binion fails to appeal, he said.
Friday's action comes seven months after the Gaming Board approved the sale of the Empress casino to Horseshoe over the objections of its investigators, who said they wanted more time to investigate Binion's business dealings.
Under Illinois law, corporations can hold gaming licenses. Prominent people in the corporation, such as Binion, need approval to act as a "key person" before they assume any hands-on control of a casino operation.
At the time the sale was approved, staff investigators said Binion left "a trail of poor business practices, regulatory violations and financial malpractice," according to a staff report obtained by the Chicago Tribune.
The report said Binion put up $2 million in 1993 to bail out of jail a high-stakes gambler the Nevada Gaming Control Board said was associated with narcotics and firearms sales and money laundering.
But Valukas said the man was arrested for a tax code violation and that the charges were dropped and the money repaid. He said there was no evidence that man was involved in narcotics, gun sales or money laundering.
Investigators also said that Binion offered "highly irregular" partnerships to four people in Louisiana who were not investors in his casino ventures and appeared to do little actual work other than to offer ties to politicians and "local influence."
The Tribune reported that in order to win a Louisiana gaming license, Binion promised in 1993 to funnel 70 percent of the casino's supply contracts to firms run by minorites and women. But Illinois regulators found Binion fulfilled this pledge by steering millions of dollars of contracts to shell companies run by clout-heavy minorities who contracted out the work to white-run firms, the Tribune reported. Valukas responded that the fact the minority-owned firms were shells was legal and fully disclosed to Louisiana regulators. He added there's nothing improper about certain shareholders profiting handsomely from Binion's ventures in Louisiana. "The long and short of it is, so what?" Valukas told the Tribune.
The Tribune also recounted that three years ago, Binion invoked his 5th Amendment protection against self-incrimination by refusing to answer questions before a federal grand jury investigating allegations of racketeering and extortion in the issuance of Louisiana casino licenses. Binion's lawyers have said he was not a target of the investigation, which surfaced this year in the federal trial of former Louisiana Gov. Edwin Edwards. Edwards and four co-defendants were convicted of extorting millions of dollars from riverboat casino operators in return for their licenses.
Binion is a son of legendary casino operator Benny Binion -- founder of the Horseshoe Club in downtown Las Vegas -- and brother of slain Horseshoe Club executive Ted Binion. Jack Binion managed the Horseshoe from 1964 to 1998. A legal battle with his sister Becky Behnen over control of the casino was settled in 1998 with Jack Binion selling all but 1 percent of the casino's stock to Behnen.
In a statement, Horseshoe Gaming called the Illinois action Friday "particularly distressing in light of the fact that both Horseshoe Gaming and Mr. Binion are licensed and in good standing in Nevada, Indiana, Mississippi and Louisiana."
"Mr. Binion has held a gaming license in Nevada for more than 40 years. Neither he nor the company has ever been denied a license in any jurisdiction," the statement said.
"Horseshoe Gaming will continue to operate while exploring all of its options to protect its employees, assets and the reputation of Horseshoe Gaming, including seeking an administrative hearing on this decision," said the statement, which added Horseshoe is the nation's largest privately held casino operator with annual revenue of $1 billion and 9,000 employees.
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