Published Thursday, Jan. 23, 2014 | 1:28 p.m.
Updated Thursday, Jan. 23, 2014 | 2:40 p.m.
The state treasury got a little richer today, but only because the state's reputation as a gaming regulator took a big hit.
The Nevada Gaming Commission levied the largest fine in its history, unanimously approving a $5.5 million penalty against CG Technology — the new name for Cantor Gaming, a race and sports book operator that manages books at the Venetian, Cosmopolitan, Hard Rock, Palms, Silverton, M and Tropicana properties.
Representatives of CG were present at today’s commission hearing and accepted the punishment. CG signed off on the fine earlier this month, so the only suspense today was whether the five-member commission would pile on by suspending or revoking the company’s license. Such an action could have been particularly devastating 10 days before the Super Bowl, the biggest sports-wagering day of the year.
But commissioners decided the fine would suffice.
GG has until the end of the day to make an electronic money transfer to the state. If it fails to do so, an interest payment of 5.25 percent, $288,750, would be assessed per day.
Approval of the stipulation by CG and the commission closes the case the state Gaming Control Board brought against Michael Colbert, former director of risk management and vice president of Cantor in Las Vegas. Colbert pled guilty in a New York federal court last year to one felony charge of conspiracy for his role in a nationwide illegal sports betting ring.
Earlier this month, the Control Board filed its 18-count, 35-page complaint against the company, accusing executives of lax oversight of their employees and poor record-keeping practices.
The complaint also accused the company of allowing messenger betting for high-roller Gadoon Kyrollos. The complaint alleges that CG permitted an estimated $34 million in illegal wagers.
Deputy Attorney General John Michela explained that the amount of the fine was determined based on a percentage of the handle of the illegal wagering and determining an amount that would discourage the activity from ever happening again. Proportionally, it was similar to a $250,000 fine assessed to John Ascagua’s Nugget in Sparks in a similar incident that occurred in 1999.
Lee Amaitis, CEO of CG, was present at the hearing but didn’t address the commission.
Attorney Mark Clayton of Lionel, Sawyer & Collins, who represented CG, said the company fired employees responsible for the illegal activity. Commission officials said five CG employees were terminated.
Clayton also said that even before the state’s complaint was issued the company installed new procedures to prevent a similar incident from occurring again.
Commissioner Tony Alamo acknowledged Amaitis’ presence, but warned him that “I’m not afraid of revocation.”
Commission Chairman Peter Bernhard and Commissioner John Moran Jr. said the incident gave the state’s gaming industry and regulatory process a black eye.
“When this came down, I was justifiably disappointed,” Moran said. “It did, in fact, tarnish our image. This simply can’t be tolerated or allowed. I hope this fine will set the mark to prevent this type of thing from ever occurring again.”
“This not only affected the company, but the state as well,” Bernhard said. “The case showed that we can always be vulnerable to human weaknesses, so even the best systems may not work. It doesn’t take much to bring the reputation of the industry down, and we all suffered as a result of what happened.”
Prior to addressing the CG complaint, commissioners reviewed a complaint involving violations by Bally Technologies with a smaller fine – $125,000.
Commissioners unanimously approved settlement of the 28-count complaint against Bally involving the filing of paperwork for employee registrations. Bally also self-disclosed 23 other violations.
It was the second time Bally has been fined for employee registration violations. In 2008, Bally was fined $65,000 for similar issues.
Bally executives say they have transferred some new financial compliance employees from the company’s new Shfl Entertainment unit to oversee employee registration paperwork in the future.
Employee registrations are important to the state because regulators like to keep track of software programmers who have access to gaming systems.