Paying $8.5M to settle money laundering complaints, MGM leaders say ‘we can do better’
The $8.5 million fine being paid by MGM Resorts, coupled with the Resorts World Las Vegas fine of $10.5 million, means the activities of ex-gaming executive Scott Sibella provided $19 million to the state, which could help alleviate Nevada’s budget crisis.
MGM Resorts International CEO Bill Hornbuckle was in the air between Osaka, Japan and Dubai, United Arab Emirates, when company attorneys and executives told the Nevada Gaming Commission about the numerous changes the casino giant implemented to boost its compliance with federal anti-money laundering laws.
Thursday’s hearing was added to the commission’s scheduled meeting a week after MGM and the Gaming Control Board agreed to the stipulated settlement covering a 10-count complaint. Commissioners were notified ahead of time that Hornbuckle had previous commitments.
One may have expected the CEO of a company with nine Strip resorts to address the regulators after agreeing to pay an $8.5 million fine, the fourth-largest in state gaming history, for the actions of a former executive who allowed illegal bookmakers to gamble millions of dollars in cash at two MGM Strip properties.
In a statement following the settlement, MGM Resorts said the company took “additional steps to strengthen safeguards, increase accountability, and reaffirm our commitment to doing what’s right for regulators, guests, and stakeholders.”
The company was well-represented by an outside gaming attorney, top executives and Richard Morgan, a former UNLV Boyd School of Law Dean who spent nearly two decades on the company’s compliance committee.
Gaming Commissioner George Markantonis was the only commissioner who noted Hornbuckle’s absence, but not in a derogatory manner. He wished the company well on its pending ventures outside of the U.S.
Hornbuckle first attended the groundbreaking of the company’s long-anticipated $10 billion resort complex in Osaka. Afterward, he flew to Dubai along with company Chairman Paul Salem and board member Barry Diller to meet with Maktoum Bin Mohammed, the emirate’s deputy ruler, to discuss hospitality and entertainment. Mohammed posted photos of the meeting on the social media platform X.
MGM is partnering with Wasl Asset Management Group on a 25-acre non-gaming resort development on Jumeirah Beach, one of Dubai’s man-made islands. The $1.2 billion project includes three hotel towers totaling 1,500 rooms and will be branded under the Aria, MGM Grand and Bellagio names. It’s unclear if gaming will be part of the development.
During the meeting, MGM representatives spent nearly 45 minutes outlining improvements made in its anti-money laundering (AML) program and increased training for all employees after it became aware that former gaming executive Scott Sibella had allowed gambling activities by two illegal bookmakers.
Compare the MGM presentation to one a month earlier. The leaders of Resorts World Las Vegas (including recently appointed CEO Alex Dixon, the top executive from owner Genting Berhad and its new oversight board) sat stoically in the same Las Vegas hearing room while accepting a fine of $10.5 million as the commission chastised the property’s managers for the same activity led by Sibella.
“I believe this is a clarion call up and down that street that [anti-money laundering] compliance audits [and] all of these things we talk about, we really mean it,” Gaming Commissioner Brian Krolicki said on March 27.
Last week, Krolicki again used the term “clarion call,” but noted MGM’s “very large presence in our state and around the planet” means the company needs to provide “a culture of compliance.”
MGM Senior Vice President Steve Martino told the commission that the company “had a good AML compliance program in place. But we could do better.”
He noted that in the last few years the company has banned more than 2,600 customers for compliance reasons and filed more than 46,000 suspicious activity reports with the Department of Justice.
“Over the last five to 10 years, this has been an evolving area of the law with the federal government,” said MGM General Counsel John McManus. “We understand that this is critical for our industry.”
Gaming attorney Scott Scherer told the commission that MGM had settled federal charges in the matter after paying a $7.5 million fine, adding the company paid a larger fine to Nevada, which “indicates the board and commission take this matter seriously.”
The gaming commission approved the settlement by a 4-0 vote — Commissioner Abbi Silver recused, citing her longtime friendship with Sibella.
The hearing also ended the agency’s regulatory activity involving Sibella. He agreed to placement on the control board’s “Gray List” of denials, revocations and findings of unsuitability, which includes a five-year ban from the industry.
A boost in Hawaiian visitation could help Boyd during F1 weekend
Boyd Gaming CEO Keith Smith seemed unfazed by an effort to legalize sports betting in Hawaii, which failed to pass last week in the state legislature. The company has spent 50 years bringing Hawaiians to its downtown resorts in Las Vegas.
“We know the residents have built a special trust,” Smith said following the company’s first-quarter earnings conference call last week.
Case in point: The University of Hawaii football team plays UNLV at Allegiant Stadium on Nov. 22 — the same day as the Las Vegas Formula One Grand Prix. Boyd expects a large group of Hawaiian visitors to travel for the annual “Island Showdown,” where the winning team earns the giant pineapple trophy.
“It wasn’t a mistake that it was scheduled that way,” Smith said, acknowledging Boyd lobbied for the game to be played during race weekend. “We don’t see any benefit from F1, but the game will draw lots of our customers on what otherwise would be a slow weekend for us.”
Smith said Boyd would have jumped into the market had Hawaii legalized online sports betting. Hawaii and Utah are the only states without any form of legal gaming — casinos, sports betting, lottery or horse racing.
He also said he didn’t believe legal sports betting in Hawaii would cause customers to alter visitation to Las Vegas. In the first quarter, Boyd’s revenue from its three downtown casinos grew 7 percent.
Sands exits the New York casino bidding process
Las Vegas Sands President Patrick Dumont said last week the company was ending its effort to win a New York City-area casino license, citing the state’s potential legalization of online gaming would slice into potential revenue from the casino.
Analysts, however, suggested increased construction costs because of higher tariffs may have played a role in the withdrawal.
“Increased construction costs rarely (never) generate incremental returns on capital,” Deutsche Bank gaming analyst Carlo Santarelli wrote in a research note.
Stifel Financial gaming analyst Steven Wieczynski suggested the company would have been the ultimate loser from the bidding process because of New York’s high tax rate and “competitive surrounding gaming jurisdictions.”
Sands, which is headquartered in Las Vegas but only operates casinos in Macau and Singapore since selling its Strip resorts for $6.25 billion in 2022, wanted to convert Long Island’s Nassau Coliseum and surrounding land into a $5 billion casino and entertainment complex.
However, the bid faced strong opposition from area residents and neighboring Hofstra University, which didn’t want to see the former home of the NHL’s New York Islanders turned into a casino.
Dumont said the company believes the location was the “best development opportunity” for a casino and would seek a third party to purchase its rights to the site.
What I'm reading
💲 Fitch: Not implausible to see U.S. operators forced to sell Macau casino interests should U.S.-China relations deteriorate further — Ben Blaschke, Inside Asian Gaming
Las Vegas Sands, MGM Resorts and Wynn Resorts could see their 10-year concessions terminated or not renewed when they expire in 2032 under a “worst-case scenario.”
🛫 Southwest Airlines drops forecast as U.S. trade war shakes industry — Rajesh Kumar Singh, Reuters
Alaska Airlines, Delta Airlines, Frontier Airlines and United Airlines have also adjusted their financial forecasts downward.
News, notes and quotes
😔 Alexis Herman, MGM board member and former U.S. labor secretary, dies
MGM Resorts announced that longtime board member Alexis Herman passed away last week. Herman, 77, was the first Black person to serve as the U.S. secretary of labor, appointed in 1997 by President Bill Clinton. “Over the years, Alexis actively sponsored, mentored, and coached many employees at MGM,” Chairman Paul Salem wrote on the social media platform LinkedIn. “Alexis was a tireless champion of the underserved and touched the lives of millions worldwide.” In a post on his LinkedIn page, MGM CEO Bill Hornbuckle said Herman, who was appointed to the company’s board in 2002, provided “individual career mentorship to me and many other leaders at MGM and throughout the community.”
👩🏻⚖️ Jennifer Roberts joins Resorts World Las Vegas as chief compliance officer
Gaming attorney Jennifer Roberts was appointed the chief compliance officer at Resorts World Las Vegas to oversee the property’s regulatory compliance, registration and licensing, anti-money laundering efforts, responsible gaming, and technical compliance. The move to bring in the longtime gaming attorney is part of the Strip property’s revamped compliance program after it paid a $10.5 million fine to state gaming regulators in March for violating federal anti-money laundering laws. Roberts has operated a law practice in Las Vegas after serving as general counsel at WynnBET. She also oversaw the regulatory body for Tennessee’s sports betting industry and has been associated with UNLV’s International Center for Gaming Regulation and with the Boyd School of Law.