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Poker Palace hit with $250,000 fine

25 May 2009

Las Vegas Sun

LAS VEGAS, Nevada -- A North Las Vegas casino has agreed to pay a $250,000 fine for allowing a group of alleged illegal bookmakers to lay off bets at the property's race book.

Representatives of the Poker Palace on Las Vegas Boulevard North did not dispute the action approved today by the Nevada Gaming Commission.

The state Gaming Control Board said in a five-count complaint that three Poker Palace employees provided unlawful rebates on pari-mutuel wagers, unlawfully shared pari-mutuel revenue, illegally accepted wagers from messenger bettors, illegally paid winnings to persons who did not place bets and failed to adequately monitor activities on the premises.

Poker Palace owner Marvin Coleman was cited for failing to adequately supervise his employees and his casino.

In a settlement agreement signed before the commission meeting, the Poker Palace agreed to the charges in the five-count complaint.

The Control Board launched an investigation in late 2006 when sports book audits uncovered uncharacteristically high handle on racing wagers at the Poker Palace. Using a board agent working undercover, investigators discovered that the casino sought the business of two or three alleged unlicensed bookmakers by offering an off-track pari-mutuel contest that effectively guaranteed the group a rebate on its wagering activity.

"While the off-track pari-mutuel contest at issue appeared to be legitimate on its face, based on the makeup of the cash-prize pool and the manner in which the contest was conducted, the contest was in actuality a front for an unlawful rebate scheme in violation" of Nevada law, the Control Board complaint said.

The complaint said that while the contest was technically open to anyone, the $2,500 entry fee was well above the wagering level of typical race book customers at Poker Palace, most of whom bet between $2 and $5 a race.

Historical data accumulated by the board indicated that the average monthly handle at the race book was around $100,000 and the monthly average didn't come close to the amount that occurred after the alleged illegal bookmakers became involved, laying off bets to protect themselves on wagers made by East Coast bettors.

Once Control Board investigators determined the identity of the alleged bookmakers, they called in investigators of the U.S. Immigrations and Customs Enforcement. The alleged bookmakers were not named in the Control Board's complaint.

In the stipulation for settlement, Poker Palace did not admit nor deny the allegations, but entered into the agreement because the owner believed the board could meet its burden of proof in the case.

Coleman did not attend the hearing, but was represented by two lawyers, including former Gaming Commission Chairman Bill Curran.

Of the $250,000 fine, $150,000 represented reimbursement of costs incurred by the board for the investigation and prosecution and $100,000 was the fine assessed on the five counts. The board could have fined the company $100,000 for each count.

The Gaming Control Board is a full-time agency run by a three-person panel that acts as the cop and tax collector for the state's casinos, while the Nevada Gaming Commission is a part-time, five-member panel that approves or rejects license applicants, writes and enacts the state's gaming regulations.

When the Control Board investigates possible wrongdoing by a licensee and finds one or more violations of gaming laws or regulations, the state's attorney general's office negotiates with the licensee's lawyers, and if a settlement agreement is reached, the attorney general's representative individually polls the members of the Control Board —avoid violating the state's Open Meeting law — to see if at least two out of three agree to recommend the settlement deal to the commission.

The commission then meets in an open hearing, and considers the complaint and the settlement. Today, the commission met in Las Vegas at its regularly scheduled monthly meeting and voted 5-0 to agree to the settlement, although new commission member John Moran Jr., in his second stint on the panel, said he thought the fine could have been more.

"They were lucky they had good lawyers on their side," Moran said.

The $250,000 fine the Poker Palace has to pay is substantial, one of the largest levied against a casino as small as Poker Palace, but far smaller than the handful of seven-figure fines that have been levied against some of the state's biggest gaming companies, including the record-setting $5 million fine against MGM Mirage for failing to file cash transaction reports used to combat money laundering.

According to the settlement, the Poker Palace has to pay the $250,000 by 5 p.m. Friday by electronic fund transfer.

According to the In Business Las Vegas Book of Business Lists 2009, Poker Palace has a 25,900-square-foot casino with 389 slots, seven table games and eight poker tables. The sports book is listed at 1,800 square feet.

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