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Rod Smith
 

Nevada Commission Imposes Venetian Fine

19 March 2004

NEVADA – The Nevada Gaming Commission Thursday reluctantly imposed an agreed-upon $1 million fine on The Venetian for rigging contests and violating state gaming regulations but only after chastising other state agencies for not pursuing the case more vigorously.

Chairman Peter Bernhard and Commissioner Art Marshall, who called the violations the "most serious" they have dealt with during their tenures on the commission, criticized the state attorney general's office and the Gaming Control Board for taking a year to bring the eight-count complaint before the commission.

They also took the agencies to task for failing to schedule an evidentiary hearing to determine who was responsible for rigging the contests at The Venetian, what their motives were and whether any criminal conduct might have been involved.

"This is the most serious complaint I've seen since I've been on the commission. The issues go to the heart of the integrity of the industry," Bernhard said.

The eight counts stemmed from a first-of-its-kind complaint that the resort had fixed promotional contests to favor specific Asian high rollers.

Drawings were conducted for patrons who had credit lines at the Venetian, and they were issued tickets in an amount corresponding to their credit lines, according to the complaint.

The Asian high roller at the center of the case, who was also the big loser in the casino over the Chinese New Year weekend in 2002, was preselected to win a Mercedes-Benz.

The complaint said a Venetian executive who rigged the drawing with a cohort hid the winning ticket in his shirtsleeve and pretended to draw it randomly from a batch of entries before announcing the "winning" ticket.

"I can't imagine the people involved did not know this was wrong. I would like to hear testimony. The industry must be self-policing, and I'm reluctant to go ahead (and approve the settlement)," Bernhard said.

Tony Cabot, a partner in the law firm Lionel Sawyer and Collins who represented The Venetian, said "rogue employees" at the hotel-casino acted independently and that management took steps to correct the situation as soon as it was discovered.

Bernhard, however, argued "no rogue employees benefited, so they (must have) thought they were acting for the benefit of the hotel."

Marshall echoed Bernhard's concerns, and added that public hearings should have been held so the general public could understand the issues involved.

The commissioners' concerns were echoed by professional gambler Chuck Torchick, who said the commission should refer the complaint to the attorney general for criminal prosecution.

"I'm shocked there was no mention of criminal charges. If this commission wants any credibility, criminal charges have to be brought. If they aren't, you should throw a picnic and go home," Torchick said.

"This is why the commission and the state have no credibility. People think the gaming industry runs this town. And in this case, they're right," he said. Rob Goldstein, president of The Venetian, called the case "a tough one" for his property as well as for regulators.

He said The Venetian has a zero-tolerance policy toward violating state gaming laws and regulations.

"It should never have occurred and hopefully will never happen again," Goldstein said.

Other parts of the complaint dealt with rigged contests to give away a $20,000 chip and a $10,000 chip to high rollers who lost large amounts at the casino and improper record keeping.

Two counts of the complaint dealt with schemes to give some gamblers more credit than they were entitled to and a key employee who improperly placed sports bets in his own name but on behalf of a customer. The Venetian, however, did not admit to either of those counts as part of the settlement. Also on Thursday, the commission approved gaming licenses for the Bourbon Street near the Strip and its new owner, Michael Bloch.

Bloch, whose license had become mired in controversy because of issues involved in his failed Texas real estate operations in the late 1980s and early 1990s and the administration of an offshore trust he had set up at the same time for the purported benefit of his children, was intensely questioned by Bernhard.

Bernhard said the issue was not whether the trusts were sham operations, but whether Bloch had been honest in disclosing the trusts when settling debts stemming from his failed real estate operations.

In the end, he supported the license applications on the basis of Bloch's personal assurances about how he would handle similar relationships and transactions in the future.

The commission also approved licenses for Barrick Gaming, which is buying most of Jackie Gaughan's downtown real estate assets and is planning to use its casino operations as the "anchor tenant" for a massive redevelopment of Las Vegas' urban core.

With the license approval, Barrick Gaming will proceed with its acquisition of the Plaza and its seven additional acres, the Las Vegas Club, the Gold Spike and the Western Hotel, which it plans to retheme as a Latino destination resort. Together, the hotels have 1,850 rooms and suites, 3,000 slot machines, and about 1,900 employees.

The Barrick deal also includes other developed and undeveloped property in downtown, and first right of refusal to purchase the El Cortez.