Hefty Casino Fines Signal Zero Tolerance

In the past few years, Nevada gaming regulators have levied three separate seven-figure fines against casino companies. Gaming Control Board Chairman A.G. Burnett says it’s “sending a message to the industry.”

Money goes into general fund

The half-million-dollar fine levied by the Nevada Gaming Commission against Mandalay Bay for illegal drug and prostitution activity is a signal to the casino industry that such hijinks will not be tolerated, according to a report in the Las Vegas Review-Journal.

A five-count complaint maintained that employees of the House of Blues Foundation Room provided illegal narcotics and prostitutes to undercover officers four times during a two-month period in 2012. In addition to the $500,000 fine, MGM agreed to pay $17,000 to cover the cost of the investigation.

MGM attorney Ellen Whittemore said the company was “embarrassed” the incident took place at one of its Strip properties. Mandalay Corp. President and COO Charles Bowling also offered his regrets to the commission, along with three other MGM Resorts executives.

“I’m disappointed we’re here discussing this matter,” Bowling said. “Within the hour that we received the complaint on this matter, we went in proactive action to understand what happened.”

The general manager of the House of Blues was fired, along with other employees involved in the scandal, he said. “This was a message to our company that you have to keep your eye on your smaller venues, not just your large nightclubs,” Bowling said. He added that the House of Blues contract for the Foundation Room “would be terminated” if a similar incident occurs.

MGM, owner of Mandalay Bay, is legally responsible for the incident, even though it is the landlord and not the owner. “It’s clear to me the tenant hung the licensee out to dry,” said Commissioner John Moran Jr.

In the past 15 months, state gaming regulators have accepted three separate seven-figure payments from gaming companies to settle disciplinary complaints. That’s the same number of seven-figure fines the state issued in the previous 28 years, the Review-Journal reported.

Sports book operator CG Technologies (formerly Cantor Gaming) was fined $5.5 million for allowing one of the company’s key executives to run an illegal sports wagering operation. The Peppermill in Reno was charged $1 million for allowing one of its employees to use a slot machine reset key to access proprietary information from rivals. The Palms in Las Vegas was hit up for $1 million on drug and prostitution charges.

“We’re not hunting or going after people and we’re not in a mindset of trying to be adversarial with the industry,” Burnett said. “But these events have happened, it seems, one after another.”