Question of the Day - 16 September 2024

[Editor's Note: Once again, this answer is provided by LVA business blogger, David McKee.]

Despite increasing efforts at awareness, money laundering is, as you say, a growing problem in the casino industry. No fine seems to be a large enough deterrent.

Memories are especially short in the casino industry. In 2014, Las Vegas Sands was hit with a then-whopping $47 million federal fine for money laundering. It had been failing to file Suspicious Transaction Reports (intended to monitor the movement of large sums of cash), including deposits from and payments to a Mexican drug lord. An investigation of Caesars Entertainment followed shortly thereafter, but evidently didn’t find anything definitive enough to issue a fine.

The Wynn scandal, however, comes hard on the revelation that Resorts World had been serving as a laundromat for the ill-gotten gains of illegal bookies. In a particularly egregious and, we'd say, obvious move, Resorts World executives allowed the wife of bookie Mathew Bowyer to collect commissions on her husband’s high-rolling play, meaning the Bowyers benefited even when Mr. Bowyer lost (as he usually did).

Even then, Wynn’s criminal scheme was the most brazen and extensive to date, so much so as to make Resorts World look like amateurs. Among the particulars was the so-called “Human Hat” strategy, whereby undesirable individuals did their gambling via hired stooges. It’s a Mandarin term, “ren tou,” which strongly suggests that Wynn learned this while operating in Macau.

Ditto the “Flying Money” (or “quian chen”) scheme. As the feds explain it, “A money processor, acting as an unlicensed money-transmitting business, collected U.S. dollars in cash from third parties in the United States and delivered it to a Wynn patron who couldn't otherwise access cash in the U.S. The patron then electronically transferred the equivalent value of foreign currency from the patron’s foreign bank account to a foreign bank account designated by the money processor. The WLV patron paid the money processor a percentage of the value transferred.”

And that’s just the tip of the Wynn iceberg, which included hiring, as an overseas executive, someone so unsavory that he wasn’t allowed to enter the United States.

Clearly, this has all been going on for a long time and with the full cognizance of the Wynn higher-ups. So far, no top executive has offered his resignation and the Nevada Gaming Control Board has been silent. In the wake of the largest penalty in gambling history ($130,131,645), one wonders how much longer that silence can last.

By the way, money laundering is just as much (if not more) of a problem in the Australian casino industry. Part of that is due to its “too big to fail” structure, whereby two companies control 95% of the market. Both Star Entertainment and Crown Resorts have been caught washing dirty Chinese money and both have been fined big time. Both have had executive house cleanings, as well. 

The difference is that Crown was sold (to U.S.-based Blackstone Group) and looks like it will exit with its house in order. Star has had to go through a second executive purge, as well as the presence of government monitors. Its suitability to retain its gaming license remains very much in doubt as of this writing, as does its ability even to continue as a going concern.