Cokehead gets Nevada casino license; Cosmo sale near

Goodwill generated by the opening of SLS Las Vegas just went up Sam Nazarian‘s nose. The Los Angeles nightclub operator admitted to doing cocaine last April while living it up in Mexico. This is the kind of revelation casino pundits have been dreading, should Nazarian ever apply for a gaming license, which he has finally done. Much more concerning, however, is the revelation that Smilin’ Sammy Naz let himself be shaken down for over $2 billion by convicted felon Derrick Armstrong. He also laid $90,000 on Suge Knight and $83,000 on Hai Waknine, both of whom have been sent to the slammer.

And there may be others. “This isn’t the first time I’ve had to deal with this kind of parasite,” said Nazarian attorney Joseph Taylor. Another Nazarian consigliere, Anthony Cabot, argued that the incidents should be ignored in light of his business expertise. That’d be a bit like saying Allen R. Glick‘s relationship with Lefty Rosenthal should have been overlooked in light of his (Glick’s) business experience. Nevada Gaming Control Board Chairman A.G. Burnett played the role of apologist, saying solicitously, “I know that it’s been hard talking about these things. What we’ve been talking about is the tip of an iceberg — and the rest of that iceberg is your success in business … “Mr. Nazarian is really the face of the property,” Burnett continued weakly, sounding like counsel for the defense. “Referring the matter back does nothing. I don’t want you to be a denied applicant.”

The board, in a split vote, granted Nazarian a limited, one-year license, giving him time to — as it were — keep his nose clean. He won’t be able to participate in the operation of the casino at SLS, with President Scott Kreeger continuing to report to majority owner Stockbridge Real Estate while The Naz takes his Nevada-mandated drug tests.

* In other NGCB business, it approved the sale of a casino that Nazarian tried (unsuccessfully) to buy, The Cosmopolitan of Las Vegas. Current owner Deutsche Bank will take a massive bath on the transaction, unloading the $3.9 billion property for $1.73 billion. CEO John Unwin might want to update his resume, though: Incoming owner Blackstone Group hinted at big changes on the horizon — including physical alterations to the casino and facade — and outlined a simple, three-point strategy for the Cosmo, “buy it, fix it, sell it.”

The first priority for fiscal repair is — you guessed it — the casino. Were it not for that weak underbelly, Blackstone, a large-scale speculator in Nevada property, would be completely happy with the revenue mix it will inherit at the Cosmo. (I don’t know that I’d get all carried away and agree with Burnett that the perpetually money-losing resort is “a very successful location.”)

* With the words “money laundering” being whispered around Wynn Resorts — and fairly shouted at Las Vegas Sands and Caesars Entertainment — under a new regime of stringency at the Financial Crimes Enforcement Network, the American Gaming Association has been moved to action. It has issued its premier set of best-practice standards for casino operators. A score of compliance officers and lawyers was mobilized to draft the 17-page set of strictures which “outlines money laundering risks, regulatory requirements and compliance strategies.” High rollers are to be handled with caution, particularly if they hail from Macao or other “jurisdictions of concern.”

It’s good to see the AGA getting out in front on this issue, possibly sparing operators from regulatory agita in the near future. Association prexy Geoff Freeman continues to remake the advocacy body in his own image.