Casinos gone wild

September 7, 2012 1:53 pm

This blog usually avoids the gossip items found on, say, Page Six of the New York Post. But hey, it is Friday. And the long-running legal battle between Las Vegas casino mogul Steve Wynn and ‘Girls Gone Wild’ impresario Joe Francis is just too rich to pass up.

Wynn and Francis have been locked in legal battles for four years. Like many disagreements involving rich guys with giant egos, the latest lawsuit centers around money. Wynn claims Francis owes him money. Francis says Wynn threatened to kill him.

Francis said in 2010 Wynn threatened  to “hit me in the back of the head with a shovel and bury me in the desert” — the sort of “terrible lie,” Wynn denied the allegation and testified this week, that such a comment could damage his reputation and that of his gambling empire.

That’s right, Joe. Wynn is trying to run an upstanding gambling business in Las Vegas. Albeit one that profits by separating gamblers from their money. Wynn’s casino company is under investigation for violation of the Federal Corrupt Practices Act, for potential bribery issues in China. The last thing Wynn needs is a porn purveyor claiming he tried to have him whacked.

The legal fight would be funny if it didn’t underscore the types of characters casinos often associate with. In fact, casinos have long been known to attract mobsters and other sleazy characters. The dispute with Francis is just the latest chapter.

New Jersey sued over sports betting

August 9, 2012 10:41 am

The NCAA and four professional sports leagues sued New Jersey in federal court to stop the state from allowing betting on games at its casinos and race tracks.

The suit contends that New Jersey’s effort to allow sports betting violates federal law. Sports betting is legal only in Nevada, Delaware, Oregon and Montana. The suit added: “Gambling on amateur and professional sports threatens the integrity of those sports and is fundamentally at odds with the principle … that the outcomes of collegiate and professional athletic contests must be determined … solely on the basis of honest athletic competition.”

Gov. Chris Christie shrugged off the lawsuit, saying he believes the existing law is unconstitutional. But he added the state has long way to go in the courts. “I don’t believe that the federal government has the right to decide that only certain states can have sports gambling, and it does not acknowledge that there is illegal sports gambling going on in every state in America as we speak,” Christie said.

Even if Christie wins on the legal merits, that doesn’t make state-sponsored sports betting right. The state endorsement of sports betting will only prompt more people to gamble – and lose. More addicts will also be created, leading to more social costs paid by all taxpayers regardless of whether they gamble. (Read about the costs here.) See here how sports betting and addiction is especially a problem among young males, especially on college campuses.

The increase in big money bet on games will also likely lead to more players taking dives and games getting fixed, further undermining the integrity of sports. (See list of famous scandals here.) In the end, everyone loses.

Lottery contract leads to lawsuit

May 16, 2012 11:01 am

A federal judge has ordered the mayor of Washington, D.C. to testify in a lawsuit that alleges misconduct in the awarding of a lottery contract.

The lottery dispute is at the center of a legal dispute that is shining a light on dubious deals by D.C. officials. The lottery case alleges Mayor Vincent C. Gray and other officials wanted a different minority partner to get a piece of the $38 million contract.

The city’s former contract officer, Eric W. Payne, alleges he was fired because he opposed efforts to scrap the lottery contract. The fallout killed the lottery deal. Allegations of extortion and vendatta’s threaten to upend the mayor’s administration.

More broadly, the suit underscores the corrupting influence the lottery can have on governments. The river of money that flows from the lottery is a tempting honeypot for elected officials when it comes to awarding contracts and jobs. That issue is all the more troubling as more states look to privatize the lucrative lottery operations. Look for more shady deals and hookups as lawmakers and their friends jockey for control of the lottery.

Massachusetts gambling commission off to a flying start

May 10, 2012 10:45 am

“And the gambling commission is hanging on by the skin of its teeth.”

- Bruce Springsteen, “Atlantic City.”

The Massachusetts gambling commission is just getting started and it is already embroiled in controversey surrounding sexual abuse allegations against the interim head of the agency, who abruptly resigned last night.

Carl Stanley McGee resigned from the gambling commission after mounting criticism about the lack of a background check. McGee was accused of assaulting a 15-year-old boy in the steam room of a Florida resort in 2007. McGee was arrested, but Florida prosecutors eventually declined to press charges. The boy’s family filed a civil lawsuit against McGee, who eventually paid to settle the case. Critics of McGee’s appointment called for the settlement details to be made public.

Beyond the sexual abuse allegations, the appointment of McGee raises troubling questions about the integrity of gambling board, which is charged with vetting casino applicants to ensure against criminal elements and political corruption that has long been associated with gambling. Yet, the gambling commission failed to perform a basic background check of McGee.

Of course, none of this should come as a surprise to those familiar with the casino licesning process in other states. That’s because the awarding of gambling licenses is often more about political connections than insuring integrity of the process or getting it right. Exhibit A: Pennsylvania.

Then-Gov. Ed Rendell’s first pick to head Pennsylvania’s gambling control board resigned amid questions in his background. Former police officer Frank Friel was accused by the Pennsylvania Crime Commission of taking money from a club owner. He denied any wrongdoing and was never charged. Friel later testified that he had earned bachelor’s and master’s degrees when in fact he never graduated.

As an employee for a private security firm, Friel testified in support of a Philadelphia boxing promoter with alleged ties to organized crime who was seeking to hold fights at a Connecticut casino. Initially, Rendell stood by Friel. But after Friel resigned, Rendell blamed the press for digging up dirt on him. Pennsylvania lawmakers failed to learn from that controversey. The state’s gaming commission went on to award casino licenses to two people with past felony convictions. Licenses were also awarded to others with political ties to Rendell and other elected state leaders.

In Massachusetts, McGee was Gov, Deval Patrick’s point man in writing the casino law and getting it passed. His insider status was probably being counted on to help grease the skids for the licensing process. Now the Patrick administration will have to find another hack to do its casino bidding. Unfortunately, there is probably a long line of willing enablers on Beacon Hill.

Steve Wynn goes to the mattresses

February 23, 2012 10:50 am

Casino mogul Steve Wynn has gone to war with his former friend and major investor, Kazuo Okada. Wynn has put Okada on the defensive by moving to buy him out and remove him as a director from his casino company. But it is unclear if Wynn will win the battle but lose the war.

Indeed, the falling-out between the two tycoons could impact their respective multibillion-dollar gambling empires. (Okada made his fortune in pachinko machines, a Japanese gambling device that is a combination of pinball and a slot machine.) Each claims the other made improper payments to win favor in their respective Macau and Philippines casino markets. The dueling lawsuits has caught the attention of federal authorities, prompting the Securities and Exchange Commission to open a probe.

Reuters has a good take here. Meanwhile, The Wall Street Journal reports that Wynn was prompted to act to appease Nevada gaming regulators after learning that Okada allegedly made improper payments to officials in the Phillipines. Details of the payments are part of an internal report Wynn commissioned that was done by Former FBI director Louis Freeh. Read Freeh’s report here.

Of course, Okada fired the first shot by questioning $135 million in donations that Wynn made to a university in Macau, a booming casino market. After Okada’s suit was filed, an analyst invoked The Godfather by asking Wynn if he going to make Okada “an offer he can’t refuse.” Well, it looks like Wynn has decided to “go to the mattresses.”

Is it just a coincidence that such ganster phrases seem to pop up when discussing casino moguls?

Steve Wynn’s casino catfight

January 13, 2012 11:27 am

Casino mogul Steve Wynn is in a legal fight with a board member who is the biggest shareholder in his company. Now, two rich casino guys fighting over money isn’t really news.

But here’s the interesting detail that shows how casino owners buy their way into communities so they can then fleece the residents. According to the lawsuit filed by Kazuo Okada, Wynn will not show him financial records after he challenged the company’s donation of $135 million to a university in Macau.

Donation? For the uninitiated, Macau is the wild, wild west, er east of casinos. It’s the huge and growing gambling mecca in China. A $135 million donation to a university there sure sounds like a good way to generate some feng wei for a new casino. Or maybe Wynn just wanted to fund some tenured department chairs at the university to research how gambling destroys lives, increases social ills and produces no real economic spinoff.

Okada, who is a director in Wynn’s company and its largest shareholder, also wanted to see the records of how Wynn Resorts used $30 million of his money in its Macau developments. That money probably went to permit fees.

Okada is chairman of Japanese casino company and arcade-game manufacturer Universal Entertainment Corp. He and Wynn were good friends but now they are legal adversaries. The lawsuit hints at some insights into how casino deals get done. In some respects, things seem like they work the same in Macau as in Albany. See post below on Genting.

About those great casino jobs (part II)

December 13, 2011 10:12 am

We did a post yesterday about the low pay for many of the casino jobs that elected officials like to tout as a reason to legalize gambling. But then along comes a report in The Press of Atlantic City today that says the new Revel casino wants to limit the number of years people can work jobs as card dealers and wait staff.

The casino – which received a huge taxpayer bailout from Gov. Christie – is telling workers they can only stay in the job for a few years. Essentially, Revel is placing term limits on the jobs. Of course, the unstated reason behind the move is to keep down costs and ensure a steady flow of new, young employees to fill the jobs. Younger bodies tend to look better in the skimpy costumes that many female cocktail waitresses and blackjack dealers are forced to wear.

Indeed, nine waitresses sued the Resorts casino in Atlantic City earlier this year for age discrimination, alleging they were fired because they couldn’t fit in the new flapper costumes.

At Revel, the unions are balking and arguing the provision is a form of age discrimination. It’s also another example of how the casino jobs are not all they are cracked up to be. Indeed, many of the casino salaries of around $30,000 are not enough to raise a family, so are hardly worth the economic or social problems that come with gambling.