January 23, 2014 - 6:44 pm
The Nevada Gaming Commission on Thursday unanimously approved a record $5.5 million fine levied against the race and sports book subsidiary of Cantor Fitzgerald L.P. related to illegal bets by a top executive.
“Today is a bad day,” Commissioner Tony Alamo said. “This is an enormously large sum of money. This is a revenue get. That’s not our goal. Our goal is to punish” those who violate state gaming regulations.
Alamo credited CG Technology’s CEO Lee Amaitis for attending the hearing but cautioned him that this incident was national news and “gave Nevada a black eye.” Alamo said he wouldn’t want to see CG Technology come before the commission for a similar incident in the future.
“I am not afraid of revocation” of a company’s license,” Alamo said.
Chairman Peter Bernhard said he was initially reluctant to support the stipulation because of the damage done to the industry by the company. But Bernhard eventually supported it because it is the largest fine ever against a gaming company. He said the $5.5 million fine sends a message that “people will be held accountable.”
The three-member Nevada Gaming Control Board could have also recommended revoking or suspending CG Technology’s license.
Amaitis attended the hearing but did not address the commission. He also declined to comment on the commission’s decision following the 20-minute hearing.
The Gaming Control Board’s 18-count compliant outlining the charges against CG Technology, formerly Cantor Gaming, was made public Jan. 8. The settlement was released Jan. 13.
In the complaint, regulators said CG Technology failed to prevent Michael Colbert from operating an illegal sports betting ring that made an estimated $34 million in bets. Colbert, formerly risk management director and vice president of the former Cantor Gaming in Las Vegas, worked with three men who worked as messengers to place wagers for Gadoon Kyrollos, a high-level sports bettor.
Paul Sexton, Robert Drexler and Thomas Ludford acted as messenger bettors, according to the complaint. Sexton pleaded guilty to fourth-degree money-laundering and forfeited $600,000.
In 2013, Colbert pleaded guilty in federal court in New York to one felony count of conspiracy for his role in the betting ring. He awaits sentencing.
The settlement says CG Technology admitted guilt in 14 counts of the complaint and concurred that the board could prove one count directly relating to Colbert’s oversight of the illegal wagering operation. The company did not admit or deny allegations in three other counts.
Both Amaitis and Cantor Fitzgerald Chairman Howard Lutnick signed off on the settlement.
Before the CG Technology fine, the largest fine ever approved by Nevada gaming regulators was $5 million in 2003 against MGM Mirage, now MGM Resorts International. The company was fined for failing to file 15,000 currency transaction reports with the Internal Revenue Service.
Owners of the Stardust paid a $3 million fine in 1984 to settle a complaint over allegations that the now-imploded Strip casino’s former owner failed to prevent mob-related skimming of gaming revenue.
In 1988, Ralph Engelstad, late owner of the Imperial Palace, was accused of damaging the state’s reputation for holding two Adolf Hitler birthday parties at the casino in separate years. He paid a $1.5 million fine.
The Palms paid a $1 million fine in 2013 to settle a complaint resulting from an investigation that discovered drug sales and prostitution at clubs on the property.
Cantor Fitzgerald, founded in 1945, is one of the largest private financial services firms on Wall Street. Lutnick has led the company’s expansion over the past decade into investment banking, commercial real estate and gaming.
CG Technology operates race and sports books at the M Resort, Hard Rock Hotel, Tropicana Las Vegas, The Cosmopolitan of Las Vegas, The Venetian, Palms and Silverton, and provides information as Las Vegas Sports Consultants and offers mobile wagering.
The bookmaker also has operations in China and the Bahamas.