MGM admits wrongdoing, as Nevada regulators approve $8.5M fine

MGM Resorts Takes Responsibility with Comprehensive AML Reform Plan Following $8.5 Million Fine

In a significant move reflecting its commitment to compliance, MGM Resorts has pledged to implement substantial reforms concerning its anti-money laundering (AML) protocols. This decision comes in the wake of the Nevada Gaming Commission’s (NGC) approval of an $8.5 million fine against the company, concluding extensive investigations into alleged deficiencies in its AML practices. The fine, sanctioned unanimously by a 4-0 vote, marks the second such action by the NGC in just over a month regarding casino compliance procedures—an area of increasing scrutiny across the Las Vegas Strip.

Recent Developments and Obligations

The NGC’s latest ruling follows a similar settlement involving Resorts World Las Vegas (RWLV), which incurred a $10.5 million fine last month under circumstances linked to Scott Sibella, former president of MGM Grand, who left that position in 2019 to lead RWLV. Sibella, whose own tenure ended amidst the ongoing scrutiny, was placed on probation in 2023 for federal offenses, including failure to file Suspicious Activity Reports (SARs).

Unlike RWLV, which neither accepted nor denied any charges, MGM Resorts openly acknowledged its shortcomings. “We did not obstruct the investigation; we cooperated fully, recognizing that a sanction was forthcoming,” stated MGM’s chief legal officer, John McManus, during the hearing.

Crucial Findings and Compliance Shortcomings

The NGC’s decision stemmed from a 10-count complaint against two MGM properties—the MGM Grand and The Cosmopolitan of Las Vegas—following investigations into the actions of illegal bookmakers, notably Wayne Nix. Nix, who pleaded guilty in 2022 to operating an illegal gambling operation and tax offenses, raised red flags when he made cash deposits exceeding $50,000, primarily in small denominations, without the required reporting.

Investigators found that between 2017 and 2020, the Cosmopolitan accepted nearly $929,000 in illicit funds linked to Nix’s operations, highlighting the gaps in MGM’s AML framework. The complaint detailed how Nix often transported cash in various containers, including brown paper bags and duffle bags, to facilitate his illegal activities.

Interconnected Relationships and Bookmaking Operations

Nix’s relationship with Sibella extended beyond mere acquaintance, involving friendly golf trips that raised ethical concerns. Nine of the ten charges levied against MGM pertained to Nix, while one charge involved Matt Bowyer, another illegal bookmaker, whose operation took over $325 million in bets, notably from a former interpreter for MLB star Shohei Ohtani.

MGM’s management had reportedly raised concerns about Bowyer’s illegal activities as early as 2015, although he was not banned until three years later, underscoring compliance lapses within the organization.

High-Profile Clientele and Industry Implications

The Nix operation reportedly serviced a roster of high-profile clients, including well-known athletes and personalities, which further complicated MGM’s position. This reality demonstrates the far-reaching impacts of lax compliance in the gambling industry, prompting regulators to strengthen their oversight measures drastically.

The recent settlement parallels a federal non-prosecution agreement executed earlier this year, wherein The Cosmopolitan agreed to pay a $928,600 fine, suggesting a pattern of compliance failures across major casino operators.

Commitment to Cultural and Compliance Reforms

MGM Resorts, represented by a legal team including attorney Scott Scherer, outlined a proactive eight-point remediation plan encompassing enhanced cooperation with regulatory bodies. CEO Bill Hornbuckle, albeit absent during the hearing due to business engagements abroad, emphasized the importance of maintaining a compliance-focused culture right from the top management down.

Key initiatives outlined in MGM’s strategic overhaul include:

• Implementing a structured credit information sharing system between the credit and compliance departments to enhance know-your-customer (KYC) reviews.
• Elevating due diligence measures for the company’s 25 highest-volume cash customers.
• Formulating robust protocols for large cash transactions, mandating that all transactions exceeding $100,000 be reported to the compliance department, irrespective of the denominations involved.
• Investing over $1 million into the improvement of AML frameworks.

Position of the Nevada Gaming Commission

Jennifer Togliatti, NGC chair, expressed support for the settlement while Commissioner Brian Krolicki reiterated the severity of money laundering infractions, prioritizing the integrity of the gaming landscape. Krolicki’s remarks conveyed a stark warning to illegal bookmakers: Nevada regulators are committed to enforcing stringent penalties against all illicit activities.

A New Era with Incoming NGCB Chair

The appointment of Mike Dreitzer as the new chair of the Nevada Gaming Control Board is expected to usher in a fresh regulatory perspective. With extensive experience in gaming technology and prior regulatory roles, Dreitzer’s leadership could pave the way for more rigorous compliance measures across the state, mitigated by recent high-profile cases of non-compliance.

Future Outlook

As MGM Resorts transitions into this new phase of heightened regulatory diligence, the emphasis remains on establishing an impermeable compliance culture that safeguards against future infractions. The industry’s ongoing challenges underscore the critical importance of adhering to AML guidelines, ensuring that operators can maintain their reputations and operational licenses in an increasingly competitive market.