MGM agrees to $8.5 million fine for AML failures

MGM Resorts has reached a settlement of $8.5 million (£6.4 million/€7.5 million) with Nevada regulators following a series of anti-money laundering (AML) violations associated with two illegal bookmakers.

On April 17, the Nevada Gaming Control Board (NGCB) filed a comprehensive ten-count complaint against MGM Resorts International alongside a stipulated settlement for the imposed fine. The violations under scrutiny occurred at two prominent MGM properties on the Las Vegas Strip: the MGM Grand and the Cosmopolitan. This settlement follows a similar $7.45 million penalty that MGM paid in January under a federal non-prosecution agreement concerning the same issues.

The Nevada Gaming Commission (NGC) is set to render a final decision on this settlement during its meeting on April 24. The governance framework in Nevada employs a dual-regulatory system, whereby the board executes operational oversight, while the NGC provides the final adjudication.

The issues faced by MGM primarily stem from two notorious illegal bookmakers: Wayne Nix and Mathew Bowyer. Notably, nine of the ten counts levied by the NGCB pertain to Nix’s activities, while the remaining count is directed at Bowyer. According to the NGCB’s complaint, MGM executives, including Scott Sibella, were allegedly aware of the illicit origins of both bookmakers’ funds but permitted their gambling activities to continue, with unreported cash markers complicating the situation further.

Currently, Nix and Bowyer await sentencing in federal court on charges of money laundering and illegal gambling. At the time of these violations, Sibella held the position of president at MGM Grand and was later sentenced to probation and a monetary fine for his involvement, resulting in the revocation of his state gaming license for a minimum of five years.

In its official statement, the NGCB indicated that the settlement stipulates the implementation of specific conditions on MGM and its gaming licenses, coupled with multiple ‘remedial measures’ aimed at reinforcing compliance at MGM and its subsidiary properties.

Latest Chapter in a Broader AML Scandal

If approved, this settlement will represent another development in an extensive series of AML scandals. Bowyer’s illicit operations were similarly implicated in a significant investigation leading to a $10.5 million settlement with Resorts World Las Vegas (RWLV) on March 27.

In this context, it should be noted that Bowyer was allowed access to gamble at RWLV, and his activities included the hiring of his wife, Nicole, as his personal host, further entrenching the conflict of interest. The NGC found that Bowyer’s gambling losses at RWLV exceeded $7.9 million. A proposed settlement for Nicole Bowyer was rejected in January, with the NGC advocating for her lifetime ban from the gaming industry.

High-profile clients also complicate the narrative. Ippei Mizuhara, previously the English-language interpreter for baseball star Shohei Ohtani, was sentenced to 57 months in prison for embezzling approximately $17 million from Ohtani to fund gambling through Bowyer. The U.S. Attorney’s Office highlighted this case as one of 2024’s most significant stories within professional sports.

Reports indicate that Mizuhara funneled a portion of his gambling losses through an associate of Bowyer, who subsequently transferred funds to marker accounts at both RWLV and the Pechanga Resort Casino in California. Over a 14-month span, Bowyer’s gambling activities at RWLV alone aggregated $6.6 million in losses.

Alleged Failures to Report Suspicious Activity

The investigation by the Nevada authorities uncovered that MGM and its affiliated properties had identified numerous red flags surrounding Bowyer’s gambling behavior as early as March 2015. The NGCB filing cites a specific instance in April 2018 in which a host and two marketing managers were explicitly alerted to Bowyer’s illegal bookmaking, yet failed to adhere to MGM’s AML policies or internal controls regarding the reporting of suspicious activities. Over a span of four years, Bowyer reportedly placed wagers across MGM properties on more than 300 occasions.

Sibella transitioned from MGM Grand to the presidency of RWLV in 2019 but faced termination in September 2023 for violating company policies. His statement to the Las Vegas Review-Journal highlighted that both bookmakers operated freely within all major casinos before, during, and after RWLV’s opening.

MGM’s Leadership and Oversight Concerns

Amid ongoing scrutiny, regulatory improvements have been evident at RWLV, with a new board of directors and CEO established in response to prior scandals. Nevertheless, the resurgence of personnel linked to MGM raises questions about the effectiveness of these changes. Key figures, including former MGM CEO Jim Murren and Nevada’s two-term governor Brian Sandoval, maintain involvement with RWLV; this may be scrutinized if further federal actions arise.

Commissioner Brian Krolicki of the NGC recognized the newly appointed leadership as a potential “dream team,” though he noted that any subsequent federal developments could instigate additional regulatory inquiries against RWLV.

Reports suggest that Murren and the NGCB were alerted to Bowyer’s potential AML violations as early as 2019, a timeframe that implicates a broader culture within the industry regarding compliance standards. Murren currently serves as chairman of the General Commercial Gaming Regulatory Authority in the United Arab Emirates, extending the conversation surrounding regulatory oversight beyond U.S. borders.

MGM’s Commitment to Strengthen Compliance Protocols

This settlement comes closely on the heels of MGM Resorts CEO Bill Hornbuckle’s recent address at the East Coast Gaming Congress in Atlantic City. Hornbuckle emphasized the company’s unwavering commitment to maintaining a robust compliance culture and ongoing dialogue with regulators, particularly in response to incidences of money laundering.

In light of the settlement, MGM issued a statement reinforcing its dedication to compliance: “MGM Resorts takes its compliance responsibilities seriously and has cooperated fully with the Nevada Gaming Control Board to resolve this matter. The company has invested significantly in building a robust AML program, grounded in executive leadership, rigorous training, and internal controls.”

Escalating AML Concerns in Las Vegas

The $10.5 million settlement with RWLV represents one of the largest penalties issued by state regulators, second only to Wynn Resorts’ $20 million fine in 2019 concerning failure to adequately address sexual harassment allegations against its founder, Steve Wynn. MGM’s settlement now ranks fourth largest, following a $10 million personal settlement with Wynn in 2023.

Regardless of these actions, concerns surrounding money laundering continue to proliferate in Las Vegas. Notably, the recent dismissal of Spencer Evans, head of the FBI’s Las Vegas Field Office, after over two decades may signal heightened scrutiny over compliance issues, with the investigative mantle now resting in the hands of Jeremy Schwartz.

This evolving narrative underscores the critical importance of stringent regulatory oversight in combating money laundering within the gambling industry, emphasizing the need for continuous improvement in compliance practices across major operators.

– Reporting by Matt Rybaltowski