Schuetz: This Year’s G2E In Vegas, A Time For Serious Reflection

“Nothing to see here. Move along.”

— Unattributed

We are about to return to Las Vegas for another Global Gaming Expo, a.k.a. G2E. This is a time to celebrate all of the wonders of gaming and prepare for an even better future. G2E also celebrates the people of gaming.

It seems fitting that it is in Las Vegas, Nevada, for, after all, Nevada started it all with legal regulated gambling.

It is a bit ironic that since the last G2E, a few challenging situations have developed in and around Las Vegas that probably will not be celebrated at G2E. 

Last December, it was announced that Entain, PLC had entered into a $737 million deferred prosecution agreement relating to bribery offenses in the company’s former Turkish betting unit. Interestingly enough, Entain entered into a joint venture agreement with MGM Resorts International to form BetMGM on July 30, 2018, and the investigation resulting in the large fine was not initiated until 2019. 

One wonders what happened to MGM’s due diligence efforts. Also, where were the background checks that the U.S. is so famous for with its regulatory agencies that licensed BetMGM between 2019 and 2023? It appears that many U.S. regulators were either not concerned that one of the joint venture partners was involved in a bribery investigation or didn’t know it. So much for that “gold standard” nonsense.

Wait, it gets worse

We then find in January that Scott Sibella, who had been the president of the MGM Grand, pleaded guilty to money laundering involving an illegal California bookie named Wayne Nix.  As part of this, MGM Grand and its related property were fined almost $7 million and are required to spend another $750,000 over two years to enhance their compliance capabilities.

It should be a wake-up call to the gaming industry when the federal government needs to force a global gaming name to improve its compliance efforts or be prosecuted.

Coming from an old casino executive: For the federal government to tell you that if you do not get your act together in compliance we will prosecute you is a bit humiliating.

Interestingly, in a subsequent communication with reporter Dana Gentry, Sibella indicated he relied on the Corporate Compliance Committee at the MGM and was never invited to attend a meeting. (It is interesting to note that he was on Resorts’ Compliance Committee when things apparently went sideways there, but he indicated he never bothered to attend a meeting.)

What is also fascinating is that Sibella, now a felon who pleaded guilty to violating the Bank Secrecy Act by laundering money for an illegal bookmaker, plans on returning to the industry. In a release by his lawyer, Sibella stated, “As this process comes to a conclusion, I look forward to continuing to provide my knowledge, skills, and insights to support the continued growth, evolution, and professionalism of the gaming industry.”  

Maybe G2E can offer a panel on assisting felons in reentering the gaming industry as key executives to “support the continued growth, evolution, and professionalism of the gaming industry.” It seems that Sibella is expecting a pretty big mulligan from the regulators.

Also, published on Jan. 31, 2024, it was noted that in 2019, MGM Resorts International’s CEO and chairman and Nevada’s gaming regulators had received information about Sibella and other peoples’ activities. These communications included, according to emails, information that “drugs and prostitutes were allegedly provided to certain high rollers with criminal records who play with questionable bankrolls.” It appears that nothing came of this from the MGM or the NGCB until the feds moved in several years later. 

Add a major sports betting scandal to the mix

This March, a story broke about L.A. Dodgers baseball sensation Shohei Ohtani’s interpreter, Ippei Mizuhara, who apparently stole massive amounts of money from Ohtani. The story has a gambling angle. It seems that Mizuhara’s bookie was Californian bookmaker Matthew Bowyer, and that is where all of the money went.

The good news is that most of the $16-million-plus Mizuhara lost to Bowyer appears to be in Las Vegas between Resorts World (headed by Sibella) and possibly the Venetian. Resorts World was even kind enough to hire Bowyer’s wife as a host, which is certainly curious.

On April 30, someone apparently reminded the Nevada Gaming Control Board that it was responsible for overseeing the Nevada casino industry. It seemed unfair that the NGCB expected the federal government to do all the work. Plus, having the feds prove them incompetent or in the bag was embarrassing. The Nevada regulators then filed a three-count complaint against Sibella that suggested his behavior was highly inappropriate for a licensed key employee.

This is still pending. It is also interesting to note that all of the exhibits are federal documents.

That takes us to May 8, when a federal judge sentenced Sibella to a fine and one year of probation. During his sentencing, Sibella noted that he had been fired in September 2023 by his post-MGM employer, Resorts World Las Vegas, where he had been president and chief operating officer.

Before Resorts fired Sibella, a story by Gentry from August 2023 reported that the feds had opened an investigation of Las Vegas casinos for various forms of inappropriate conduct and that Sibella and Resorts were of interest in the investigation. Resorts World had also reportedly received a subpoena. Several weeks later, Resorts World fired Sibella.

It does appear that the Nevada Gaming Control Board was trying to catch up on all of this and filed a complaint against Resorts and its affiliated companies. Its 31 pages describe a casino and its management out of control. It gets really interesting when it discusses the involvement of organized crime.

In September, we saw that Wynn Las Vegas finalized a non-prosecution agreement with federal authorities by agreeing to pay $130 million to the Justice Department for illegal international money transfers. The news release by the U.S. Attorney’s Office, Southern District of California, states, “Today’s settlement is believed to be the largest forfeiture by a casino based on admissions of criminal wrongdoing.” The investigation of Wynn Las Vegas involved Homeland Security Investigations, IRS Criminal Investigations, the Las Vegas Financial Crimes Taskforce, and the Drug Enforcement Administration.

There’s always a butt

It has certainly been a busy year since the last G2E, and it no longer seems that what happens in Vegas stays in Vegas.

One thing that did not change is that Nevada still allows smoking in casinos. Sure, it damages the health of casino workers and customers. It is good business, however, for studies indicate that many problem gamblers smoke, and that is why allowing smoking is so important to the casinos. See here, here, and here. 

The industry and its fanboys and fangirls like to talk about their deep concern over problem gambling. Still, the rubber meets the road regarding the importance of problem gamblers in the casino profit picture, and as the industry well knows, problem gamblers love their smokes. 

As an aside, the Nevada law that allows for smoking in casinos also allows for smoking in Nevada’s brothels. This must make the industry proud being within such a select group. When it comes to smoking, apparently, water seeks its own level.

Even Nevada’s politicians will quickly mislead about smoking. Nevada congressional representative Dina Titus recently spewed industry talking points about ventilation systems as meaningfully protecting guests and employees in casinos. This has been proven false in many instances. See here, here, and here. I suspect Rep. Titus knows better, having a long history as a college professor, but she also needs political contributions to secure reelection ­— so she spouts the party line. 

Any adults in the room?

Anyway, what a year since the last G2E. Record fines, money laundering, organized crime, massive compliance failures, illegal bookies, and so on. And the federal government was on the leading edge of it, which has made the Nevada regulators appear asleep at the switch. And the industry continues to lie about smoking while simultaneously declaring special months for problem and/or responsible gambling.

I mention all of this for a reason, and the reason is that it is important.

I started in this business in 1971, working for Bill Harrah in Reno. During my tenure, I have never seen the industry so out of whack. I would also suggest that it quickly needs some adult supervision.

If you think the REITs or private equity firms in New York and elsewhere will provide this adult supervision, you are probably out of your mind. That is not what REITs and private equity do.

If you think the cheerleaders at the American Gaming Association will save it, you are also challenged. Remember, according to Gallup, lobbyists are the profession with the lowest ranking for honesty and ethics in the U.S. Moreover, they understand little about the industry and will probably move on to sell some other product in a few years if they get a better offer.

Politicians will not save you, for they seem all about pay-to-play.

And the operators, well, here is a chart of stock sales and salaries of insiders of a prominent U.S. gaming company for the last year that may prove interesting. It also may help explain why the ban-or-bankrupt model has become crucial to U.S. online sports operators and why aggressively selling to the young and dumb has become so important in the sports betting space.

One of the most surprising events over the last year, in my opinion, was the total lack of respect by the online sports betting operators toward the regulators in Massachusetts. I would have never dreamed I would see something like that during my career. I grew up in a totally different world of regulation.

And then, my final disillusionment is the continuing second-class treatment of women in this industry. This is not showing any signs of changing.

So, there is my rant, and I provided it because I care about this industry. I have been in it for over 50 years, and it has been incredible to me. 

My present concern is that what I see going on now is not sustainable, and there will be multiple backlashes to so much of it. If you can’t see, hear, and feel the backlashes, you are not paying attention.

It just may be time that when we get together as a group next week, we slow down some of the cheerleading and honestly attempt to address some of the challenging topics with a bit more rigor and honesty. The gaming industry affects a great many people in the U.S., for better or for worse. And these people deserve better than what they are getting. Much better.

—

Richard Schuetz entered the gaming industry working nights as a blackjack and dice dealer while attending college and has since served in many capacities within the industry, including operations, finance, and marketing. He has held senior executive positions up to and including CEO in jurisdictions across the United States, including the gaming markets of Las Vegas, Atlantic City, Reno/Tahoe, Laughlin, Minnesota, Mississippi, and Louisiana. In addition, he has consulted and taught around the globe and served as a member of the California Gambling Control Commission and executive director of the Bermuda Casino Gaming Commission. He also publishes extensively on gaming, gaming regulation, diversity, and gaming history. Schuetz is the CEO American Bettors’ Voice, a non-profit organization dedicated to giving sports bettors a seat at the table.