Inside Asian Gaming

JUNE 2015 inside asian gaming 45 The US government has stepped up its scrutiny of casinos’ compliance in recent years, with almost every major Las Vegas Strip casino operator from Las Vegas Sands Corp. to Wynn Resorts Ltd. and Caesars Entertainment Corp. becoming subject to federal investigations involving money-laundering laws. In August 2014, FinCEN also fined a Tinian Dynasty executive $5,000 and permanently banned him from working at any financial institution that does business in the US for his role in helping high- end customers circumvent anti-money-laundering rules. Judge Rules Against Caesars in Favor of Creditors Investors hammered the stock price of Caesars Entertainment Corp. in the first two days of June after a federal judge handed a small victory to creditors seeking to collect $750 million from the casino company’s bankrupt operating division. The lawsuit is one of several legal actions being taken against Caesars by several creditor groups who fear they will be cut out of recovering any funds through the Chapter 11 bankruptcy reorganization of Caesars Entertainment Operating Co. The division was placed into a pre-packaged bankruptcy in January. Creditors are suing Caesars over the company’s sale of several casinos, including Planet Hollywood Resort & Casino, Bally’s - Las Vegas and Harrah’s New Orleans Casino, to subsidiary Caesars Growth Partners in 2014. Caesars Entertainment plans to merge Caesars Growth Partners back into the parent operation after the bankruptcy is concluded. In a Securities and Exchange Commission filing in March, Caesars said the lawsuits represent a “material uncertainty” that could imperil the company’s ability to continue as a going concern. According to Bloomberg , US District Judge Shira Scheindlin ruled last month in New York the trustee representing CEOC creditors can ask her to rule on parts of the lawsuit without first holding a trial. A favorable ruling could force Caesars Entertainment into bankruptcy because of the liabilities it would owe. Caesars Entertainment has $22.8 billion in long term debt (by far the highest among its gaming industry peers), of which $18.4 billion is attached to CEOC. Through bankruptcy, which was filed in Chicago, the company hopes to eliminate almost $10 billion of the division’s debt and convert CEOC into a real state investment trust. CEOC controls Caesars Palace, Caesars Atlantic City, Harrah’s Reno Casino and Hotel and more than a dozen regional properties. On 1st June, Caesars’s three Atlantic City resorts faced a new challenge. New Jersey lawmakers introduced a bill that would allow three casinos to be built in the northern part of the state. Gov. Chris Christie said he supports the measure. US Government Slaps Fine on Tinian Dynasty Operator INTERNATIONAL BRIEFS Tinian Dynasty Hotel & Casino The US government fined a Pacific island casino operator $75 million for what it called “willful and egregious” violations of anti- money-laundering rules going back to 2008. The Treasury’s Financial Crimes Enforcement Network, or FinCEN, hit the Tinian Dynasty Hotel & Casino on the Northern Mariana Islands, a US commonwealth, with the civil fine, which was the biggest ever issued against a casino by FinCEN and the fourth largest ever imposed on any entity by the agency, said spokesman Steve Hudak. The penalty is a sign that FinCEN is acting after issuing warnings to casinos to step up their efforts to prevent money laundering. The previous top penalty against a casino was a $10 million fine imposed on Atlantic City’s Trump Taj Mahal casino in March, which at the time was seen as an increase in enforcement. The Tinian Dynasty Hotel & Casino is located on Tinian, one of 14 islands that form the Northern Mariana Islands, located north of Guam and about three-quarters of the way from Hawaii to the Philippines. Along with Puerto Rico, the Northern Mariana Islands are one of two commonwealths of the US. “Tinian Dynasty’s actions presented a real threat to the financial integrity of the region and the US financial system,” said FinCEN Director Jennifer Shasky Calvery in a statement. A representative for Tinian Dynasty declined to comment. The casino is also facing a related federal criminal case in Northern Mariana Islands District Court that is scheduled to go to trial 30th June, according to a court official. It follows a grand jury’s 158-count indictment for anti-money- laundering violations during September 2009 to April 2013. In a trial brief filed last month, prosecutors said that a special agent from the IRS Criminal Investigation unit found that the casino had failed to file more than 3,600 required reports for currency transactions over $10,000, the total value of which was around $138 million. Tinian Dynasty is owned by a Northern Mariana Islands- incorporated entity called Hong Kong Entertainment (Overseas) Investments Ltd., according to a 21st April Hong Kong stock exchange filing by Chinese Strategic Holdings Ltd., which said it was in talks to take over the casino’s operations. The anti-money-laundering penalty imposed on the 40-table casino by FinCEN is topped only by three others ranging from $110 million to $500 million levied against major banks HSBC Bank USA, JPMorgan Chase Bank and Wachovia Bank, said Mr. Hudak. Judge Shira Scheindlin