The Lotto Report
Originally Posted: Feb 26, 2004 - 5 PM
Revised: Feb 26, 2004 11:20 PM
Disturbing Gaming News
GAMING CONTROL: Venetian to pay $1 million
Casino admits 'serious violations' in rigging
The Venetian agreed Wednesday to pay $1 million in fines and investigation costs to settle a first-of-its-kind complaint that the resort had fixed promotional contests to favor specific Asian high rollers.
State Gaming Control Board Chairman Dennis Neilander said The Venetian admitted to "serious violations" in the case that "would tend to undermine the public's confidence (in the industry), which is the worst kind (of violations) you can have."
Neilander said when the violations came to light in early 2002, regulators discovered other casinos were about to initiate similar programs to rig contests, all of which have been stopped.
He said The Venetian has since initiated programs to ensure the violations of state gaming laws and regulations that took place between 1999 and 2002 are not repeated.
University of Nevada, Las Vegas professor and casino industry expert Bill Thompson said the two-year investigation and stiff fine should send a signal that the state is serious about keeping casino games honest.
"I don't know if it was fair, but it's appropriate if the message is that everything in a casino has to be conducted with the highest level of integrity," he said.
David Friedman, top aide to Sheldon Adelson, who owns The Venetian's parent company, Las Vegas Sands, said his company reported the incident to the control board as soon as it was discovered and launched an internal investigation.
He said the investigation uncovered four "rogue employees" involved in the scam, including two senior executives. All four of the employees were immediately suspended and later terminated without severance.
The Venetian also reported an alleged credit scheme involving several Taiwanese patrons and employees of the company's Asian marketing department, Friedman said.
The first count, which kicked off the investigation and resulted in the 12-count complaint filed Wednesday morning, involved Venetian executives rigging a promotion to give a Mercedes-Benz to an Asian high roller.
Sources said casino executives were attempting to make the gambler happier after he lost $5 million.
Thompson pointed out that rigging the car giveaway was unnecessary.
"We have ways of doing that. We could take him to a show or give him a car free, but you don't cheat your customers," he said.
The second and third counts involved two other rigged contests that gave away a $20,000 chip and a $10,000 chip. The fourth court claimed two property executives knew about the contest-rigging but failed to stop it.
The sixth and seventh counts involved failure to file cash transactions reports, the ninth was an accounting violation for failing to report dispersing promotional funds, the tenth involved inadequate procedures for voiding markers, and the last two concerned The Venetian's purchase of seven $15,000 cases of wine from a Mexican patron, rather than a state-licensed wholesaler as required by regulations.
The fifth count, which The Venetian did not admit to, involved a scheme to give some gamblers more credit than they were entitled to and the eighth count, which The Venetian also did not admit to, involved a key employee who allegedly improperly placed sports bets in his own name but on behalf of a customer.
"These incidents were unfortunate and should never have occurred. However, The Venetian's response to each situation demonstrated that The Venetian's compliance programs are effective," Friedman said in a statement.
The Gaming Control Board unanimously agreed to the proposed settlement, which goes to the Nevada Gaming Commission for consideration at its March 18 meeting.
(Note from Dawn Nettles - Lotto Report: Before reading this next story, in an interview with some who knew the lottery director who died, I want to tell you I've learned that Mr. Andersen was not eating in his last few days and that he was having some blood sugar problems that put is mind into a bad state. Mr. Andersen was a witty intelligent man who could have found lots of other options. For those who who knew him well, it was hard to accept that he committed suicide, but a blood sugar imbalance that caused sudden depression and delusion is most likely the true answer to his death.)
Longtime lottery director dies day after meeting with auditors
CHRIS WILLIAMS - Associated Press - Jan 28, 2004
MINNEAPOLIS - The longtime director of the Minnesota State Lottery died on Tuesday, apparently by suicide, a day after meeting with legislative auditors examining the lottery's operations.
Cmdr. Scott Malinosky of the Washington County sheriff's office said it appeared that George R. Andersen, 53, killed himself, probably with a knife. A note was recovered, but Malinosky would not describe it.
Malinosky said authorities were called by Andersen's family about 7 a.m. after they found him outside their home in a residential area of Hugo, which is about 16 miles northeast of St. Paul.
Paramedics took Andersen to Regions Hospital in St. Paul, where he was declared dead. Autopsy results were expected Wednesday.
Andersen was married with two grown children, according to a statement from the lottery.
Law enforcement officers and the Ramsey County medical examiner's office were investigating the death.
Andersen has been the director of the lottery since it began in April 1990. The position is unique in the amount of independence it allows. Directors can be removed from the job by the governor only in cases of wrongdoing, violating a strict conflict of interest policy or for failing to "perform adequately."
Gross revenue and efficiency of operations are factors used to determine adequate performance, according to state law.
A legislative auditor's report on the lottery is due late next month. Legislative Auditor James Nobles said in a statement that he met with Andersen on Monday to discuss the report.
"We had a cordial and productive meeting, and when I left I thought George had handled the meeting well and he seemed in good health," the statement said. Nobles declined to discuss the content of the audit or elaborate on the meeting.
Gov. Tim Pawlenty said he wasn't aware of any financial irregularities in the lottery office nor was his administration investigating Andersen.
The audit - meant to look at how the lottery was run as opposed to a review of its accounting - was requested by Sen. Ann Rest, DFL-New Hope. Rest said she spoke with Nobles about the review Tuesday. She wouldn't provide details, but said it would recommend ways "to improve the performance of the lottery."
Rest said she became concerned last year when the Minnesota Center for Environmental Advocacy studied the lottery and concluded that it costs far more to in Minnesota than in comparable states.
In response, lawmakers placed stricter limits on operating expenses, which resulted in 34 layoffs in October.
Andersen had said the report wasn't fair because every state lottery is run differently.
By law, much of the lottery's profits are directed toward conservation and environmental efforts.
In fiscal year 2002, for example, the lottery turned over $81.6 million to the state, of which $36 million went into the general fund and the rest was divided among natural resources, environmental and game and fish funds.
The money came from overall revenues of $378 million that year and the lottery spent $50 million - 13 percent of revenues - on its own operations.
Pawlenty called Andersen "a tireless advocate for Minnesota." In fiscal 2002, the lottery contributed more than $43 million to the state's environmental efforts, according to the lottery's Web site.
"Through a lot of his hard work, we have been able to make significant investments in the protection of our natural resources," Pawlenty said. "For this, we can all be grateful."
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