Nevada Gaming Commission Likely to Change CTR Policies for Rural Satellite Sportsbooks
The Nevada Gaming Commission is considering a change in the state’s gaming laws which would close a loophole for money launderers. The change being considered involves current transaction reports, usually referred to as CTRs.
Anytime a gambling transaction over $10,000 is processed, Nevada casinos are supposed to file a report to the Treasury.
The statute which requires the CTR policy is the Bank Secrecy Act, passed by the U.S. Congress in 1970.
CTRs and the Bank Secrecy Act
The BSA was passed by Congress as an anti-money laundering measure. Any large payments processed by a casino would be reported to the U.S. Treasury Department, so its auditors could monitor the flow of money in and out of casinos, which traditionally were a favorite hub for money laundering.
The BSA has one exception, though, which the Nevada Gaming Commission might eliminate. Under Article 22 of the Nevada gaming laws, casinos which make less than $1 million a year in revenues do not have to make CTR reports. In the past, they were considered to be beneath the attention of organized crime and other white collar criminals.
In the case of Nevada’s gaming business community, rural satellite sportsbooks often fall under the exemption. That is a potential problem, because satellite sportsbook operators could be approached by a money launderer with the cash to lure them into illegal money laundering. With enough sportsbooks spread around the state and enough compliant operators, a potential money launderer could launder millions of dollars through the system.
Mesquite Gaming Calls for Changes
Interestingly, it is the Mom-and-Pop operations in rural areas which are leading the movement to have the loophole closed. Catherine Catanzaro, the corporate compliance officer for Mesquite Gaming, sent a letter to the Nevada Gaming Commission in June 2016 asking for the loophole to be closed.
Mesquite Gaming wants the Gaming Commission to amend Article 22.
In her letter to the commission, Catherine Catanzaro wrote, “We believe the current practice of exempting these satellites from reporting winning sports book wagers of $10,000 or higher facilitates money laundering, increases the risk of criminal activity through third-party betting, impedes the efforts of law enforcement in identifying such activity and could potentially damage the integrity of gaming in the state of Nevada.”
$140 Billion in Laundered Money Each Year
No one is certain about the amount of money which is laundered through satellite sportsbooks in Nevada each year. The U.S. Treasury Department estimates $140 billion is laundered through sports betting operations each year, but it has no estimate for the amount small, rural sportsbooks launder.
The biggest offender, according to Treasury Department’s Financial Crime Enforcement Network (FinCen), is unregulated online sportsbooks and illegal out-of-state bookmakers. Organized crime rings and others with illicit revenue sources make sports bets without much care whether they win or lose. The idea is to put in dirty money and get back clean cash which is harder to trace. Whatever losses the bettor sustains is the cost of doing business, which is a win-win for the bookmaker and the money launderer.
FinCen monitors Nevada’s many casino operations and sportsbooks, just like it monitors gaming operations across the United States. The aggressive financial crimes unit sometimes fines Las Vegas Strip casinos for their failure to monitory money laundering, but small-time Nevada sportsbooks are entirely off FinCen’s radar.
William Hill’s Satellite Sportsbooks
The operator most likely to be affected by a change in policy is William Hill USA. Over the past few years, William Hill has developed a thriving network of sportsbooks in Nevada. While some of William Hill’s 108 Nevada-based sportsbooks are located on the Las Vegas Strip or in Off-the-Strip casinos, most of them are small-scale rural satellite sportsbooks.
Scott Scherer, an attorney for William Hill, says the change in policy could put these dozens of satellite operators at risk. Mr. Scherer noted that many of William Hill’s smaller sportsbooks are operated by one single cashier, while others are nothing more than automated sportsbetting kiosks. Scherer said the burden of implimenting such a policy could drive such operators out of business entirely.
Decision Expected on May 18
William Hill’s lawyer has a point. Installing some manner of anti-money laundering technology in kiosks might be a prohibitive cost for some operators. As for the single-cashier businesses, Mesquite Gaming and their supporters may have a point.
Catherine Catanzaro argues that the existence of single-employee betting stations is the reason to have such regulations, because there simply is no oversight whatsoever. The Nevada Gaming Commission has a hearing set for Thursday, May 18, at which time it is expected to approve an amendment to Article 22 of Nevada’s gaming laws.
