GamblingCompliance: Nevada’s Mesquite Gaming Seeks Stricter AML Reporting For Sportsbooks

6TH OCT 2016 | WRITTEN BY: CHRIS SIEROTY

The Nevada Gaming Control Board on Thursday will consider a petition filed by a small Nevada gaming company that seeks to have regulators tighten reporting requirements for cash payouts at satellite sportsbooks across the state.

The three-member control board will consider Mesquite Gaming’s petition to amend Nevada Gaming Commission regulations to require satellite sportsbooks that are not subject to federal anti-money laundering (AML) reporting requirements to submit a “Satellite Sports Book Payout Report” to Nevada regulators.

The report would cover all non pari-mutuel payouts of $10,000 and higher or that aggregate to more than $10,000 during the designated 24-hour gaming day, said Mesquite Gaming’s corporate compliance officer Catherine Catanzaro.

Currently, satellite sportsbooks that have annual gross revenues of less than $1m are required to report any wagers in excess of $10,000 to the Internal Revenue Service (IRS).

But instances of cash payouts exceeding $10,000 are not required to be reported.

As a result, Catanzaro said, a gambler could wager less than $10,000 and win more than $10,000 but there is no need to report these transactions to either the IRS or the Nevada Gaming Control Board.

“We believe the current practice of exempting these satellites from reporting winning sports wagers of $10,000 or higher facilitates money laundering, increases the risk of criminal activity through third-party betting … and could potentially damage the integrity of gaming” in Nevada, Catanzaro wrote in the petition filing.

Catanzaro asked regulators to consider changing Nevada regulations to make satellite sportsbook operations that do not exceed $1m in annual gross gaming revenue to be subject to Title 31 reporting.

Under the federal Bank Secrecy Act, licensed casinos, card clubs and sportsbooks are required to submit reports on all gambling transactions over a certain size or are apparently suspicious to the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

However, the reporting requirements of the act, also known as Title 31, do not apply to gaming companies making less than $1m in annual revenue.

Mesquite Gaming owns the Casa Blanca and Virgin River casinos in Mesquite, which is about 100 miles north of Las Vegas. The Eureka casino is the only other casino in Mesquite.

In July, Mesquite Gaming CEO Anthony Toti sent a letter to FinCEN asking for a broader definition of what is understood to be a casino under the Bank Secrecy Act.

Toti also wanted a ruling on what constitutes the “principal headquarters” as it pertains to the satellite sportsbooks, including those run by William Hill and other companies.

Although the letter to FinCEN does mention CG Technology, it is clearly William Hill that Toti believes has an unfair competitive advantage.

“Our in-house sportsbook operation, subject to Title 31 reporting, is significantly impacted by this regulation as our competitor’s book, Eureka Hotel and Casino, is a satellite operation licensed to William Hill with gross sports revenue of less than $1m and therefore is only required to complete [IRS] Form 8300 for cash wagers over $10,000,” Toti wrote.

William Hill operates 104 of the 190 licensed sportsbooks in Nevada.

Toti said William Hill’s satellites “should not be permitted to evade reporting under Title 31,” as the definition includes the term “principal headquarters,” which he believes should refer to William Hill as the company that is licensed by the state to operate the satellites.

“I also believe that the current practice of exempting these satellites from compliance with Title 31 and Suspicious Activity Reporting (SAR) increases the risk of criminal activity through third-party betting, facilitates money laundering and severely hampers the efforts of law enforcement in identifying criminal activity,” Toti wrote.

He added that “this situation created an unfair advantage to William Hill over in-house operated books in Nevada subject to Title 31.”

Today’s hearing in Nevada comes just a few days after sportsbook operator CG Technology was fined a total of $22.5m by federal regulators, including FinCEN, over “egregious and systemic” AML violations.

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