GamblingCompliance: Resorts Casino Launches DFS In New Jersey


Resorts Casino Hotel has become the first property in Atlantic City to offer its customers a chance to play real-money daily fantasy sports (DFS) contests, even as a bill regulating and taxing the industry sits on Republican Governor Chris Christie’s desk.

Offered by Resorts Digital Gaming, FastPick is an online fantasy game that pits the contestant against the house, not other players.

Ed Andrewes, CEO of FastPick, told GamblingCompliance that FastPick was created to provide an alternative to traditional DFS sites and eliminate the advantage held by expert DFS players who are thought to be winning the majority of money on sites such as DraftKings and FanDuel.

One of the company’s chief findings was that players lose interest when they realize they are competing against “professional” DFS players with far more time, knowledge, and in some cases, the benefit of assistive technology.

“We wanted to offer something that was simple and enjoyable for customers to play against the house,” Andrewes said, calling FastPick “the next generation of fantasy sports.”

In FastPick, DFS players compete in a series of head-to-head match-ups of real-world athletes.

For example, a customer can choose whether New England Patriots quarterback Tom Brady or Aaron Rodgers of the Green Bay Packers will have a better statistical performance on an average NFL Sunday.

FastPick also offers DFS games associated with basketball, baseball, hockey and soccer.

The contestant’s selections are then put up against the casino’s and if the customer’s team of players gains more points than those assigned to the casino, the customer wins.

Andrewes said FastPick is designed to fit into fantasy sports regulations approved in New Jersey several years ago.

Andrewes said the DFS contests are currently only available online, including Resorts’ online casino, and not yet in the Android or Apple app store. He expects to have kiosks on the casino floor by the fourth quarter.

The move into Atlantic City is the latest expansion of DFS into casino markets. USFantasy Sports, which uses a pari-mutuel system, is licensed and offered by casinos in Nevada.

Robert Ambrose, a gaming consultant in Philadelphia, believes adding DFS is a positive and timely move for Resorts.

“It’s a model that offers more opportunity to the masses and less skilled DFS player,” Ambrose told GamblingCompliance in an email. “This is also another way to connect the online gaming community with the physical presence of the host casino.”

At the moment, FastPick is only available to people physically located in New Jersey. Andrewes said FastPick is taking a conservative approach when it comes to expansion, with a rollout into New York casinos next on the list.

A New Jersey bill, A 3532, currently sits on Republican Governor Chris Christie’s desk that would regulate and tax DFS contests, but gaming regulators say DFS is already legal for casinos in New Jersey due to the state’s internet gambling laws.

The DFS bill, sponsored by state Senator Jim Whelan, a Democrat from Atlantic City, would require companies such as FanDuel and DraftKings to obtain operating permits and pay 10.5 percent of their gross revenue to the state.

The release of FastPick comes as the DFS market deals with the fallout from the failed merger between DraftKings and FanDuel, and as the U.S. Supreme Court prepares to hear New Jersey’s appeal to legalize sports betting within its borders.

New Jersey is asking the Supreme Court to overturn the Professional and Amateur Sports Protection Act (PASPA), which bans sports betting in all states except Nevada, with partial exemptions in Delaware, Montana and Oregon.

“We are very supportive of New Jersey’s effort to [legalize] sports betting,” Andrewes said. “I believe that PASPA will be repealed. But, this gives us an opportunity to establish a brand [as we] build up expertise and a customer base.

“I think this product stands on its own two feet … with or without sports betting.”

Ambrose also said he thought it would be “a while before you see a turn-over or modification to PASPA.”

“Remember it does not reference DFS,” Ambrose said of the 1992 federal law. “However depending on the outcome here in New Jersey you will see state by state challenges. If New Jersey is successful in their sports-betting initiatives there will be a testing of it nationwide.”

Ambrose added that as far as the current DFS model offered by Resorts is concern, “some may go back to the debate of skill vs. chance. The current Resort game being offered is a positive and good for Atlantic City gaming.”

According to the Fantasy Sports Trade Association, there are 59.3m people playing fantasy sports in the U.S. and Canada. Last year, players spent more than $3.26bn on DFS.


PaymentsCompliance: U.S. Regulator Defends Fintech Charter From State Hostility


U.S. federal authorities have defended plans to give fintechs an alternative to state-by-state regulation, despite mounting pressure from politicians, state lawmakers and industry insiders.

Kathy Oldenborg, director of payment systems policy at the Office of the Comptroller of the Currency (OCC), told a conference in Washington, D.C. that a limited-purpose charter for fintech companies would not mean non-banks are subject to a light-touch regulatory regime.

Speaking at the American Bankers Association’s (ABA) Payments Forum last week, Oldenborg emphasized that the proposals are about minimizing risk as well as supporting innovation.

The OCC’s broader initiative was “to signal banks that it’s okay to innovate,” she said.

“You can work with fintech companies, you can partner with fintech companies, you can buy one if you want,” she added. “There’s nothing that says you can’t work with fintech companies outside this whole chartering discussion.”

Oldenborg added that the national fintech charter proposal is about the federal agency’s support for innovation while minimizing risk.

The OCC announced its intention last year to allow fintech companies to apply for special purpose national bank charters, and in March, after reviewing public commentary, published a draft of its guide for evaluating such applications.

The non-depository charter would effectively allow non-bank companies offering bank-like services to operate under a similar national regime, subject to regulation and oversight by the OCC.

Currently, such firms would have to apply for individual licensing in every state where they wish to operate.

Rob Morgan, the ABA’s vice president of emerging technologies, said at last week’s event that the group supports the OCC’s efforts to hold chartered fintech companies to the same standards as banks.

However, the proposals have sparked outrage from regulators at state level, who fear the initiative will pre-empt their authority over non-banks headquartered in their jurisdiction.

Margaret Liu, senior vice president and deputy general counsel at the Conference of State Bank Supervisors (CSBS), said the organization believes that by proposing the limited-purpose charter, the OCC had overstepped its authority under the National Bank Act.

The CSBS and a group of state regulators filed a lawsuit in April trying to prevent the OCC from moving forward with its charter proposal.

Liu said that chartered banks have a well-developed set of rights and responsibilities, but that chartering fintech companies as banks will cause turmoil for those rights and responsibilities.

“A federal license to do business is the exception, not the rule,” Liu said.

Liu was not the only speaker to voice concerns about the OCC’s plans — which were made under former comptroller Thomas Curry — to issue national bank charters to fintech firms.

Illinois Republican Representative Randy Hultgren, who is co-chair of the House Fintech and Payments Caucus, argued there is a bigger role for Congress to play in the discussion about allowing fintech firms to operate as national banks.

“If a healthy debate in Congress leads to a change in the law specifying a new authority for the OCC to issue some sort of special-purpose charter, or fintech charter, then the people will have spoken at that point,” Hultgren said in a speech to the conference.

He said that he would welcome further debate on the OCC proposal, although added there are currently no hearings scheduled.

Jason Henrichs, co-founder of FinTech Forge, told attendees that he liked the intent of the fintech charter scheme but said the OCC risks stifling innovation.

Henrichs, who participated in a discussion on how to maximize bank and fintech partnerships, noted that fintech firms were “where all the innovation is happening.”

Oldenborg declined to comment on when the OCC will finalize its fintech charter plan or begin accepting applications.

GamblingCompliance: Cyberattacks A Risk To All Businesses, Expert Warns

The fact that the Iranian government successfully targeted a Las Vegas gaming company and Russians tried to manipulate the U.S. election system should have significant implications for all businesses, a leading U.S. terrorism expert warned last week.

Counter-terrorism specialist Reid Sawyer, a senior vice president of credit, political and security risks with risk consultancy JLT, said every company executive needs to understand that cyber risk is a global issue.

“What I mean is the geography is irrelevant these days. Doesn’t matter if it’s coming from Russia, Ukraine or China, or from a criminal organization in the United States,” Sawyer told attendees of the American Bankers Association’s (ABA) Payments Forum.

Criminals and foreign governments are targeting all industries, including the gaming and hospitality industry.

Gaming’s most high profiled cyberattack occurred in February 2014, when the Iranian government was behind an attack on Las Vegas Sands’ computer systems and stole credit card data, social security numbers and drivers’ license numbers.

Sawyer said that cyber espionage — both state-based and criminal actors — poses significant risks that must be understood across the breadth of an organization. He described it as the new battlefield in terms of business risk.

“We need to stop talking about cyber risk in terms of cyber,” Sawyer said. “Cyber is just a means to get into your organization … to disrupt business to consumer or business to business activities, or disrupt your overall organization.”

When you put it in those terms, Sawyer said, “it is no longer a cyber risk, it is a business risk.”

He added that most businesses fail to understand the risks to their organizations, even though they have cyber directives. Sawyer criticized businesses for only looking at replacement costs.

“It’s a completely insufficient way to look at it,” Sawyer said. “You need to understand the financial risks. Why aren’t we talking about the P&L (profit and loss) risks or your earnings per share?”

He added that if you flip the way a company views the risk, then “you can recognize the problem in a different way.”

Sawyer was the keynote speaker on Thursday at the ABA’s inaugural Payments Forum, a two-day conference exploring the future of financial transactions in Washington, D.C.

“The greatest cyber threat we face is from our own actors,” Sawyer said. “John Podesta here in Washington clicked on malware and opened up the DNC’s (Democratic National Committee) emails.”

The DNC cyberattacks took place in 2015 and 2016, in which computer hackers infiltrated the DNC computer network, leading to a data breach. Cybersecurity experts say the espionage was the work of Russian intelligence agencies.

The attack allowed internal communications to stream into public view during the 2016 presidential election between former Secretary of State Hillary Clinton and current President Donald Trump.

Sawyer said the majority of cyber breaches come from willing or unwilling employees within corporations.

The gaming business and casino regulators have already acknowledged that the industry faces a mounting cybersecurity challenge.

In July 2016, the Hard Rock Hotel & Casino in Las Vegas suffered a second data breach which provided hackers with access to payment card data, including name, card number, expiration date and internal verification codes. Hard Rock faced a similar breach in May 2015.

The Las Vegas Sands-owned Venetian and Palazzo in Las Vegas and Sands Bethlehem in Pennsylvania were hit be a significant cyberattack in 2014, which was later linked to the Iranian government.

The FireKeepers and Four Winds tribal casinos in Michigan, as well as the Peppermill Casino in Reno, Nevada, and Casino Rama in Ontario, Canada, have also all been victims of cyber crimes.

The attacks range from malware software being placed on a payment card system, to email viruses being opened by employees that infect a company’s computer system.

Both New Jersey and Massachusetts have increased their cybersecurity rules, with New Jersey now requiring casinos’ heads of information security to be afforded the same level of responsibility as heads of audit or other departments.

In terms of cyber threats, Sawyer urged companies to move from the notion of whether they are appropriately protected to asking: “What is the enemy doing to us?”

“We don’t get that this is a business risk,” Sawyer said, citing an EY survey that found 68 percent of company executives would not change their IT spending if the supplier was breached.

Sawyer also said he was shocked at the amount of commercial espionage activity.

“The FBI will tell you the activity we are seeing from state to commercial is exceeding our ability to respond to it,” Sawyer told some 200 attendees during his 45-minute presentation.

“What we are seeing now is private warfare. States are no longer seeing state to state warfare as a legitimate target.”

He said that the government believes they can attack U.S. businesses with the idea “of destruction or damage.”

“That does far more damage to the U.S. in the long run,” Sawyer said. “It is the economy that is being targeted.”

Sawyer cited Iran’s response to Stuxnet, a computer worm that destroyed centrifuges inside the country’s Natanz uranium enrichment site. The cyberattack plan also targeted Iran’s air defenses, communications systems and key parts of its power grid.

“Iran’s response wasn’t against the Pentagon … it was against 50 financial institutions in the United States,” Sawyer said. “Data integrity is the payments industry’s greatest risk.”

GamblingCompliance: New Jersey Tracks Eye Historical Racing As Revenue Boost


Horseracing in New Jersey has fallen on hard times, and to help boost revenues, purses and attendance at the state’s three racetracks, track executives and lobbyists believe historical racing is key to their survival.

Representatives from the racing industry recently appeared in Trenton before members of the New Jersey legislature calling on lawmakers to approve a measure to legalize the games.

“Based on models in other states, purses would be increased significantly so as to enable us to be more competitive with surrounding states, which have slot or casino revenue,” said Dennis Drazin, an advisor to the New Jersey Thoroughbred Horsemen’s Association.

“We do believe historical racing will increase attendance,” Drazin told GamblingCompliance in an email.

Historical racing, also known as instant racing, is a form of electronic gambling machine that allows players to bet on replays of horse races or dog races that have already run.

The machines are marketed and sold as a legal form of pari-mutuel wagering, with outcomes determined by pooled bets on previously run horse races.

“Customers bet on historical racing because it’s fast, simple and similar to slot machine play, but based on a pari-mutuel model,” Drazin said. “Fans are given past performance data, but can’t identify the race.”

Historical racing is already offered in Arkansas, Kentucky, Wyoming and Oregon with $1.1bn bet on the product in four states last year.

Idaho and Texas had approved historical racing, but then pulled the plug on the machines.

The Idaho legislature, for example, approved the machines in 2013 but then in 2015 lawmakers banned historical horseracing after concerns were raised the machines resembled illegal slot machines.

New Jersey Assemblyman Ralph Caputo, a Democrat and chairman of the Assembly Tourism, Gaming and the Arts Committee, said his committee was “very interested in learning about this new concept … that has been established in some other states and has been very, very profitable and also very successful.”

“The horseracing industry has deteriorated over the last number of years due to a lack of state support and also because of changing demographics,” Caputo said.

“Obviously, the state needs revenue, the horseracing industry needs revenue,” Caputo said. “So, we are very interested in any new concept that would help the racing industry, but also the general state of the economy of New Jersey.”

Chris McErlean, vice president at Penn National Gaming, owner of Freehold Raceway, agreed the New Jersey racing industry was struggling.

McErlean on Tuesday praised Caputo for holding a hearing on the issue, and was hopeful that historical racing gets some momentum in the legislature.

In 2011, Republican Governor Chris Christie ended a $30m annual subsidy for purses that Atlantic City casinos paid the racing industry to compensate them for a prohibition on slot machines.

The Assembly committee discussed historical racing at a June 1 hearing, but as of Tuesday had not scheduled a hearing to vote on Assembly Concurrent Resolution 196.

Senate Bill 2886 introduced in January also would permit historical racing in New Jersey.

As the results are based on actual pari-mutual races that took place in the past, supporters believe the format does not require voter approval.

Marshall Spevak, chief of staff for Assemblyman Vince Mazzeo, a Democrat who represents Atlantic City and is vice chairman of the Tourism, Gaming and the Arts Committee, said Tuesday that if historical racing is gambling then “there is a constitutional question.”

Under New Jersey’s constitution, new forms of gambling are prohibited unless they have been approved by state-wide referendum.

Spevak said his boss was “very protective of the casino business in Atlantic City.”

“That’s really the point, making sure we are not expanding gambling beyond Atlantic City,” said Spevak, adding that there needs to be “a lot more research and thought that goes into this.”

However, racing supporters insist historical racing machines simply give tracks a chance to sell their product in a new way.

Scott Wells, president and general manager of Remington Park and Lone Star Park, told attendees at last month’s Pan American Conference in Washington that historical racing was the next step in the evolution of pari-mutuel wagering.

“Not to allow racetracks to have historical racings … is a restriction of fair trade,” Wells said. “It keeps the industry in handcuffs.”

GamblingCompliance: New Jersey To Continue Sports-Betting Battle As NBA Favors Federal Solution


The U.S. Solicitor General’s Office may have dealt a knockout blow to New Jersey’s six-year battle to legalize sports betting, but the state’s top gaming regulator says efforts will continue.

“We are still on hold,” David Rebuck, director of New Jersey’s Division on Gaming Enforcement (DGE), said Wednesday. “Right now, the long legal history of this case, we continue to fight the good fight.”

The solicitor general last week recommended that the Supreme Court not hear New Jersey’s case challenging the scope of the 1992 Professional and Amateur Sports Protection Act (PASPA).

PASPA bans legal sports betting in all states expect Nevada, Delaware, Oregon and Montana.

In the court brief, solicitor general Jeffrey B. Hall wrote that the case did not deserve the attention of the Supreme Court, as New Jersey had not raised valid constitutional problems and other states had yet to pursue similar legislation.

Still, sports-betting advocates remain unbowed.

“Hope springs eternal,” Joe Asher, CEO of William Hill US, said Wednesday about the prospects of rolling back the federal sports-betting ban.

“I think it was expected the solicitor general would weigh in against the court taking the case.”

But Asher predicted that if the Supreme Court allows PASPA to stand, there will be other litigation to follow in other jurisdictions. He put the chances at just 20 percent that the Supreme Court would hear the case following the solicitor general’s opinion.

Both Rebuck and Asher participated in a panel discussion at the IAGA International Gaming Summit in New York City.

Asher described PASPA as a “really obsolete law,” which has “created a large black market for illegal sports betting.”

The American Gaming Association (AGA) has estimated illegal sports betting to be a $150bn business in the United States. Others have estimated the value to be around $400bn annually.

“Clearly there is activity that is widespread throughout the United States,” Asher said.

There seemed to be division among the IAGA panelists as to who should regulate sports betting if and when it expands beyond Nevada.

Dan Spillane, senior vice president and assistant general counsel with the National Basketball Association (NBA), said there was no division about whether sports gambling should be legalized; the only disagreement is how you get there — state or federal regulation?

“The NBA endorses a federal solution,” Spillane said.

That position appears to go against the AGA’s and Rebuck’s preferred solution of states being able to choose the terms upon which they want to regulate sports betting.

Rebuck said that he was not against some federal minimum standards, but he believed there should be a state-by-state model to oversee “this type of wager in the future.”

The NBA, National Hockey League (NHL), Major League Baseball (MLB) and the National Football League (NFL) have all softened their traditional opposition to gambling in the last few years.

The NHL approved the Vegas Golden Knights as its 31st franchise that will take to the ice in September. Meanwhile, NFL owners voted 31-1 in March to allow the Oakland Raiders to move to Las Vegas, and gambling was not even an issue.

Asher said the one owner who voted against the move was concerned about teams moving, and not about any issues dealing with gambling.

Spillane admitted that the NBA helped drive the passage of PASPA out of concern over the integrity of their games.

But its position on sports betting has evolved since then.

“We have a global business,” Spillane said. “That global perspective shows us how they do it.”

As New Jersey waits for a decision from the Supreme Court, advocates are known to be lining up a further test of PASPA’s scope via a move to repeal the state’s prohibitions on sports betting and effectively permit the activity without any system of regulation.

A bill is expected to be introduced in the New Jersey House and Senate if the Supreme Court, as expected, rejects the state’s plea for a hearing on its sports-betting appeal.

Asher said that it is a “possibility that could happen.”

But Rebuck told GamblingCompliance after the panel that it was too early to discuss the possibility of New Jersey repealing its prohibition on sports gambling.

He expects a decision on whether the Supreme Court will hear the case by the end of June.

If you look at the state of gaming in the United States, it has “increased massively” since 1992 when PASPA became law, Rebuck said.

“Forty-nine states have some sort of legalized gambling,” the regulator said. “It used to be 48 states … I now call Utah in the box of legalized gambling. They don’t know it but they authorized daily fantasy sports (DFS) play.”

Rebuck added that most regulators believe DFS is “sports betting and if it is not sports gambling then it’s very close.”

He said DFS has raised the issue of sports betting with the general population.

“We love fantasy sports in the state of New Jersey for that reason,” Rebuck said.

Rebuck’s comments also came about a week after New Jersey Congressman Frank Pallone published draft legislation to overturn PASPA and establish a federal regulatory scheme for sports betting overseen by the Federal Trade Commission.

The proposed bill, known as the Gaming Accountability and Modernization Enhancement (GAME) Act, would also clarify the legality of online poker and casinos.

“Only Congress could come up with the GAME Act,” Rebuck said. “Whether it becomes legislation … it’s in its very early stages. It’s a start.”

Spillane said the NBA was looking at Pallone’s bill, but had no comment on the potential of the GAME Act becoming law.

“I appreciate it as another step forward,” Spillane said.

GamblingCompliance: Racino Executive Urges Embrace Of Historical Racing


A veteran racetrack executive believes the next step in the evolution of pari-mutuel racing in the United States is to allow tracks to offer historical horseracing, also known as instant racing, which allows players to bet on replays of horse races.

“The fact is that in most jurisdictions we are not being allowed to sell our own product in the most modern and productive way,” Scott Wells, president and general manager of Remington Park and Lone Star Park said at the Pan American Conference.

Wells said a live horse race every 25 minutes is the traditional way to sell horseracing, but “many of us are stuck thinking that’s the only way.”

Wells said the industry’s product is not just the visual experience of watching the race.

“It’s the results of the race that are our core product,” Wells told several hundred trainers, racetrack executives, politicians and racing officials gathered inside a Grand Hyatt ballroom in Washington, D.C.

The Pan American Conference, which offered a number of panel discussions on the health of the horseracing industry, racetrack design and marketing, was held May 17-20.

“The results of the race are what determine the winners and losers … and the distribution of the mutuel pools and purses. And the results are filed away forever. It doesn’t have to be that way,” Wells said.

Wells cited Oaklawn Park’s success with historical racing at its track in Hot Springs, Arkansas, which first offered the games in 2000, as an example a new revenue stream for racetracks.

Churchill Downs is also considering adding historic racing machines at the Louisville, Kentucky, track.

Bill Carstanjen, CEO of Churchill Downs, said during a first-quarter conference call in April that the machines have already been put in place at racetracks Kentucky Downs, Ellis Park and the Red Mile.

“We are intrigued by the idea and continue to analyze it closely,” Carstanjen said.

Historical racing games play like slot machines but base payouts on a pari-mutuel formula with winning combinations determined by previously run horse races.

“Historical horseracing gives us the opportunity to sell our real product — the results of the race — repeatedly in a modern, fast paced way, which is what the marketplace demands,” Wells said.

For those skeptical that historical racing is legal, Wells said that “as long as it is done in a pari-mutuel way, it is clearly been approved in all gaming jurisdictions.”

“Not to allow racetracks to have historical racings … is a restriction of fair trade. It keeps the industry in handcuffs,” said Scott Wells of Remington and Lone Star racetracks.

Wells added that unlike video gaming terminals (VGTs), which have saturated some gaming markets, instant racing should only be done at racetracks. Allowing the product more widely would “add dramatically to purses and the viability of the breeding and racing industries.”

During his 45-minute presentation titled “The Racino Experience,” Wells admitted that running two racetracks can “get a little depressing,” especially with the declining numbers of on-track bettors.

Wells also showed a few Remington Park commercials that incorporated jockeys to promote the track’s casino. As well as two commercial racinos, Oklahoma is home to 124 tribal casinos on Native American lands.

“Off course there has been a proliferation of gambling choices for everyone,” Wells said. “Where for many years Las Vegas and Atlantic City were the only choices that allowed gambling … now that pie has been divided into a thousand pieces.”

Defined as a marriage between casino gambling and horseracing, West Virginia pioneered the racino concept in 1990 when MTR Gaming Group was allowed to introduce gaming machines to Mountaineer Race Track and Gaming Resort in Chester.

Today there are 55 racinos nationwide, according to data compiled by GamblingCompliance.

In Oklahoma, racinos were legalized when a state-wide ballot measure was passed 60 to 40 percent in the fall of 2004. Wells said Remington Park was on the verge of closing when the measure was approved by voters.

“The racino model was very beneficial to Remington Park and the Oklahoma horse racing industry,” Wells said. “Our purses rose by 400 percent … our handle is up 30 percent.”

But increasing attendance at the track is still a struggle.

In Wells’ experience, 25 percent of racing customers play in the casino before they leave; only 5 percent of casino players bet on racing.

Wells cited those numbers in saying opponents of racinos could justifiably argue that basing your business on slot machines will just keep eroding horseracing.

“That’s a difficult argument to dispute,” Wells said. “But let me say I’ve had the racino experience and the non-racino experience for the last four years as the manager of Lone Star Park.”

Based in Grand Prairie, Texas, Lone Star Park is owned by the Chickasaw Nation of Oklahoma. The tribe have also owned Remington Park, located near Oklahoma City, since 2009.

“Texas is surrounded by Louisiana, Arkansas, Oklahoma and New Mexico, all of which have casinos to support racing at the racetracks,” Wells said. “That has been catastrophic for the Texas horseracing industry.”

Wells was also critical of a move last year to try and adopt historical horseracing in Texas.

Under pressure from the state’s political leaders, Texas racing commissioners voted in February to rescind regulations that would have permitted historical racing machines at tracks.

“Texas politicians had one hand [behind their backs] … taking donations from politicians in other states, especially from casino interests in other states,” Wells said. “Texas has been held to a standstill.”

Wells admitted that Lone Star Park was “not doing well,” but he praised the Chickasaw Nation for their willingness to invest millions of dollars in both tracks.

This year, Lone Star Park will host 50 days of racing between April and July. Remington Park hosts 119 days and is in the midst of an annual quarter horse meet that runs through June 3, with live thoroughbred racing between September and December.


GamblingCompliance: AML Compliance Lawyers Cautious After MoneyGram Deal


Anti-money laundering (AML) and gaming law experts believe a settlement of civil charges brought by the federal government against a former MoneyGram compliance executive may make it harder to find quality applicants for AML compliance roles in casinos and other financial institutions.

Thomas Haider served as MoneyGram International’s chief compliance officer from 2003 until 2008, supervising the company’s fraud and AML compliance departments.

Haider was accused of failing to ensure compliance with AML and Bank Secrecy Act (BSA) laws during his career with the money transfer company, and last week settled the claims by paying a $250,000 penalty.

“I think it may have a chilling effect on qualified people taking the job,” said Donna More, a partner at Fox Rothschild in Chicago, of the impact on the ability of casinos and other groups to recruit AML compliance officers.

“Perhaps going forward they should be included in the D&O (Directors & Officers) insurance.”

Sharon Levin, a partner at WilmerHale in New York, said the Haider case serves as a warning to compliance officers that they face an increased risk of personal liability.

“In Haider, a court for the first time held that the Bank Secrecy Act permits the Treasury Department to sue individuals for an institution’s AML compliance failures,” Levin told GamblingCompliance.

“By reaching a settlement, that decision cannot be challenged on appeal,” she said. “But the Haider decision is unlikely to be the last word on this question.”

Levin’s advice: “Compliance officers should understand what insurance coverage they have, specifically whether their legal fees will be covered.”

On top of the $250,000 fine, Haider agreed as part of the settlement with prosecutors in Manhattan to accept a three-year ban on acting as a compliance employee at any money transfer company.

The Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury, which announced the civil action against Haider on December 18, 2014, had originally sought a $1m fine.

Although the Haider case does not involve casinos, it comes amid a period of intense scrutiny of the gaming industry’s AML practices on the part of FinCEN.

Casinos, just like banks and money transmitters such as MoneyGram, are considered a form of financial institution subject to the reporting and other compliance requirements established by the BSA.

Jennifer Roberts, an adjunct professor at the University of Nevada, Las Vegas’ William S. Boyd School of Law, said the penalty against an “individual compliance officer is something that should certainly be noticed.”

“However, the Haider case involved numerous ‘willful’ violations and several significant lapses in compliance,” Roberts said.

As part of the settlement, Haider accepted responsibility for failing to terminate contracts with specific MoneyGram outlets after receiving information that indicated the outlets were complicit in consumer fraud schemes.

According to a 50-page complaint, Haider also accepted responsibility for structuring MoneyGram’s AML program so that fraud reports about outlets were not generally provided to analysts who were responsible for filing suspicious activity reports to the government.

In a statement emailed to GamblingCompliance by one of his attorneys, Ian Comisky of Fox Rothschild in Philadelphia, Haider defended his work at MoneyGram despite the settlement.

The settlement also resolves Haider’s “separate claims against the Treasury Department based upon illegal media leaks that occurred in 2014, which were intended to … damage Haider’s reputation,” the statement said.

As for the gaming industry, Roberts said that many companies already have robust compliance programs in place because there has always been a risk of disciplinary actions by state regulators for major compliance failures.

“Not to mention, [AML] compliance officers have had the opportunity to enhance programs because of more recent FinCEN enforcement against the gaming industry,” Roberts said. “In the Haider case, you are talking about violations that occurred almost ten years ago.”

Levin said that regulators have tried to hold individuals responsible for corporate wrongdoing.

“AML is no different,” Levin said. “Regulators are showing a sustained interest in holding AML compliance officers personally liable for the institution’s AML deficiencies. This trend is likely to continue.”

Recent FinCEN enforcement actions have targeted various gaming companies, including CG Technology, California’s Hawaii Gardens and Oaks Club card rooms, Caesars Entertainment and the Trump Taj Mahal in Atlantic City.

FinCEN has also fined and barred a casino executive in the Northern Mariana Islands, although the individual in question was responsible for marketing programs involving high-rollers and was not an AML compliance officer.

Under the BSA, casinos and card clubs are expected to report all transactions worth more than $10,000, in addition to any others that could appear to be suspicious.

Federal regulators also expect casinos and other financial entities to demonstrate a so-called “culture of compliance.”

Levin said effective AML starts at the top.

“An AML officer must have strong independent authority and the support of the institution’s leadership,” Levin said. “This settlement only reinforces the importance of the support of company executives.”

The American Gaming Association (AGA) in 2014 published the casino industry’s first set of best practices for AML compliance.

Elizabeth Cronan, senior director of gaming policy at the AGA, said that individual compliance officers play a critical role on a daily basis.

“Compliance officers are essential to the industry’s strong culture of compliance,” Cronan told GamblingCompliance in an email.