Crime-casino links should alarm Toronto and Ontario pro-gambling forces
U.S. regulators aren’t ignoring the relationship between organized crime and corporate casino operators — so why is Ontario?
Sheldon Adelson and his wife Miriam at the Four Seasons Macao hotel and casino. His Sands empire is under investigation for bribery and corruption. (Aug. 28, 2008)
If anyone were to suggest to a casino promoter that there is a relationship between organized crime, corruption and the big corporate casinos, the denials would fly faster than any cards from a professional dealer. This would be in spite of mounting international evidence to the contrary that U.S. regulators have discovered and begun to act upon.
Today, the lion’s share of the global profits of companies such as Las Vegas Sands Corp., MGM and Wynn (all vying for the Toronto casino) now come from Macau — a magnet for corruption and organized crime far beyond the reach of these same U.S. regulators.
At $38 billion revenue in 2012, Macau casinos generated roughly six times the haul of the Vegas Strip, and this is on track to grow to $62 billion by 2015 (U.S. revenues remain flat). The April 9, 2012, edition of the New Yorker reported that total amounts wagered in Macau in 2010 are estimated at $600 billion or equal to all U.S. ATM cash withdrawals that year. This in a city with the population of Hamilton.
This new geographic centre for gambling puts Vegas operators at arm’s-length from U.S. regulators. In Macau, 70 per cent of casino revenue is derived from VIP clientele whose financing is provided by informal “bankers” known as junkets. According to a Reuters report from Oct. 24, 2012, these junket operators are often owned by Asian triads who “have grown adept at disguising their investments, just as the Mafia once did in Las Vegas.”
A 2011 annual report by the U.S. Congressional-Executive Commission on China states: “The growth of gambling in Macau, fuelled by money from mainland Chinese gamblers and the growth of U.S.-owned casinos, has been accompanied by widespread corruption, organized crime, and money laundering,”
U.S. regulators have taken notice.
This is the reason why the U.S. Justice Department and the Security and Exchange Commission (SEC) have Sheldon Adelson’s Sands empire under investigation for bribery and corruption. And why his company stated recently that it “likely” violated the federal Foreign Corrupt Practices Act, which outlaws the bribery of foreign officials, according to a SEC filing.
In a lawsuit against his former employer, Steven Jacobs also accuses the Sands management of tolerating the activity of organized crime in Macau, and of secretly investigating government officials in order to use “improper leverage” against them. In plain language, that’s called blackmail. And while that suit has not been settled, Sands was recently hit with a ruling that it hid evidence and deceived the judge in the case.
Nor is Sands alone. Wynn Resorts has been making headlines in its own bribery and corruption scandal.
MGM, too, is under an order from authorities to leave Atlantic City, due to unscrupulous practices uncovered in a scathing report by the New Jersey attorney general. Regulators objected to MGM’s pursuit of a partnership with a notorious figure with deep links to organized crime in Macau. The investigation also found that MGM’s senior management deliberately misled regulators to conceal the known organized crime links of its partners.
So, while alarm bells are ringing with U.S. state and federal governments and regulators, what are the governments of Toronto and Ontario doing? Inviting these companies to bring their corrupt business practices here.
Wynn Resorts chair and CEO Steve Wynn has already said, “We’re really a Chinese company now, not an American company.” Regulators and the public should take note.
The City of Toronto and the Government of Ontario should not believe Wynn and the other big-time international casino operators that they will be bringing the Las Vegas experience to Toronto. Their business models no longer work that way. Macau is the new model with its junket operators with suspected links to organized crime that power it. In poker circles, there’s a rule: Don’t play the hand, play the player. Ontario, Toronto — you know who you are playing against. Don’t let their denials bluff you. U.S. regulators are already taking action against them. It’s time to walk away from the game.