California’s cardroom industry is still wearing another self-inflicted black eye after the state’s second largest venue reached a $3.1-million settlement over anti-money laundering (AML) and regulatory failures according to Calvinayre.com.
California Attorney General Xavier Becerra revealed on Thursday that the state had reached a settlement of $3.1 million with the Hawaiian Gardens Casino for misleading gaming regulators and breaching the Bank Secrecy Act (BSA). The venue boasts some 225 gaming tables, among the non-tribal gaming venues of the state second only to the Commerce Casino.
The settlement arises from the $2.8 m Hawaiian Gardens agreement reached in 2016 with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department over numerous BSA breaches and the failure of the operators to remedy the 2011 AML deficiencies of the site.
California’s AG said that the Gardens did not alert the FinCEN investigation’s state gambling regulators as required by the 1998 Gambling Control Act of the state. Throughout the time it was under the microscope of FinCEN, the Gardens submitted to the Bureau of Gambling Control multiple license renewal applications without mentioning any regulatory probes, opening the operators of the venue to perjury charges.
Even after the FinCEN agreement in 2016 had been made public, the Gardens told the BGC that they had “always participated in frank and honest communication with the regulators.” Becerra said the Gardens had “tried for years to deceive the California Department of Justice” and there was “no excuse for failing to comply with the law and intentionally trying to mislead regulators.” Furthermore, for the next 24 months, the Gardens are effectively on probation and no more cockups will result in the revocation of their gaming license.
The 2016 settlement of the Gardens was one of a number of similar cases in which California cardrooms paid millions of dollars for breaches of BSA and for showing a relatively slapdash strategy to keep track of cash flowing through their venues.
The highest of these penalties–a $8 m penalty in 2017 against Artichoke Joe’s Casino in San Bruno–was later reduced to $5 m, provided the casino kept its nose clean in the future.
The latest public error of the Gardens is likely to produce a lot of schadenfreude among the tribal gaming operators of the state. The tribes have long argued that, with the tribes having a perceived monopoly over these games, the cardrooms’ so-called’ player-banked’ games were’ house-banked’ games in disguise.
This hostility has been considered the main reason behind the decision of the tribes to exclude cardrooms from the proposed ballot initiative aimed at bringing legal sports betting to California, but only for tribal casino and racetrack operators.