U.S. News

01.21.14

Las Vegas Betting Scandal Earns $5.5 Million Fine but the Boss Walks

A bookmaking subsidiary of Cantor Fitzgerald paid a record $5.5 million fine in a betting scandal last week, but Las Vegas insiders are wondering how top dog Lee Amaitis still kept his job.

It’s bound to happen some day. A dizzy Las Vegas tourist will leap from the top of the Stratosphere, plummet more than 1,000 feet, and--defying unimaginable odds--live to tell the tale. 

Until that day comes, CG Technology CEO Lee Amaitis might be the luckiest man in Las Vegas.

The head of Cantor Fitzgerald’s boneheaded bookmaking subsidiary last week signed off on a record $5.5 million fine to settle a devastating 18-count Nevada Gaming Control Board complaint alleging that Amaitis should have known company vice president Michael Colbert was accepting illegal wagers and acting as an agent in a nationwide illegal betting operation. Cantor Fitzgerald Chairman Howard Lutnick also signed the recommended settlement.

The fine, which is expected to be approved this week by the Nevada Gaming Commission, is substantially higher than the $3 million fine paid by the former owners of the mobbed-up Stardust of Casino infamy. It tops even the $5 million fine levied against then-MGM Mirage in 2003 for failing to file 15,000 Currency Transaction Reports, documents used to track money laundering.

So what makes Amaitis so lucky?

The control board easily could have justified recommending he be ousted from the sports book empire he’s in the midst of building on the Las Vegas Strip.

Although CG Technology (formerly Cantor Gaming) manages sports books inside the Venetian, Palms, Tropicana, and other local resorts, its operation is based out of the M Resort’s Race and Sports Book. While Amaitis worked to add locations, Colbert was allowed the run of the house at the M.

For months before trouble surfaced in the press, the M sports book gained a reputation inside the local casino sports book fraternity, a traditionally close-knit group, for allowing the inmates to run the asylum. Colbert’s circle of gambling acquaintances included several men with histories of illegal activity in New York and the Caribbean. Colbert was clearly in over his head and appeared to be influenced by the very bettors he was supposed to be battling.

Was he taking a cue from the boss?

Viewers of a 2011 60 Minutes segment saw Amaitis gush about his relationship with legendary sports bettor Billy Walters. Their chumminess raised the suspicions of Gaming Control Board investigators, the IRS criminal division, and other law enforcement offices that had long had Walters on their radar. (Although indicted more than once, Walters has never been convicted of a felony and in Nevada is well known as a golf course developer and philanthropist. He has not been publicly associated with the Cantor scandal.)

Investigators were well aware of the wiseguys working out of Cantor’s sports book at the M Resort.

Amaitis was so politically tone deaf that he apparently believed his bromance with Walters wouldn’t invite law enforcement scrutiny. But, in short order, the Las Vegas office of the IRS criminal division teamed up with casino regulatory investigators to pursue Walters for using intermediaries known as messenger bettors to place his wagers. (A messenger bettor is a person who places a wager for the benefit of another for compensation.) That case resulted in one arrest but later stalled.

By then, however, investigators were well aware of the wiseguys working out of Cantor’s sports book at the M Resort, where millions in bets were transacted. According to the 33-page state complaint, Colbert served directly under Amaitis and used his position as vice president of race and sports book risk management to move millions in sports bets for gambler Gadoon “Spanky” Kyrollos through messenger bettor Paul Sexton and others. Last September, Sexton pleaded guilty in New York state court to money laundering and agreed to forfeit $600,000. From July 2011 to October 2012, Sexton placed 4,464 bets worth approximately $22 million with Cantor Gaming, according to the Nevada complaint.

Robert Drexler was another Kyrollos middle man who wore a path to Cantor Gaming’s bookmaking window. From February to July 2011 alone, Drexler placed 1,612 wagers with a total handle of $7.9 million, according to the complaint.

And on it went. Kyrollos’s messenger bettors were prolific, and Colbert was happy to take their action despite knowing it was illegal.

Between the Walters fawning and the Colbert debacle, Amaitis is fortunate only to be paying a record fine. 

In an earlier era, he might have been dumped by regulatory authorities to send a message to a nation of gambling skeptics about the propriety of Nevada’s top industry. Instead, it’s a $5.5 million blood tribute to the state’s depleted coffers.

The public thumping of Cantor’s bookmaking subsidiary has local gaming observers wondering aloud why regulators haven’t yet recommended a hefty fine for Las Vegas Sands, which last year paid the U.S. government $47.4 million to settle a federal money laundering investigation with ties to the Sinaloa drug cartel and reputed methamphetamine master Zhenli Ye Gon. So far, the casino giant run by multibillionaire and Republican Party mega-donor Sheldon Adelson appears to have avoided further embarrassment.

This week the Nevada Gaming Commission will meet to determine whether to accept the Control Board’s recommendation and the CG Technology settlement.

Is the good fortune about to shift for Amaitis?

Although The Wall Street Journal reported in October that Amaitis was the subject of a federal investigation in connection with the messenger-betting caper now that Colbert is cooperating, a guy with his luck might just buck long odds and land on his feet. Hey, it could happen.

Just don’t expect any real handicapper in Las Vegas to make Lee Amaitis the favorite.

John L. Smith is a columnist for the Las Vegas Review-Journal.