New Jersey regulators fined Caesars Entertainment $225,000 in connection with a sex, drugs and gambling scandal involving a high roller who lost millions at the company’s Las Vegas casinos.
The New Jersey Division of Gaming Enforcement, in announcing the fine Monday, said the company’s misconduct in Las Vegas had the potential to harm the reputation of the casino industry nationwide.
Caesars Entertainment, the world’s biggest casino operator, agreed to pay the fine, but company spokesman Gary Thompson declined to comment on the case. Among its holdings, the company owns the Bally’s, Caesars, Harrah’s Resort and Showboat casinos in Atlantic City.
The case involves high roller Terrance Watanabe, a Nebraska businessman who gambled away millions of dollars at Caesars Palace and the Rio Hotel Casino in Las Vegas in 2007. Watanabe was indicted by a grand jury for failing to pay $14.7 million in gambling debts, but the charges were later dropped in a settlement with Caesars.
Watanabe filed a civil lawsuit alleging that Caesars employees allowed him to gamble even though they knew he was incapacitated by drugs and alcohol. He further alleged that Caesars Entertainment personnel plied him with alcohol and repeatedly gave him pain killers without a doctor’s diagnosis or a prescription. The suit was dropped as part of the settlement in Watanabe’s criminal charges.
The Division of Gaming Enforcement, in papers filed Monday on its website, said Caesars did not protect its employees when Watanabe allegedly engaged in “inappropriate sexual conduct” in their presence and made sexual advances toward them. In failing to do so, Caesars violated its own sexual harassment policy, the division concluded.
The division also cited the findings of an internal report by an investigative company hired by Caesars Entertainment to look into Watanabe’s allegations.
The report stated that a Caesars compliance committee “was concerned that senior management did not respond appropriately to allegations that (Watanabe) possessed and used illegal drugs on (Caesars Entertainment) property; engaged in inappropriate sexual conduct in the presence of (Caesars) employees and made inappropriate sexual advances toward (Caesars) employees.”
The division, however, did note that Caesars disciplined three of its senior executives who were involved in the incident and took other corrective steps, including an overhaul of its ethics and compliance program.
Although none of the alleged misconduct occurred at the Caesars Entertainment casinos in Atlantic City, the division fined the company because it falls under New Jersey casino regulations.
In justifying the hefty penalty, the division said Caesars’ “failure to exercise discretion and sound judgment” could “reflect discredit upon the state of New Jersey or the gaming industry.”
The Caesars Entertainment fine, though large, is not one of the biggest in Atlantic City history. A record fine of $750,000 was imposed against the former owner of Tropicana Casino and Resort in 2007 for failing to form an independent audit committee for six months. Caesars Atlantic City was hit with a $612,000 fine in 1991 for improperly paying rebates to high rollers to partially offset their gambling losses.
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