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Unscrupulous marketing hosts and other inadequately vetted employees pose as large a financial crime-related threat to casinos as external parties wagering illicitly obtained funds, compliance officers warned attendees of a recent industry event in Las Vegas.

Marketing hosts are responsible for bringing wealthy patrons into casinos by offering them luxury hotel rooms, stacks of chips and other promotions on the house, while also cultivating personal ties with them to retain their business. Those responsibilities uniquely position them to learn of, and potentially turn a blind eye towards, cash of questionable origin.

“When I was chief compliance officer, our risk-based analysis was concentrated on customers,” Thomas Peterman, an independent member of the compliance committee at Wynn Las Vegas, told attendees of The Assembly Las Vegas on Sept. 23. “Now … one of the risks that every casino has is at least one rogue employee.”

In one such case, MGM Grand Hotel agreed to a $6.5 million settlement in January after admitting that at least two marketing hosts and Scott Sibella, the casino’s president at the time, withheld information from compliance officers while allowing a known illegal bookmaker, Wayne Nix, to launder $4 million in illicit sports-betting profits from 2017 to 2020.

Nix used marketing events at the casino to pull VIPs into betting on matches with him and paid kickbacks to hosts who steered patrons his way.

“Marketing is your weakest link,” said Peterman, who led compliance at MGM Resorts International from 2013 to 2016, before the casino’s involvement with Nix.

Prosecutors found that compliance staff at MGM failed to use “all available” information in building a know-your-customer profile of Nix, as they never contacted marketing hosts for details on his sources of income despite knowing they had close and regular contact with him.

Sibella, who presided over MGM from August 2017 to February 2019, was fined $9,500 and sentenced to one year of probation in May after pleading guilty to failing to file a suspicious activity report on Nix and admitting to investigators that he knew of his illegal operations.

Gregory Brower, an attorney at Brownstein Hyatt Farber Schreck in Las Vegas, told ACAMS moneylaundering.com after the panel in Las Vegas that the commission-based model of remuneration used by many casinos sometimes results in hosts overlooking a client’s background, sources of funds and gaming activity if their patronship profits their employer.

“Hosts’ compensation is in many cases based in part on the money they bring in, which can make them uniquely incentivized to look the other way,” said Brewer, who led compliance at Wynn Resorts from January 2021 to March 2024. “The best compliance programs ensure there’s a very robust dialogue [with] marketing on a daily basis. … It’s labor intensive, but absolutely critical.”

Nix by 2020 had also laundered nearly $1 million in sports-betting profits at a second casino, The Cosmopolitan, with the knowledge of at least one host. At both casinos, Nix used illicit cash—usually high-denomination bills—from his operation to place wagers or pay off markers.

MGM acquired The Cosmopolitan in May 2021.

A third casino, Wynn Las Vegas, agreed to forfeit a record $130 million in September after partnering with independent agents to help foreign patrons move tens of millions of dollars into the U.S. through a “convoluted” network of companies and third-party nominees in Latin America and elsewhere, all while evading the reporting requirements of the Bank Secrecy Act.

As part of the scheme, which ran from 2012 to 2020, the funds would pass through Wynn’s bank account in California and onward to the casino’s cage in Las Vegas, after which several employees, acting “with the knowledge of their superiors,” credited the relevant patron’s playing account in Las Vegas.

Peggy Jacobs, now vice president of gaming compliance at MGM Resorts, said during the panel in Las Vegas that casinos should thoroughly train independent agents in their anti-money laundering policies and procedures as if they directly employed them.

Agents in Nevada must obtain licenses from the Gaming Control Board, which subjects them to background checks, annual reporting requirements and financial disclosures.

Gregory Giordano, a partner at McDonald Carano in Las Vegas who previously represented the Gaming Control Board as a state deputy-attorney general, told moneylaundering.com that casinos must not only vet agents for anti-money laundering purposes regardless of whether they hold a state license, but, in a broader context, also reassess their own priorities.

“The focus has too often been on supervising agents to see how successful they are in getting people into the casino as opposed to making sure they work legitimately, and are not bringing in money from criminal sources,” Giordano said.

Nix, the illegal bookmaker, awaits sentencing after pleading guilty in April 2022 to running an unlawful gambling business and filing a false tax return.

Contact Chelsea Carrick at ccarrick@acams.org