Resorts World omits money laundering case from its New York casino application 

The failure of Resorts World New York, a sister company of Resorts World Las Vegas, to disclose regulatory violations of money laundering in its New York casino application could jeopardize its effort to turn its electronic gaming establishment in Queens into a full-service casino. 

The company was one of three applicants with casinos in Las Vegas to win a recommendation Monday from the New York State Gaming Facility Location Board to be licensed in that state. 

The New York board’s selection report noted that Resorts World, asked to disclose disciplinary actions within the past five years, reported none brought against several Genting (Resorts World’s parent company) subsidiaries, “omitting violations resulting in fines at Resorts World Catskills, Resorts World Hudson Valley, and its current video lottery gaming facility at Aqueduct.” Resorts World, the report said, “disclosed a settled disciplinary action involving Genting Berhad – RW Las Vegas LLC without providing details.”

The New York board “views this lack of transparency as concerning and recommends that the Commission weigh this in its licensing evaluation.” 

The Nevada Current was first to report in 2023 that federal authorities from the Central District of California were investigating a variety of allegations involving Resorts World Las Vegas,  MGM Grand, and Scott Sibella, who served as president of both hotels. 

Resorts World terminated Sibella weeks after the story’s publication for violating internal policy. Sibella later pleaded guilty in federal court to failing to comply with anti-money laundering laws while president of MGM Grand. He later lost his Nevada gaming license. 

Resorts World LV agreed to a $10.5 million fine imposed by state gaming regulators for allowing illegal bookmakers Mathew Bowyer and Damien LeForbes to gamble at the casino. The two, who lost close to $24 million at Resorts World LV, were permitted to gamble despite the lack of documented sources of income required by casinos. Both pleaded guilty to money laundering and illegal bookmaking.  

Federal prosecutors have yet to file charges or impose a long-anticipated fine against Resorts World. 

Taxing matters

Resorts World is planning a $3.3 billion investment in the New York property, which is slated to have more than 2,000 rooms. 

Resorts World NY, along with Bally’s and Hard Rock, the other applicants recommended for New York gaming licenses, would pay a much higher gaming tax in the Empire State than in Nevada, where unrestricted licensees are assessed a maximum gross gaming tax of 6.75% on casinos with  monthly revenue that exceeds $134,000.  

The New York State Gaming Commission determines the tax rate each applicant would pay, according to the state’s selection process. 

“An applicant may propose a tax rate on gross gaming revenue as part of its application, so long as the tax rate is at least 25% for slot gross gaming revenue and 10% for gross gaming revenue from all other sources,” says the state website.

Resorts World, in supplemental information provided to regulators, proposed a 56% tax on slot machines and a 30% tax on table games and other sources of gambling, far more than the 6.75% tax Nevada casinos pay. The company is also offering to contribute $25 million a year to a workforce housing fund. 

The other two companies recommended by regulators, Bally’s and Hard Rock, which have casinos in Las Vegas, also proposed paying higher taxes than they are assessed in Nevada. 

Bally’s suggested a 30% tax on slot machine games and 10% on table games and other gambling, while Hard Rock Metropolitan Park proposed a 25% tax on slot machine games and 10% on table games and other sources. 

“Assuming licensing at each Applicants’ proposed tax rates and stability in the existing gaming facility landscape, incremental gaming tax revenue is projected to reach approximately $1 billion annually by 2036, totaling approximately $7 billion in incremental tax revenue from 2027 to 2036, plus $1.5 billion in licensing fees,” says the Gaming Facility Location Board’s selection report.  

Gaming tax revenues in Nevada totaled $1.1 billion in fiscal 2024.

The willingness of Nevada casino companies to pay significantly higher taxes in New York raises longstanding concerns about Nevada’s lowest-in-the-nation gaming tax.

Industry advocates have long argued that limited competition in other jurisdictions, where states often establish the number of licenses that may be granted, justifies the higher tax rates. Nevada, however, has no cap on the number of gaming licenses issued by the state, rendering licensees subject to widespread competition.  

But does the argument hold water now that nearly all adults hold a virtual casino in the palm of their hand?  

Former California gambling regulator Richard Schuetz notes electronic gambling and brick-and-mortar casinos “are not the same product. Sports betting really dominates phones. And going to Caesars for three days is different from sitting in your backyard playing slots or blackjack.” 

The competition argument remains valid today, says Alan Feldman, a former MGM executive who now serves as Director of Strategic Initiatives for UNLV’s International Gaming Institute.  

States with “monopoly systems” such as tribal exclusivity, limited licenses, or even a single operator, “can impose higher tax rates, because operators can still be profitable with no competition,” he says, while competitive markets “often use lower rates to attract multiple operators.” 

Feldman cites sports betting as an example, “as states with limited licenses often charge higher rates,” such as New York’s 51% tax rate.

“As gaming is regulated on a state-by-state basis, the competitive landscape is incredibly significant in determining a tax rate that’s reasonable,” says Feldman. 

Factors to be considered, he says, include: 

• states have different fiscal needs: Some states rely on casinos as economic drivers, others as revenue sources;
• tourism markets differ;
• labor costs vary; and,
• political attitudes toward gambling differ.

“If you look at the higher tax rate states, they are all likely to have a lower level of investment in the properties they attract,” Feldman says. “New York believes it’s different and can both charge a high tax and expect significant investment.”

MGM Resorts, he adds, pulled out of the New York competition “because they don’t believe the market can sustain both. They likely have a point as the winners are all located in fairly close proximity to one another.”  

MGM owns the Empire Casino in Yonkers “and will continue to operate without needing to invest $10+ billion,” Feldman noted. 

“The fact remains that no state can match the level of economic impact as Nevada when it comes to investment, jobs or per-capita taxes generated,” he said.

The gaming tax rate is the sacred cow of Nevada tax policy. Increasing the rate is a bridge too far for almost all Nevada politicians and most business interests.

Rebecca Dutro, president of the Nevada Taxpayers Association, says she’s unaware of the organization’s position on the gaming tax.

Former State Sen. Joe Neal, a Democrat, spearheaded two ballot initiatives in the early 2000s that would have increased the gaming tax rate from 6.25% to 11.25% on casinos with monthly revenue exceeding $1 million. Neither garnered the signatures to qualify for the ballot. 

Neal also sponsored several bills to increase the tax rate, however, they were killed in committee.

A 2022 ballot initiative sponsored by the Clark County Education Association would have increased the gaming tax rate to 9.75% on monthly revenue that exceeds $250,000. While the measure garnered enough support to qualify for the ballot, the Nevada Resort Association filed a legal challenge, and a judge eventually ordered that the measure be removed from the ballot.

Former Nevada Gov. Brian Sandoval, who currently serves as president of the University of Nevada Reno and as chairman of the Resorts World board of directors, declined to say via his UNR office whether the willingness of Resorts World and other casinos companies to swallow a double digit tax rate in New York is an indication the gaming tax in Nevada could be tweaked to the benefit of residents and public institutions such as UNR. A spokesman directed the Current to Resorts World, which did not respond. 

Sandoval’s fellow Republican, Gov. Joe Lombardo, also did not respond.   

Washoe County Commission Chairwoman Alexis Hill, a Democrat who hopes to run against Lombardo next year, wants an overhaul of the state’s tax system, which she says needs to be modernized. A hike in the gaming tax, she says, is not off the table.

“It needs to be broad based and equitably distributed, which it is not right now,” Hill said Tuesday. “We tax poor people disproportionately more because of our very high sales tax. We need to bring all industries to this table. That’s what a governor would do if we were looking at these major reforms, and that’s what I promise as part of my campaign.”

Attorney General Aaron Ford, who is also vying to be the Democratic candidate for governor next year, did not respond.