Loopholes and High Rollers

But underworld attraction and profiteering are not the only threats to our well-being that link themselves with gambling casinos. They also serve as clearing houses for money that would cause serious embarrassment if someone traced it to its sources.

   Casinos are not just glitzy palaces where hysterically happy citizens may gamble away their savings, incur ruinous debts and have themselves a ball in the process. They also can provide enticing tax advantages for those wily enough to claim them and a no-questions-asked laundering facility for "dirty" money generated in both legitimate and illegitimate business enterprises.

Illicit Use of the Cash Transaction

   In "legitimate" business, the cash transaction is a widely used method of siphoning off unlawful profits, avoiding tax liability, concealing involvement by disreputable characters and masking the details of hidden ownership. The basis for the cash transaction can be

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just about anything — a piece of real estate, ownership in a business, heirloom jewelry, a truckload of hijacked TV sets or some type of questionable professional service. For some complicated reason the item goes for half its real value — at least on the books. The balance is paid in cash as "shoe box money."

   What makes the deal potentially profitable to all concerned is that no one is accountable for the balance. No one can prove it; no one need know about it. The money appears on no one's books, and thus may slip through the cracks of sales tax, document tax liability — plus the advantage of leaving an unfathomable uncertainty about who did what for whom and how much he got for the favor.

   Sooner or later, however, soaring cash money must come down to earth and appear in someone's records — and that's where casinos step in. No matter how clandestine the business transaction, in due time someone will need to know where the money went or how the owner got it — someone curious and inquisitive like, say, company auditors, agents of the Federal Bureau of Investigation or people who work for the Internal Revenue Service. This is true for the person who forks over the cash — who may have to explain to someone what happened to it — as well as for the person who pockets the cash and has to have a plausible story about the source from which it came. To have won it or lost it at the casino is an explanation no one can disprove.

A Fistful of $100 or $1000 Bills

   The seller may have a fistful of attention-getting $100 or $1000 bills, but no feasible way to get them

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back into the legitimate monetary mainstream. Paying income taxes on the money may not, in fact, be his problem. He might be willing to pay the taxes if only he could conceal the episode from other prying eyes. Bank deposits — particularly large ones — can come under embarrassingly close scrutiny by state and federal boards or commissions concerned with the legitimacy of financial transactions.

   This dilemma can be all the more crucial for the drug dealer, racketeer or extortioner who may make a modest salary at a cover-up job but takes in considerably more than that from his illicit activities. He urgently needs a laundering facility where he can provide a proper ancestry for cash of spurious origin.

   What more convenient solution to this dilemma than the gambling casino? There, millions of dollars in cash and checks change hands nightly with no questions asked and no answers necessary. From whatever source they may come, illegal dollars can be legitimized through a process that provides a deliberately casual unaccountability — with the carefree delights of the gambling tables thrown in at no extra charge.

   The seller brings his cash to the casino where he may already have earned acceptance as a high roller. There he may, of course, lose it all — in which case the question of tax liability is conveniently resolved. But he probably knows better than to let that happen. He may win or lose a little, depending on his skill or good luck or lack of it, and then he will go his way — the happy possessor of a stack of $1000 bills or, better yet, a check or draft, allegedly won at dice, cards or roulette. No one can prove he didn't win it there. Now he has a credible source for that tidy sum which, until he arrived at the

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casino, had considerable potential for embarrassment, if not outright culpability.

The Skim, the Kickback and the Bribe

   Cash transactions, of course, are not the only sources of "dirty" money in business — though they may be the most commonplace. There is also the skim, the kickback and the business bribe, and there is the reality of cash from outright theft — very hot cash, burning the proverbial hole in the culprit's pocket.

   Skimming is a simple term that describes the act of siphoning off into someone's pockets a portion of the money that forms the life blood of a business enterprise. Owners and managers may have the most enticing opportunities to skim, but they aren't the only culprits. Cash can be misappropriated in the business arena by anyone from owners and managers right down through the hierarchy to the lowest paid employee on the payroll. At that lower level, however, it is usually referred to as theft — an act of betrayal considered somewhat less honorable than skimming at the top. No matter how elaborate the precautionary measures, dishonest people in the world of commerce still manage here and there to dip into the cash and get away with it. Some may never be caught.

   Every retail business that accepts cash for goods or services — from the largest department store chain down to the smallest local shop — offers an open invitation to skimming or theft and, presumably, as long as humans remain human, the skimmers and thieves will continue to stalk their prey. But auditing agencies are making it increasingly difficult for people to account for

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large sums of money fraudulently acquired. That is why gambling casinos can provide a welcome relief for the frustrations unique to skimmers and corporate thieves.

Vast Amounts of Dirty Money in Circulation

   Vast amounts of dirty money circulate constantly in these United States. Whatever can lend an air of legitimacy to illegally obtained cash and neutralize the embarrassment of identifying its source provides a valuable helping hand to those who conduct their financial affairs, of necessity, in the shadows. Finding it buried under a rock isn't a very convincing story. Casinos provide a solution to that dilemma.

   Knowledgeable people in the gaming business may not advertise the fact, but they are well aware that "good players" tend to be people from businesses or professions in the higher echelons of cash flow. Most high rollers come to the casino from businesses likely to generate unaccountable cash — money derived from large, untraceable and untaxed transactions. When the cash comes in large sums, it may need to be laundered. Casinos are delighted to provide the washing machine.

$37.3 Million in Pampering Services

   During 1983, Chairman Stephen A. Wynn posted profits of $35.9 million for his Golden Nugget in Atlantic City — nearly doubling what the casino had earned two years before. He accomplished that feat primarily by more than doubling his giveaway budget to attract high rollers to the Golden Nugget — posting $37.3 million in pampering services. Casino analysts speculate that

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Chairman Wynn stands guard over a list of approximately 600 adventurous and affluent players who account for at least 60 percent of his table business. He treats those special players like kings and queens, and they pay him royally for the privilege. Would anyone suppose the Golden Nugget screens those special guests to be sure the money is clean? Would someone suggest anyone cares?

   Sands Hotel and Casino president William Weidner is credited with the most lavish giveaway seduction of high rollers. He is credited with presenting a $56,000 Mercedes to one of his favored customers. On another occasion he bought seats on the luxurious supersonic Concorde to spirit 40 of his high-rolling friends and their wives off on a junket to Monte Carlo.

   In spite of all that, however, his profits lagged behind those of Golden Nugget, Caesar's Palace and Resorts International, so Weidner began a program he calls "matching 'em and upping 'em one." In the fall of 1984 he opened seven "wildman suites" designed to attract the attention of high rollers like the Connecticut businessman reputed to have lost nearly $1 million at the Sands during that same year. Losers like that may choose between transportation from home or office to Atlantic City on the casino's $3.2 million Sikorsky S-76 helicopter or from their local airports aboard an equally expensive Mitsubishi Diamond Jet.

Those Dazzling High-Roller Suites

   When the high roller checks in at the Sands, he will likely be housed amid the dazzling mirrors and polished Italian marble of the Versailles Suite. Five-foot portraits

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of Louis XVI and Marie Antoinette adorn the silken walls and add design authenticity to the modern Jacuzzi, spacious sauna, pool table and environmental tank.

   Back at the Golden Nugget, well-heeled guests can enjoy worth-their-weight-in-gold antiques, grand pianos and original paintings by the masters. One suite boasts an oriental alcove housing a six-foot Buddha. For those eager for every possible advantage before entering the gambling arena, a place is provided for a brief act of worship in front of the Gautama's rotund figure. Serious gamblers, we presume, are careful to touch all the bases.

   But all of these good things depend, of course, on what the computer shows concerning the high roller's losses at the gaming tables. Even in Las Vegas and Atlantic City, there is no free lunch. As long as the jet or helicopter leaves him off at home considerably less affluent than when it picked him up, the hospitality of the host casino knows no bounds. Neither is it likely to ask him where all the easy money came from.

Untraceable, Untaxed Money in Abundance

   Untraceable and untaxed money apparently exists in abundance today. Harvard University's James Henry observed in 1976 that the very nature of paper currency available in this country suggests a wide evasion or defiance of accountability requirements. The United States boasts $80 to $85 billion in currency, and approximately 25 percent of that is in $1 to $10 bills. The remaining 40 percent is in even larger denominations.

   Most of us, in everyday transactions, avoid carrying

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bills larger than the ubiquitous $20, though a single $20 bill seldom gets us past the supermarket checkout counter any more. In fact, many businesses are suspicious of a $20 bill and definitely frown on a $50 bill. Almost none will accept a $100 bill without the closest possible scrutiny and a probing identification check.

   Banks traditionally hold as little cash as they can get by with in adequately serving their depositors' needs — reportedly only about 20 percent of the currency in existence in this country. As a matter of policy, they stock very little in the way of large bills. Banks carry less than 5 percent of paper denominations larger than the $50 bill. One reason, of course, is that there is very little demand for the big ones — at least in legitimate areas of financial transaction. Another reason is that cash money in a bank vault or a teller's drawer is earning no interest for the bank.

Drug Dealers Hold $20 Billion in Currency

   What all of that means is that, once the currency held by banks and legitimate users is accounted for, something in excess of $30 billion remains in hands unknown. This is mostly in larger bills, and it is reasonable to assume the bills are held substantially by people engaged in businesses or professions functioning only through large, untraceable, noncredit transactions carried on behind the scenes or under the table. At any given moment, principals in the illicit drug business alone across our nation may be holding as much as $20 billion in currency of large denominations!

   Casinos provide probably the largest and most reliable facilities for laundering dirty money questionably acquired.

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That laundering requires no illicit activity on the part of the casinos and no collusion between management and the player. Everything is legal, and no one is liable. Money is money — however spotless or stained its origin.

   The people who operate America's casinos have no obligation to question the character of players who step up to the cashier's window or to the dice, blackjack or roulette tables and lay cash on the line. Nor are they concerned about the scruples or the reputations of the high rollers to whom they provide free junkets with lavish complimentary accommodations. The source of the money wagered or traded for chips is not their concern.

   What casinos are all about is action at the tables with a percentage to the house — and the larger the amounts wagered the fatter the percentage. The money is the medium, and the medium is indeed the message. Money is the common denominator that reduces to a single level the drug dealer, the bookmaker, the petty thief, the loan shark, the arsonist, the skimmer, the tax evader and the legitimate businessman seeking harmless enjoyment at the gaming tables. It is no secret that a few professing Christians can also be found at the heart of that mixed multitude.

A World of Unquestioning Acceptance

   In that frame of reference, the casino provides a characteristically undiscriminating environment for its clientele. Here is a setting in which acceptance of the player is based not on wealth, beauty, achievement, skill or family name, but on the size and frequency of the bet and the ability to pay off losses. Casinos can claim to be

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among the most democratic of our institutions.

   In the world outside, the player may be a dentist or a drug dealer, a race driver or a racketeer, a minister or a mobster, a physician or a pimp, but within the casino's four walls he finds a world of unquestioning acceptance. He may even attract a bit of long coveted admiration or a fleeting glimpse of fame if he scores a spectacular win. In fact, at the gaming tables a special kind of admiration may even be meted out to the spectacular loser if he handles his losses like a seasoned professional.

   The casino can be whatever the player needs it to be. If that is to be a clearing house for tainted cash, that poses no problem for the management — as long as the house gets its cut.

The Desire for Recognition

   And why do otherwise intelligent, discreet, perceptive and successful tycoons persist in the obvious sham of the high-roller game? Psychologists theorize, if it isn't just to clean up tainted money, it probably is because of that insatiable human desire for recognition. All humans share to some extent the need to be perceived as somebody special — even though we may be reasonably sure that in reality we are not.

   The words "brash" and "cocky" often appear when observers attempt verbal descriptions of high rollers. Now and then the favored customers are simply compulsive gamblers who have enough money from some source or another to support their expensive habit, and who bask in the special attention earned by their sometimes shocking losses.

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Keeping Them Betting, Losing and Betting Again

   "Where do you see this high-roller program taking the industry in the future?" one casino executive was asked when he grumbled over the alleged $2,000 an hour it costs to operate his special delivery helicopter.

   "Just about anywhere it wants to lead us," he replied, a bit whimsically. "Some of our best people lie awake at night just thinking up new things to give away — ways to excite our regular customers to keep them from losing interest. We don't think of it in terms of extravagance or waste — just in terms of how much we get in return when they hit those casino tables.

   "It's spending money to make money," he said, "We run a business here like any other enterprise, and whatever we can give them — as long as it's legal — that will keep them betting and losing and coming back to bet and lose again, we'll sure be handing it over, no matter how ridiculous it seems to somebody out there or how much it costs to give it away."¹

Is That Your Value System?

   Is this, then, the value system with which the conscientious Christian wishes to be identified? Emphatically not, when he is instructed to "beware lest ye also, being led away with the error of the wicked, fall from your own steadfastness. But grow in grace, and in the knowledge of our Lord and Saviour Jesus Christ" (2 Peter 3:17, 18). He isn't doing much growing in that urgently important knowledge while rubbing shoulders with greed at the slot machines, the craps table or the roulette wheel.

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   But, then, maybe he never got a good, clear look before at the world of loopholes and high rollers. Maybe he thought laundering had to do only with dirty clothes, not with dirty money!

Points to Ponder

1. Why is it important that people who deal in illicit transactions pay or be paid in cash? Is it only to avoid income tax liability or are there other complications making it necessary that no records be kept? How can gambling casinos or bookies provide a solution for their problems?

2. The skim, the kickback and the bribe are three potential sources of fraudulent profit in the business arena. If a Christian has evidence that someone in his company is skimming cash before it is accounted for, accepting a kickback from someone in return for purchasing his goods or services, or being bribed because someone has something on him, do you feel that a Christian has a moral responsibility to do something about it? What, for example?

3. You may not see this as a serious possibility, but suppose you had obtained, say, $100,000 in a fraudulent transaction. How would you go about explaining your sudden prosperity to (a) your spouse, (b) your children, (c) your closest friend, (d) the people at church?

4. If someone provided you with free helicopter transportation from your home to his gambling casino,

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plus a complimentary luxury hotel suite with gourmet meals as long as you stayed there, would you suspect ulterior motives or would you consider him just a nice, eccentric rich friend who loves to make you happy?

5. Do people who operate casinos have an obligation to ask players at the cashier's window where their money comes from? Should they require character references on everyone who bets more than, say, $1000 at a time? If not, how do you think gambling casinos could lessen the possibility of being used by unscrupulous people to launder larger sums of dirty money?

Note

1. Wall Street Journal, December 27, 1984.

Chapter Eleven  ||  Table of Contents