Chris Sieroty, Las Vegas Review-Journal

The race and sports book subsidiary of Cantor Fitzgerald L.P. accused of inadequate supervision of its employees that led to one of its top executives accepting illegal bets will pay a record $5.5 million fine under a settlement unanimously approved Thursday by the Nevada Gaming Commission.

“Today is a bad day,” Commissioner Dr. Tony Alamo said. “This is an enormously large sum of money. This is a revenue get. That’s not our goal, our goal is to punish” those who violate state gaming regulations.

Alamo credited CG Technology’s CEO Lee Amaitis for attending the hearing but cautioned him that this incident was national news and “gave Nevada a black eye.” Alamo said he wouldn’t want to see CG Technology come before the commission for a similar incident in the future.

“I am not afraid of revocation” of a company’s license,” Alamo said.

Chairman Peter Bernhard said he was initially reluctant to support the stipulation because of the damage done to the industry by the company. But Bernhard did support it because it is largest fine ever against a gaming company. He said the $5.5 million fine sends a message that “people will be held accountable.”

The three-member gaming control board could have also recommended revoking or suspending CG Technology’s license.

Amaitis attended the hearing but did not address the commission. He also declined to comment on the commission’s decision following the 20-minute hearing.

The Nevada Gaming Control Board’s 18-count compliant outlining the charges against CG Technology, former Cantor Gaming, was made public on Jan. 8. The settlement was released on Jan. 13.

In the complaint, regulators said CG Technology failed to prevent Michael Colbert from operating an illegal sports betting ring that made an estimated $34 million in bets. Colbert, formerly director of risk management and vice president of the former Cantor Gaming in Las Vegas, worked with three men who worked as messengers to place wagers for Gadoon Kyrollos, a high-level sports bettor.

Paul Sexton, Robert Drexler, and Thomas Ludford acted as messenger bettors, according to the complaint. Sexton pleaded guilty to fourth-degree money-laundering and forfeited $600,000.

Colbert pleaded guilty to one felony count of conspiracy for his role in the betting ring in New York federal court last year. He’s awaiting sentencing.

The settlement says CG Technology admitted guilt in 14 counts of the complaint and concurred that the board could prove one count directly relating to Colbert’s oversight of the illegal wagering operation. The company did not admit or deny allegations in three other counts.

Both Amaitis and Cantor Fitzgerald Chairman Howard Lutnick signed off on the settlement.

Prior to the fine approved Thursday, the largest ever approved by Nevada gaming regulators was $5 million in 2003 against MGM Mirage, now known a MGM Resorts International. The company was fined for failing to file 15,000 currency transaction reports to the state.

Owners of the Stardust paid a $3 million fine in 1984 to settle a complaint over allegations that the now-imploded Strip casino’s former owner failed to prevent mob-related skimming of gaming revenues.

In 1988, Ralph Engelstad, late owner of the Imperial Palace, was accused of damaging the state’s reputation for holding two Adolf Hitler birthday parties at the casino in separate years. He paid a $1.5 million fine.

The Palms paid a $1 million fine last year to settle a complaint resulting from an investigation that discovered rampant drug sales and prostitution at clubs on the property.

Founded in 1945, Cantor Fitzgerald is one of the largest private financial services firms on Wall Street. Lutnick, the firm’s chief executive, has led the company’s expansion over the past decade into investment banking, commercial real estate and gaming.

CG Technology operates race and sports book at the M, Hard Rock, Tropicana, Cosmopolitan of Las Vegas, Venetian, Palms and the Silverton, as well as provides information as Las Vegas Sports Consultants and offers mobile wagering. The bookmaker also has operations in China and the Bahamas.

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