California Casino Hit With Record $6M Fine

Hawaiian Gardens Casino is the second-largest card room in the state of California.

You’d think that being the second-largest card room in California would have policies in place to keep it operating legally. You’d think wrong, at least in the case of Hawaiian Gardens Casino on East Carson Street, California.

The casino, founded in 1997, only offers card games. It started life as a 59,900 square-foot casino but expanded to 200,000 square-feet in 2016 following a $90 million renovation. It is now a regular stop on the World Poker Tour.

Hawaiian Gardens Casino faced the possibility of losing its license in 2017 after failing to follow federal anti-money laundering laws.

Keith Sharp, the casino’s general counsel, said managers “have made tremendous steps to improving our programs”. Sharp’s claims of revamping policies are inaccurate as the casino is now paying a near $6 million fine.

Record Fine for a Casino in California

California Attorney General Xavier Becerra issued a $3.1 million fine, surpassing the previous record of $2.1 million. Becerra said the fine is for “misleading gambling regulators and violating federal law intended to prevent money laundering.”

Becerra revealed the company failed to disclose a federal Financial Crimes Enforcement Network (FinCEN) investigation into its practices. He also stated the company had attempted to deceive the California Department of Justice for years.

“There’s no excuse for failing to comply with the law and deliberately attempting to mislead regulators,” said Attorney General Becerra. “In the gaming world, if you fail to play by the rules, expect to pay the price. Hawaiian Gardens Casino is paying the price. At the California Department of Justice, we will do all we can to prevent the marriage of money laundering and casinos.”

Casinos must make full and true disclosure to gambling regulators under the Gambling Control Act of 1998.

Additional $2.8 Million Penalty

FinCEN imposed an additional $2.8 million fine for the company’s failure to have an effective anti-money laundering program. This includes failing to report transactions involving currency in amounts greater than $10,000 and failing to report suspicious activity. Financial records between 2009 and 2016 were deemed to be insufficient.

“There’s no excuse for failing to comply with the law and deliberately attempting to mislead regulators,” Becerra said. “For 24 months they’re going to be under our scrutiny to make sure that they are … dotting their Is and crossing their Ts. And if they don’t, then they’re subject to having their license yanked.”

The court heard one patron attempted to cash out $14,000 but refused to fill out an IRS identification form. The players ripped up the document, asked another employee for his money and they complied.

Another example involved a patron known only by the name “Michelle”. FinCEN found 15 instances of suspicious cash transactions, but she never provided casino staff with her identification.

Sharp said the company, its 2,000 employees, and the community are pleased the settlement is finalized.

“Garden Casino has strong procedures in place and several years ago we put in place the necessary corrective measures to ensure these issues do not re-occur,” said Sharp, but he said similar last time.

Gambling in California

Hawaiian Gardens Casino boasts 225 tables but does not offer slot machines. Only tribal casinos in California can offer slot machines. Taxation of the casino provides a major source of income for Hawaiian Garden, the smallest city in Los Angeles County.

The casino must fully comply with regulations for the next two years or face losing its operating license.

California has more than 60 licensed card rooms operating in the state. A further 21 card rooms have licenses but are not operating. These generate $850 million in revenue after payouts.

Online poker is still not available in the Golden State, although moves are underway to bring it to the masses. California has more than 39 million residents so would make for the largest pool of players than any other state, including New Jersey, Michigan, and Nevada.

California has a state-level debt of $400 billion and its unfunded liabilities increase each year. Revenue derived from taxing online poker will go towards reducing some of that astronomical debt.

Bills legalizing and regulating online poker in California are in place. They, however, keep hitting stumbling blocks, mostly from racetracks, poker rooms and Indian tribes unable to agree on a plan that is satisfactory for all parties involved.

Matthew Pitt

If it’s something you can play online for real money, chances are Matthew knows a bit about it. He’s been writing about slots, craps and poker for the better part of the last decade. He’s written for PokerNews, PartyPoker and many other respected online gambling websites during the last nine years.


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