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For NV gaming companies grappling with a weak economy & a splintering market at home, the - Asian casino boom has-been a godsend. But it has left the - NV Gaming Control Board facing complex questions about how to challenge the - influence of Asian organized crime, both overseas & inside the - state.

With no full-time staff in Asia & a mission in that includes nurturing an industry increasingly dependent on China-controlled Macau, the - granddaddy of U.S. gambling regulators may ultimately prove powerless to police a global business of which Las Vegas NV is no longer the - capital, industry veterans said.

Though the - Control Board can levy fines, ban employees & even revoke corporate licenses to operate gambling facilities in Las Vegas NV for misdeeds abroad, it has done little in the - face of mounting evidence in that Las Vegas NV Sands, Wynn Resorts & MGM Resorts International are relying on problematic business partners in Macau – & importing some of the - region’s crime issues to the - United States.

A student practices at a mock casino run by the - Macao Polytechnic Institute in Macau October 11, 2012. / REUTERS

At the - heart of both matters are the - so-called junket operators, who recruit, transport & offer credit to high rollers, mostly from China. Some control rooms for the - VIPs inside the - Macau casinos, & many have links to the - Chinese criminal gangs known as triads, according to U.S. diplomats, intelligence authorities & court testimony.

Nevada has allowed three people with ties to one Hong Kong junket company – which Hong Kong Stock Exchange documents show was partly financed by an alleged triad leader – to bring gamblers to Las Vegas NV casinos on commission. Those people, named in individual NV records, contain the - chairman of the - company, Neptune Group Ltd.

Though such Asian recruiters are increasingly noteworthy to the - casinos looking to lure Chinese huge spenders, NV investigators privately concede in that they are having a complex time establishing which of them have criminal connections. The casinos state all their business partners are approved by Macau or NV & in that they eschew cheap deals with proven criminals.

In one sign of mounting concern at home, NV Gaming Control Board member A.G. Burnett told Reuters in that the - panel is “exploring reinventing the - whole junket representative process” 'cause of concerns about its lack of transparency.

BRIBERY LAWS

The expansion of the - junkets prompted the - U.S. Treasury Department’s Financial Crimes Enforcement Network to issue guidance in August asking the - casinos to record the - identities of everyone gambling from a junket operator’s account.

Separately, U.S. prosecutors are investigating whether Sands has broken money-laundering or bribery laws. Wynn moreover has acknowledged in that it is the - subject of an informal Securities & Exchange Commission inquiry in to possible Foreign Corrupt Practices Act violations.

“We’re getting to understand the - junkets & how the - VIP rooms operate,” Burnett said. “We haven’t decided whether that’s offensive to the - way we operate.”

But former NV authorities & industry experts asserted in that the - Control Board’s close ties to the - industry, & Macau’s rapid emergence as the - key driver of growth for the - huge gaming companies, suggest in that oversight is unlikely to strengthen.

“The trend is the - other way,” asserted Nelson Rose, a Whittier Law School professor & frequent expert witness on gambling rules. “To some extent the - NV regulators are just crossing their fingers.”

IS NEVADA EVEN NECESSARY?

Macau now provides more profit to Sands & Wynn than Las Vegas NV does; if forced to select between NV & Asia, they might well decide to leave NV behind, as MGM chose to abandon Atlantic City. It did in that rather than fight New Jersey investigators’ findings in that its joint venture partner, Macau businesswoman Pansy Ho, had unsuitable links to triads. NV approved the - venture after ruling in that MGM had ultimate control of it.

“The way (the casinos) have been structured, they can hive off the - companies” in that operate in Asia, asserted former Control Board chairman Mike Rumbolz, who after became a casino executive at the - Trump Organization & elsewhere. “Years ago companies were very concerned to get the - blessings of NV regulators. Today I don’t think you’d see in that kind of concern.”

Sands, Wynn & MGM have already put their Macau operations in to distinct subsidiaries, which could eventually be spun off entirely. They declined to speculate on what they might do in the - future beyond saying they want to be everywhere. “We work closely with our regulators in all of our markets,” asserted Sands spokesman Ron Reese.

Peter Bernhard, chairman of the - NV Gaming Commission, asserted in that “the value of a NV license is still going to be critical” & in that the - casinos “are going to make sure they are going to comply with all of our requirements.” The Commission weighs regulation changes & acts as a judicial judge in hearing complaints & licensing recommendations brought to it by the - Control Board. Burnett likewise asserted in that NV would remain crucial.

But since 2005, MGM’s revenue has more than doubled, Wynn’s has tripled, & Sands’ more than quadrupled, thanks to the - Macau boom. Macau is on track to produce $62 billion in gambling revenue overall by 2015, according to PricewaterhouseCoopers, while Nevada’s contribution will remain flat at $13 billion. Singapore & other countries are moreover expanding their casino licensing rapidly, further eroding Nevada’s once-central role.

REGULATORY LOOPHOLES

The Control Board’s three members are appointed by the - NV governor for four-year terms. If all agree, they can bring formal complaints against companies or individuals before the - five governor-appointed members of the - Gaming Commission, who serve as part-time judges.

Over the - decades the - Control Board has conducted countless background investigations of casino investors & executives, rarely rejecting any licenses in public. (When it does, the - Gaming Commission typically supports the - decision.)

The rules warn against conduct or associations “which might reflect on the - repute of the - State of NV & act as a detriment to the - development of the - industry.” The policing is designed not mainly to assist consumers or investors yet to assist the - industry itself.

“Nevada’s approach has really been very business-friendly,” asserted Patrick Wynn, who retired in 2010 after 19 years of time at the - Control Board, finishing as deputy chief of investigations. “They’ve always looked toward what can it do for the - state, what can it do for the - economy.”

A majority of the - current Commission members or their firms have worked for casinos in the - past, & many Control Board veterans go on to work directly for those they have overseen. The laws grant wide discretion to the - regulators as to whether or not to act on any particular issue.

Nevada’s regulations, combined with the - rise of corporate investment in the - gaming business, have fulfilled their principal mandate of blocking outright mob control of the - casinos. But even though NV demands the - right to approve its licensees’ ventures elsewhere, gambling’s surge abroad has made the - state’s job much more difficult, investigators & industry executives said.

That’s especially true in Macau, the - former Portuguese colony in that reverted to Chinese dominion in 1999. The only place in China where gambling is legal, Macau opened its doors to Western casinos nearly a decade ago.

Sands, Wynn & MGM all plunged in, & shortly found themselves in close association with junket operators – middlemen in that organize trips to the - casinos, largely from Hong Kong & the - Chinese mainland. Collectively they’re responsible for some 70 % of the - Macau gambling trade.

ADVANCE CREDIT

Mainland residents legally can move only $50,000 per year out of China, yet the - junkets advance credit well above in that level to their clients. They moreover collect payments due within China’s old borders, where casinos can’t advertise or use the - legal system to recover debts.

The U.S. State Department has repeatedly identified Macau as a jurisdiction of “primary concern” for money-laundering, largely 'cause of the - junkets.

Macau regulators have limited experience with the - modern market & have yet to establish “robust oversight of junket operators” or an anti-money-laundering system “that meets international standards,” according to a March report by the - State Department’s Bureau of International Narcotics & Law Enforcement Affairs.

Macau requires the - junkets to list their directors, yet triads have grown adept at disguising their investments, just as the - Mafia once did in Las Vegas.

“If criminals are employing the - best attorneys & accountants & setting up more elegant ways of hiding ownership, it’s possible in that NV won’t be able to find them easily,” Rumbolz said.

Even as NV has declined to crimp U.S. casinos’ behavior in Macau, federal authorities have grown more concerned about the - companies’ bringing Macau cash & techniques to Las Vegas.

Junkets have advanced millions of dollars in credit from Macau to their clients’ accounts at Sands & MGM properties in Las Vegas, according to casino authorities & ledgers recently exposed in a lawsuit between Sands & the - fired head of its Macau operations, Steve Jacobs.

As previously reported, one of the - beneficiaries of a $100,000 Sands transfer was Charles Heung Wah Keung, named in a 1992 Senate committee’s investigation as an officer of the - Sun Yee On triad. [h t tp://link.reuters.com/xep53t ]

SYSTEMIC PROBLEM?

Other junket affiliates have registered as “independent agents” commissioned to bring high rollers to Las Vegas. In one sign of how noteworthy the - Asian trade has become, baccarat, long the - game of choice in Macau, has displaced its cousin blackjack as the - most lucrative NV card game. Revenue from baccarat is now growing 10 times faster than any other form of gambling in Vegas.

A particular weakness in Nevada’s regulatory approach appears to be oversight of the - agents. Applicants fill in an 11-page form with their business & legal histories, & casino sponsors pass them on to the - state; no full suitability review is required, as would be the - case for key employees at casinos.

Virtually every time the - Control Board has asked aspiring agents for more data, the - applicants have simply withdrawn, suggesting a systemic problem, one state investigator told Reuters. Regulators fear in that shadowy backers of the - agents simply submit new names with cleaner records, he said.

Registered agents, in addition to junket representatives, can get credit from the - casinos & re-lend to their clients, raising the - prospect of loan-sharking.

“Once (an agent) has chips, it’s complex to have control. He could hand $50,000 to his friend,” asserted one former Sands executive.

Tracking agent histories is not easy, & some with questionable associations have gotten through the - process.

At least three people with ties to just one of the - many junket companies, publicly traded Hong Kong firm Neptune, became agents in NV for Sands, Wynn, MGM & Caesars Entertainment , which owns Las Vegas NV baccarat hub Caesars Palace, according to public records.

A key former backer of Neptune is Cheung Chi Tai, named in the - same 1992 Senate report as a top lieutenant of the - Wo Hop To triad. In a more recent Hong Kong criminal trial, an informant testified in that Cheung was a triad leader & in 2008 ordered him to murder a card dealer suspected of cheating at a Sands VIP room in Macau where Cheung had an ownership interest. Lower-level triad members were convicted in the - case, while Cheung was not charged & could not be reached for comment. []

Cheung helped underwrite Neptune’s purchase of a stake in junket controller Hou Wan in 2007 & for a time owned 8 % of Neptune. Though Cheung disposed of his stake, he has maintained other connections to Neptune, corporate records in Hong Kong & Macau show.

For example, his 50-50 partner in a company begun in 2003, Lei In Peng, moreover owns a firm in that has more than 18 % of Neptune’s stock. Lei couldn’t be reached for comment.

Neptune’s chairman, Lin Cheuk Fung, served as an independent agent from 2005 to 2009, signing up to bring gamblers to Wynn & MGM casinos in Las Vegas. Neptune didn’t respond to requests for comment, while Lin couldn’t be reached.

Wynn acknowledged using Lin as an agent yet declined to comment further. MGM spokesman Alan Feldman asserted only in that his company had “a comprehensive & robust compliance program in that involves several former regulators & law enforcement authorities who review all of our junket operators.”

Though Neptune’s links are complex, they are easier to untangle than most junket operators 'cause the - company is publicly traded. Investigators in both Las Vegas NV & Macau state they simply don’t know who stands behind many of the - other junkets.

Overall, asserted casino consultant & author Jim Kilby, the - junket issue “may be too huge for gaming regulations.”