Las Vegas-based Caesars Entertainment Corp. (caesars.com/corporate) disclosed in an Oct. 21, 2013, regulatory filing with the Securities and Exchange Commission that its flagship Caesars Palace casino hotel (which is owned and operated by its subsidiary, Desert Palace) was the subject of a federal money-laundering probe, and said it "has decided to withdraw its application as a qualifier" for a $1 billion casino venture in Boston, after investigators from the Massachusetts Gaming Commission raised concerns about its suitability for a gaming license.
In the filing obtained by the Hotel Insider (investor.caesars.com/sec.cfm), Caesars denied any wrongdoing and stated that "neither it nor its affiliates have been found unsuitable by any licensing authority." The company said it intends to cooperate fully with the federal and grand jury investigations, which it had been advised of in a letter dated Oct. 11, 2013. In addition, the company said officials also raised questions about the head of its online gaming business, which will begin trading publicly next month. News of the federal probe saw the company's stock fall another 4.8 percent this Monday, down 33 percent since Sept. 17.
Caesars is not the only casino operator under scrutiny as part of a crackdown by the Treasury and Justice departments on non-bank financial institutions. This past August, Las Vegas Sands Corp., operator of the Venetian-Palazzo complex on the Las Vegas Strip, agreed to return $47.4 million to the U.S. Treasury to end a federal probe into the casino's failure to alert authorities to a high-stakes patron's suspicious transactions.
In a separate statement, Caesars announced it had ended its relationship with Gansevoort Hotel Group in an effort to rebrand Bill's Gamblin' Hall & Saloon on the Strip into a luxury boutique hotel. According to several news sources, Arik Kislin, an investor in Gansevoort, was identified in German court filings as allegedly having ties to organized crime in Russia.
Despite the probe and the company's subsequent pullout from the Boston project, Caesars Entertainment said it is moving ahead with its $400 million Horseshoe Casino project in Baltimore, which is scheduled to open during the third quarter of 2014.