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How regulators will try to ensure Chicago’s first-ever casino is free of corruption – Chicago Tribune


A decade in the past, Chicago was on the verge of getting its first-ever on line casino, a controversial concept that nonetheless acquired legislative approval earlier than it was vetoed by then-Gov. Pat Quinn as a result of, in his phrases, the invoice contained “loopholes for mobsters.”

Quinn, a self-styled outsider amongst Illinois Democrats, was certainly not the primary to lift issues about how a state-sanctioned playing emporium would have the ability to keep freed from corruption in a metropolis with a wealthy and often-sordid historical past of organized crime. In a city the place Al Capone and Joey “The Clown” Lombardo are well-known names, the potential for mob infiltration was something however hypothetical, as evidenced by the debacle within the early 2000s to construct a on line casino in suburban Rosemont.

Now, after Gov. J.B Pritzker signed laws in 2019 authorizing a metropolis on line casino and Mayor Lori Lightfoot this month tapped Bally’s to develop a $1.74 billion playing and leisure advanced alongside the Chicago River, the controversy about whether or not Chicago ought to obtain a on line casino seems to have ended. Nevertheless, questions stay about how public officers and regulators will guarantee everybody from the corporate’s high buyers to the subcontractor who paves the car parking zone is aboveboard.

“You want to make sure the city is not in business with some nefarious individuals,” mentioned Jeff Cramer, a former federal prosecutor who has participated in investigations involving on line casino buyers. “You don’t want to find that out after the fact.”

Most of that work will fall to the Illinois Gaming Board, a state company that has traditionally been understaffed and underfunded. The launching of the Chicago on line casino comes because the Gaming Board has seen its employees shrink modestly since Pritzker signed into legislation an enormous playing enlargement that drastically elevated the regulatory company’s workload.

While regulators will give attention to guaranteeing any final vestiges of the Outfit don’t achieve a toehold in a Chicago on line casino, that’s certainly not the one menace, specialists mentioned. In current years, worldwide felony parts have discovered casinos throughout the globe to be a horny alternative to launder cash.

“The risks now make what happened in Rosemont seem cute,” mentioned Cramer, who now works for a global investigations agency.

At the identical time, the board possible might be below political strain to swiftly approve the Chicago on line casino so that cash can start flowing to the town’s struggling pension funds and the state’s capital development program. Lightfoot’s administration even not too long ago mentioned it hoped to submit its option to the Gaming Board for approval in time to incorporate $40 million in upfront funds from Bally’s within the 2023 fiscal finances this fall, months earlier than Lightfoot is predicted to run for reelection.

But the method of vetting buyers and others tied to the on line casino received’t get underway till the town formally submits that license utility to the Gaming Board.

The board doesn’t publicly focus on its background investigation course of, however Administrator Marcus Fruchter, a former Securities and Exchange Commission legal professional Pritzker employed in 2019, insisted the company’s investigators are as much as the duty.

“While the Illinois Gaming Board has historically been understaffed and under-resourced under prior successive administrations, the IGB’s dedicated and hardworking civilian and sworn staff of professionals has nonetheless risen to meet the many challenges and mandates of the recent gaming expansion laws (during a global health pandemic),” Fruchter mentioned in an emailed response to questions.

Despite seeing its finances enhance below Pritzker, the board’s employees has shrunk barely because the playing enlargement was signed into legislation three years in the past, reflecting each the forms of the state hiring course of and the staffing challenges going through employers throughout the nation, significantly legislation enforcement companies, in the course of the pandemic. There are about 217 state workers on the company now, down from 234 in June 2019, in accordance with a board spokesperson. That consists of the lack of 25 Illinois State Police troopers assigned to the Gaming Board, about one-third of the element from three years in the past.

Still, Fruchter mentioned, the board has completely vetted greater than a dozen candidates for on line casino licenses, together with these in Waukegan, the south suburbs, Rockford, Danville and southern Illinois, in addition to functions for casino-style playing at Hawthorne Race Course in Cicero and Fairmount Park close to St. Louis. The company additionally launched sports activities wagering and investigated candidates for bricks-and-motor and on-line sportsbook licenses, he mentioned.

“The IGB is prepared to process and evaluate the Chicago casino application (once submitted) in an ethical, efficient, independent, thorough, timely, and transparent manner that satisfies the IGB’s significant statutory obligations and maintains public trust and confidence in Illinois gaming — just as the IGB did (and is doing)” for all these different candidates, he mentioned.

A Bally’s spokeswoman declined to remark for this story.

In its vetting course of, the board digs by way of felony, civil and monetary data of candidates, appears for felony convictions or the rest that will “dishonor or harm the reputation of, or result in adverse publicity for, the state of Illinois and its gaming industry.”

The on line casino functions themselves, which have broad disclosure necessities, and the main points of the board’s investigations are shielded from public evaluation below state legislation. Sometimes, although, points that come up develop into public.

During the board’s evaluation of the brand new Hard Rock Casino in Rockford, as an example, investigators found an investor who owned the restaurant and conference heart that serves because the on line casino’s short-term location throughout development of the everlasting facility had didn’t disclose a minor 2020 arrest. The on line casino’s different backers had to purchase out the investor’s stake within the venture and buy the restaurant.

Some investigations have gone a lot deeper. Most notoriously, mob connections cited by investigators sank the ill-fated Emerald Casino proposal in Rosemont almost twenty years in the past.

State regulators yanked the playing license held by a consortium of highly effective buyers who had been making an attempt to construct a brand new on line casino within the northwest suburb. The Gaming Board alleged the group was unfit to run a on line casino as a result of some shareholders had ties to organized crime whereas others had lied to board investigators about backroom possession offers.

A Chicago on line casino has been mentioned for many years and arranged crime has all the time been a lingering concern. In the Nineties, then-Mayor Richard M. Daley floated the concept, which finally went nowhere.

Robert Lombardo, an emeritus professor in criminology and felony justice at Loyola University Chicago who has taught programs and written books on organized crime in Chicago, mentioned had the on line casino gotten off the bottom within the Nineties when Daley first proposed it, “there would have definitely been efforts (by the mob) to get involved.”

Lombardo mentioned there’s a less-severe threat of that occuring lately.

But Edward McNamara, who spent 1 / 4 century on the FBI’s organized crime squad in Chicago earlier than retiring in 2019, mentioned that whereas the FBI made a major dent within the mob construction by way of the landmark Operation Family Secrets case and different investigations, “We didn’t eradicate them.”

Those who stay will inevitably attempt to discover a manner into the on line casino in Chicago, mentioned McNamara, who additionally served because the FBI’s liaison to the Gaming Board for a few decade.

As the on line casino business has develop into huge enterprise, dominated by publicly traded corporations like Bally’s, mobsters are inclined to focus their consideration securing subcontracts to supply any of the varied items and providers that make a on line casino run, McNamara mentioned.

“It’s a cat-and-mouse game,” he mentioned. “You’ve got to try and keep them out, and they’re gonna try and get in.”

The cat-and-mouse sport in current a long time has gone worldwide, mentioned Cramer.

“I’d worry less about organized crime infiltration (and) far worse about money laundering, international money laundering, because casinos are a cash business,” mentioned Cramer, who’s now senior managing director at worldwide investigation agency Guidepost Solutions.

Regulators in different states he’s labored with, Cramer mentioned, have recognized buyers who’ve been indicted abroad for crimes comparable to extortion, cash laundering and terrorism financing. Cramer was concerned in an investigation that in 2010 led to the disqualification of 1 the bidders to run the Illinois lottery after previous abroad felony indictments of a high official had been uncovered.

“The risks are far more dangerous now because you’ve got, again, international money launderers, not just some two-bit organized crime people trying to get involved in a casino,” Cramer mentioned. “That was easy to flush out and we did and we prosecuted that and … they didn’t have a casino.”

That kind of digging usually requires “boots on the ground” in international locales, one thing Cramer thinks is past the capability of Illinois regulators.

“I don’t think anyone who knows this industry would say they’re doing a proper due diligence,” Cramer mentioned.

McNamara, the previous FBI agent, mentioned the bureau previously has routinely assisted the Gaming Board by looking its databases for abroad felony data.

Fruchter, the Gaming Board administrator, declined to enter element concerning the company’s investigation course of, although he mentioned the board doesn’t rent third-party investigators for any a part of its felony background checks.

The board’s “seasoned law enforcement professionals have experience conducting criminal background investigations of domestic and foreign individuals and entities,” Fruchter mentioned.

dpetrella@chicagotribune.com

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