Slot Machine Ripoff at Gulfstream
The Florida Department of Law Enforcement is investigating an alleged slot-machine theft ring by employees at Gulfstream Park Racing & Casino.
This is the first potential scandal for the fledgling industry, which is both heavily regulated and heavily taxed by the state. And I'm the one bringing you the news for one reason: The largest newspaper in Broward County, the Sun-Sentinel, had the story first but got cold feet and decided not to publish it.
Before we examine the Sun-Sentinel's apparent cowardice, let's look at the emerging scandal at Gulfstream, one of the county's four pari-mutuels and the first to unveil voter-approved, Las Vegas-style slot machines last year.
FDLE spokeswoman Paige Patterson confirmed that her agency, which has a regulatory office on Gulfstream grounds in Hallandale Beach, is criminally investigating the casino, although she declined to provide any details.
The investigation is centered on promotional cards used to generate interest in the slot machines, according to sources in the gambling industry and in Tallahassee.
Local casinos provide patrons with the cards, which usually hold $25 to $100 worth of "non-redeemable credits" to play the slots. Patrons can cash in any winnings beyond the card's originally assigned value.
Gulfstream employees are alleged to have exploited the promotion either by playing with large amounts of money on the cards or by their unauthorized selling. Cards used to test the machines also may have been involved in the scam, sources say.
Sources also indicate that a Gulfstream executive has been removed from his post while this investigation continues. Gulfstream spokesman Mike Mullaney was almost laughably coy about this. When I asked whether the executive in question had been fired, Mullaney said, "I haven't seen him around in a while."
Mullaney downplayed the investigation. But Gulfstream's filings to the state reveal that hundreds of thousands of dollars may have been involved in the alleged scam.
Gulfstream reported that it gave out a whopping $1,051,000 in nonredeemable credits during July and August. In that same period, Mardi Gras Gaming, a larger casino that does about twice the slots business of Gulfstream, reported using only $108,000 of the credits.
Since the investigation began, Gulfstream's numbers have come back in line, according to state filings. In October, the casino reported using just $107,986 in nonredeemable credits, a huge decline from previous months.
Mullaney claimed he wasn't aware of those numbers. "I'll have to defer to our accounting department about that," he said. "If there is an investigation, any comment I make could jeopardize it."
Mullaney did offer that he had heard people were speculating that millions of dollars were involved in a Gulfstream theft. "I can't imagine it's millions of dollars," said. "That boggles the mind."
Mardi Gras President Dan Adkins said the Gulfstream investigation could have far-ranging effects on the industry, which is already hampered by an effective 62-percent tax rate.
"To have something like this, which is a scar, a black mark, on all the hard work we've done — it hurts me," he said.
Mardi Gras would have caught the anomalous numbers immediately, Adkins said, due to its "controls and sophisticated accounting system."
State Sen. Steve Geller, who confirmed that the FDLE investigation involves allegedly misused nonredeemable credits, said pari-mutuels are so strictly regulated that any scams are bound to be discovered sooner or later. "It's impossible to get away with, but the higher up the ladder it goes in terms of management, the longer it takes to get caught," he said.
Mullaney said Gulfstream has fully cooperated with the investigation. "As a gaming enterprise, integrity and dignity and credibility are of utmost importance to us," he said. "It's in our best interest to play ball with FDLE, which is stationed here anyway."
Meanwhile, Mullaney said the first call from the media about the investigation did not come from me but from Sun-Sentinel reporter John Holland.
Mullaney said Holland asked him questions and told him the daily newspaper was going to publish an article about the investigation nearly two weeks ago. "But the days came and went without a story," Mullaney told me. "I wasted two dollars and five cents on the Sentinel looking for that story."
So what happened?
Holland declined to comment. Sources at the Sun-Sentinel say his article about the investigation was edited and vetted by a lawyer, then killed at the last minute.
Earl Maucker, the paper's executive editor, at one point told Holland to speak with a Gulfstream executive who wanted the story spiked, a veteran Sun-Sentinel reporter said. Gulfstream regularly runs large ads in the Sun-Sentinel. Maucker did not return my calls for comment.
Others at the Sun-Sentinel say they heard the story was not published because editors were concerned that it used unnamed sources and because editors were worried that such news could harm the gambling industry.
Some in the newsroom were angered by the decision. "A lot of people are upset about it," one reporter told me.
The Sun-Sentinel's circulation has plummeted lately. At the same time, the paper is undergoing what its management calls "transformative change." To some degree, this entails blending reporting with advertising and marketing. The idea is to better serve advertising clients as well as readers, even as readers fall away. Traditionally, reporting has been kept strictly separate from the interests of advertisers.
The fate of the Gulfstream story in the Sun-Sentinel's newsroom could be a sign that the paper is not just bridging departments but that its hunt for revenues in an increasingly grim industry has overtaken its journalism — which would be far worse than whatever happened on the slots floor of a local casino.
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