Jake's 58 casino hit with 26 compliance violations

Jake’s 58 casino is fighting more than two dozen state violations for allegedly employing people without the proper gaming license after a first-of-its- kind enforcement action by the state Gaming Commission.

The Gaming Commission in a Dec. 15 email to Suffolk Regional Off-Track Betting Corp. CEO Phil Boyle listed nine employees without a license and 25 who had either an expired or incorrect type of license, according to records obtained by Newsday through a Freedom of Information Law request.

Employees must have a gaming license to work at a casino to help maintain the integrity of the gambling operation, and those convicted of felonies and gambling-related misdemeanors may be denied one, according to the Gaming Commission. None of the Jake's 58 employees was accused of any further wrongdoing by the Gaming Commission, but critics say the alleged errors underscore problems that can arise when a public entity rather than a commercial operation runs a casino.

As of April 1, 26 employees remained out of compliance, and Jake’s 58, which is owned by Suffolk OTB, was issued a $26,000 fine, or $1,000 per employee, according to Gaming Commission spokesman Brad Maione. One of those employees in violation has left, but the others are still employed by Suffolk OTB, Boyle said. Jake's 58 is reviewing candidates for a new full-time staff position focused on licensing compliance, he said.

Boyle, in a statement, said the OTB had believed all its employees were in compliance until the state undertook its audit last year and that some of the issues originated under the casino's original operator, Delaware North.

Jake’s 58 management has appealed the decision, and the fine has been stayed until the matter is settled, Maione said. The casino operators since have submitted all the required license application materials as they work to bring the employees back to compliance, he said. It is not clear when the Gaming Commission will rule on the matter.

"Though we were only recently notified of any issues . . . questions date back to when Delaware North ran Jake’s 58 Casino Hotel," Boyle said. "It is our intention to address them, resolve them and become a statewide model for other casinos to follow regarding gaming license compliance."

OTB bought the hotel from Delaware North and took over casino operations in 2021, more than four years after the Buffalo-based entertainment conglomerate opened Long Island's first casino in the former Islandia Marriott Long Island.

Delaware North spokesman Glen White said the company did not receive any licensing violations from the Gaming Commission when it operated the casino from 2017 until 2021.

"Delaware North is strongly committed to gaming compliance, including employee licensing, at our casinos and other gaming venues in New York, seven other states and Australia," he said.

Boyle clarified that the casino was not notified employees would need to reapply for licenses after Suffolk OTB took over operations, but "that certainly was not Delaware North's responsibility."

Assemb. Michael Fitzpatrick (R-St. James), a longtime critic of Suffolk OTB, said the violations add to the argument that government should leave the casino business to large corporations.

“[Las Vegas] Sands or Bally's or anybody else, they don't make these mistakes," Fitzpatrick said. "But government will make these mistakes, because they are not business people."

Boyle said casino revenue has increased since Suffolk OTB took over. The casino's net revenue was $277.3 million in fiscal 2023-24 compared with $218.7 million in 2019-20, the last pre-pandemic year under Delaware North ownership, according to the Gaming Commission.

Suffolk OTB in April broke ground on a $210 million expansion that will double the number of betting terminals at the casino.

"Suffolk OTB has significantly increased revenues at the casino since taking over from Delaware North, which means more money for our New York State schools and the residents of Suffolk County," he said.

Even so, no other New York commercial or video casino has ever received a violation for licensing noncompliance, according to the Gaming Commission.

"The Commission’s issuance of a notice of violation relating to video lottery gaming employee licensure regulations is indeed rare," Maione said. "However, the Commission does issue notices of violations — including fines — to gaming operators when violations occur."

OTBs were established to pass along profits from horse betting operations to local governments and cut down on illegal betting. After the casino pays out winnings, 45% of the proceeds goes to the public education system, 10% goes to the Gaming Commission, 5% goes toward horse racing and the remainder goes to Suffolk OTB, which distributes its net revenue to Suffolk County. 

Suffolk is one of only two OTBs in the state to operate a casino, along with Western OTB, which runs the Batavia racetrack and casino. The others are operated by Native American tribes or large casino companies such as MGM Resorts International and the Yonkers Raceway and Empire City Casino.

All video lottery casino employees, from managers to housekeepers, must obtain one of several types of licenses, according to state Gaming Commission regulations. The regulations have been in place since the first New York video casino opened in 2004. Applicants are required to provide evidence of their good character that could include bank statements, tax returns and criminal history.

Those requirements help prevent corruption and maintain public trust in those operations, said Bennett Liebman, a government lawyer in residence at Albany Law School and a former member of the state’s Racing and Wagering Board, now known as the Gaming Commission. He noted it is rare for a public benefit corporation like OTB to receive any type of state violation.

"OTBs are regarded as units of local government, and as such they rarely have been fined over the five decades that OTBs have existed," he said. "It just sounds like this was sloppy, rather than anything else."

OTBs are often considered patronage mills, with Republicans and Democrats benefiting from the jobs. Some alleged to be found in violation include deputy general counsel Anthony Portesy, who is also the Brookhaven Town Democratic chairman; Suffolk OTB vice president James LaCarrubba, a Democrat; and former director of government and community relations Kristin MacKay, who since has taken a job as an assistant deputy county executive to Republican Suffolk County Executive Edward P. Romaine. Portesy noted he received a temporary license in 2021. MacKay did not respond to a request for comment.

LaCarrubba said he previously thought he has the proper license.

"We've questioned the violations, obviously, because we feel that we have the proper documentation for our employees and for myself," he said.

By Vera Chinese

vera.chinese@newsday.com@VeraChinese

Vera Chinese covers Suffolk County government and politics. She joined Newsday in 2017 after working as an editor for the East End lifestyle publication northforker and a general assignment reporter for the New York Daily News.