Japanese police emblem

1974-1975

For many Japan-based businessmen, gambling trips to Caesars Palace in Las Vegas, Nevada turned nightmarish.

Kikumaru Okuda, 46, also a resident of the Land of the Rising Sun, and a film producer with Toho Film Company, organized numerous trips on behalf of the Nevada hotel-casino, at the request of its president, Harry Wald. Caesars Palace paid Okuda, who’d met all of Nevada’s requirements for junketeers, $3,000 ($15,000 today) a month for his services.

The agreement with junket guests, which was typical, was that the resort would pay their airfare and hotel bills in exchange for them gambling a certain number of games while in Sin City. If they won, the casino would pay them in U.S. dollars on site. If they lost, the guests would pay in yen what they owed after returning to Japan.

Illegal Collections

In the case of a 32-year-old, Yokohama dry goods dealer, upon his return home, Okuda told him he owed $93,000 (about $455,000 today) and demanded payment. (It’s likely the man hadn’t known the size of his marker or how fast it had grown when he was in Vegas.) He refused to pay.

Soon after, Okuda’s partners —Yoshihisa Kuroda, 45, and Manabu Nakajima, 40, both corporate executives — told the debtor they had Mafia and Yakuza (Japanese organized crime members) associates who’d “liquidate” him if he didn’t pay immediately (Las Vegas Sun, July 17, 1975). He gave them $18,000 (probably all he could at the time) then reported the incident to police. (Such extortion by junketeers is why the state of Nevada, in 1972, had augmented its regulations concerning junkets.)

Consequently, in 1975, members of the Tokyo Metropolitan Police Department (MPD) investigated possible links between organized crime and gambling junkets to Las Vegas.

“In general, the situation occurred at about the same time as the movie, The Godfather, was being run in Japan, and from the point of view of the Japanese the entire affair appeared to have been engineered by organized crime interests,” wrote Jerome Skolnick in House of Cards.

Police discovered other victims, including:

• A golf course proprietor who was forced to repay $670,000 ($3.3 million today)
• A nightclub owner who had to come up with $100,000 ($490,000)
• A Tokyo jeweler who’d lost $50,000 and paid about $10,000 ($49,000)

They learned Okuda had begun the junket enterprise in January of 1974 and since then, had taken to Las Vegas 85 men, whose gambling losses had totaled $83 million ($407 million today)! Okuda had collected about $600,000 ($3 million today), two-thirds of which he’d sent to the casino through a U.S. attorney living in Japan.

The MPD arrested Okuda, Kuroda and Nakajima on charges of extorting millions of yen from Japanese citizens.

Nothing Doing

Nevada Gaming Control Board (NGCB) agents also looked into the allegation, in the United States and in Japan. When they questioned Wald, he said he was clueless as to the intimidation tactics Okuda had been using. Further, he claimed Okuda had offered to take over junket debt collection, but Okuda asserted Wald had asked him to do it. (Caesars Palace already had been in the NGCB’s crosshairs over junkets in 1969.)

When overseas, Japanese police prevented NGCB agents from reviewing any and all related documents, saying they were being held as evidence for the trio’s upcoming trial.

Back home, Nevada gambling regulators noted that opposition to and a major media campaign against gambling and junkets was growing in Japan and said the climate there toward the U.S. industry was “economically and emotionally bad” (Reno Evening Gazette, Aug. 19, 1975). Silver State officials were displeased with the circumstances surrounding the junkets from Japan and the resulting strained relations with the country.

As for Okuda, the Tokyo MPD arrested him a second-time in 1975 on different junket-related charges, but what ultimately happened to him, his henchmen and Caesars Palace — if anything — is unknown.

Sources

Art from Wikimedia Commons: by Mononomic

Trailways bus parked at the Golden Nugget Casino in Sparks, Nevada, 1970

1969-present

When executives of Caesars Palace in Las Vegas, Nevada hosted 12 people from Kansas City in 1969 as part of a gambling junket, it unexpectedly backfired.

When their guests, after four days at the resort, boarded the plane to return home, Clark County sheriff’s deputies arrested all of them on charges of vagrancy because they were believed to be mobsters or associates.

The Nevada Gaming Control Board (NGCB) recommended that each of Caesars’ 59 shareholders be fined up to $50,000 and the casino, $10,000.

“Catering to persons of notorious or unsavory reputation or to persons who have extensive police records reflects or tends to reflect discredit upon the State of Nevada and the gaming industry and is a violation of the regulations in that it is an unsuitable method of operation,” the NGCB’s complaint noted  (Nevada State Journal, June 13, 1969).

Throughout the 1960s, these strategic trips brought hundreds of thousands of tourists to The Silver State to gamble. Under this type of arrangement, an employee or, most often, an independent operator, frequently out of state, found people with a good credit rating and a desire to gamble (some casinos required that visitors be able to lose $2,500) then transported them to a hotel-casino for a few days to play.

The gambling licensee assumed all costs of transportation, meals and accommodations in the hopes the guests would lose money — lots of it — in his casino. The junket organizer received about $50 per person per junket.

“The casinos spend millions for the trips from as far away as New York and try to recoup the money from patrons at the gambling tables,” reported the Reno Evening Gazette (February 17, 1967).

If a junket gambler exceeded his credit, the casino might give them a marker, or written IOU. Typically, the coordinator, or junketeer, was responsible for collecting that money for the casino once the guest got home.

Cheating, Extortion, Murder

The lack of rules governing these trips led to abuses by junketeers. Some were involved with organized crime. Some enlisted people who couldn’t meet the credit requirements, then loaned them money at exorbitant rates. Some skimmed off the debts they collected before turning the money over to the casino. Via phone, some threatened junket participants who owed money.

In early 1970, the Nevada Gaming Commission (NGC) proposed regulations that addressed these problems. Soon after, Harry Otake, 46, who’d facilitated many gambling junkets from Hawaii to Las Vegas and Lake Tahoe hotel-casinos, was found lifeless in the trunk of a car, having been strangled.

Police theorized that gangsters had murdered him, gamblers who’d lost significant amounts or from whom he’d attempted to collect on debts. Robbery was another possible motive, as Otake allegedly had $95,000 in his possession before his death.

Shaken by this homicide, NGC members got all casinos in the state to stop voluntarily all junkets run by non-employee agents until governing rules could be established.

Nevada Takes Control

That same year, after months of discussions and six drafts, the NGC adopted a rule calling for punishment, even potential gaming license revocation, of any casino doing business with unsavory junketeers.

In 1972, the NGC added further stipulations, which comprised Regulation 25. Among them, all junketeers, now called independent agents, had to register with the NGCB, and licensees could work only with those whom the board had approved.

All junketeers, now called independent agents, must register with the NGCB and provide certain documentation, including a copy of the agreement between the agent and the gaming licensee, financial info if the agent is to give money to the licensee and a designation of secondary representatives. Licensees had to report quarterly what agents they’d worked with during the previous three months.

Some minor additions in 1992 aimed to ensure agents and licensees were made aware of the rule’s requirements. Regulation 25 remains in effect today.

As for Caesars Palace, for some reason, the state dropped the matter, leaving the resort’s shareholders free from reprisal.

Sources