Caesars Entertainment Corp. says the federal government is investigating the owner of its namesake hotel as part of a crackdown on money laundering in the gambling industry.
The casino company said in an SEC filing that Desert Palace Inc. is under investigation by the Financial Crimes Enforcement Network of the U.S. Department of the Treasury for alleged violations of the Bank Secrecy Act. A federal grand jury investigation is also being conducted.
Desert Palace owns and operates Caesars Palace, its flagship hotel and casino in Las Vegas.
Caesars Entertainment said in the filing that it plans to cooperate fully with both investigations, and declined on Monday to comment further.
The Treasury Department is looking into whether it should assess a civil penalty or take additional enforcement measures against Caesars Palace, according to the SEC filing.
Caesars disclosed the probe days after it was dropped by its partner Suffolk Downs in a bid to build a $1 billion resort casino in Massachusetts. The move by Suffolk Downs followed a finding by state investigators that another of the company's business partners, Gansevoort Hotel Group, had alleged ties to organized crime.
Caesars subsequently ended the relationship with Gansevoort, which was involved in developing a luxury resort on the Las Vegas Strip, but not in the Boston-area project.
Shares of Caesars Entertainment shares plunged 88 cents, nearly 5 percent, to $17.82 by late afternoon.