Of all the businesses owned by Utah’s Kingston family, perhaps none receive the government scrutiny of the Lake Elsinore Casino in Southern California.
The family is the namesake of the Kingston Group, the polygamous sect that’s also known as the Davis County Cooperative Society. Church members own a diverse portfolio of service, financial and agricultural operations in Utah and Idaho, but these businesses typically require little more than updating their licenses and filing tax returns.
California casino owners, on the other hand, must be licensed by the state — even if they are only a part owner. The process for licensing and keeping a license requires undergoing background checks, disclosing details of the applicants’ finances, listing key employees at the casino and accounting for the gamblers’ losses and payouts. The applicants’ spouses often have to submit to background checks, too.
The Lake Elsinore Casino is accused of not providing all the information California requires and committing other violations of the state’s licensing regulations. In a case that has dragged on since Bill Clinton was president, the two men listed as owners, Ted E. and Joseph O. Kingston, may be forced to close or sell the casino if they get an adverse ruling from an administrative judge who is considering arguments.
Kurt Eggert, a professor at Chapman University School of Law, in Orange, Calif., who has studied gambling statutes, said who owns Lake Elsinore Casino is only one story.
“Another is about how long California regulators have recognized there is a problem with the ownership of a major casino,” Eggert said in an email, “and how long the casino seems to have delayed the resolution of the problem by being nonresponsive to urgent requests for important information.”
Lake Elsinore Casino, which also has been known as the Sahara Dunes Casino, has been operating under a provisional license since 1999, according to a complaint filed last year by California’s Bureau of Gambling Control. That complaint seeks to deny the casino a regular license.
The bureau levels one charge: Joseph O. Kingston, a full brother to Davis County Cooperative Society leader Paul E. Kingston, has not provided the necessary information to apply for a license. Joseph and Ted Kingston co-own a management company that itself owns 5% of the casino, and the bureau said that management company hasn’t submitted an application either.
In recounting the history of the case, however, the Bureau of Gambling Control says it recommended in 2008 the license be denied for even more reasons: failure to maintain adequate records, the “use of inappropriate accounting methods,” the failure to notify regulators of ownership changes, and the “continued employment of a key employee with a felony conviction.”
Much of the case also remains a secret. There are two state agencies that regulate gambling in the Golden State: the Bureau of Gambling Control, which acts as investigators, and the California Gambling Control Commission, which makes decisions about licensing. Representatives of both denied requests to provide more documents or information about why so much time has lapsed in the case, the alleged accounting problems and the name and job of the felon.
There’s no mention in the complaint of the Kingston Group. It’s also unclear if the Lake Elsinore Casino owners are reticent to share personal and financial information due to the beliefs of Kingston Group followers. Besides polygamy, sect members often practice a communal form of living, known in Mormon fundamentalism as a united order. Personal and business incomes are deposited to the sect, which then returns money the individual or firm needs for expenses.
Neither Ted nor Joseph Kingston nor the pair’s attorney responded to requests for comment. They made their arguments for receiving a regular license in an administrative hearing March 5 and 6. The administrative law judge’s decision is expected to be made public in late June.
This isn’t Vegas
The Lake Elsinore Casino doesn’t look like one of the shimmering resorts in Las Vegas. The casino and the city it’s named for sit along Interstate 15 between Los Angeles and San Diego. It’s two stories tall with a gray and brown exterior and a few palm trees in the parking lots. According to the casino’s website, the gambling is limited to card games and wagering on horse races simulcast into the sports bar. The attached hotel is operated under the Econo Lodge chain.
The people who bought the casino in the 1990s were descendants of the men who started the Davis County Cooperative Society. According to a history published in the bureau complaint, cousins Joseph and Clyde Elden Kingston, along with Clyde’s son Ted and Joseph’s daughter Michelle Kingston-Knighton began the purchasing process in 1991. Gaming regulators approved the sale in 1993 and issued the necessary permits. Those permits were renewed annually.
Then, in 1997, California passed new laws regulating gambling. Casino owners had to submit to a new, more stringent licensing process. In 1998, according to the complaint, gaming regulators were notified that Kingston-Knighton had sold her interest to her father “at some unknown prior point in time.”
In 1999, the three remaining owners applied for their licenses. California instead opted to issue the casino itself a “provisional license” while the applications of the three Kingstons were deemed “pending.”
“From 1999 to the present,” the complaint says, “[the casino] has requested, and been granted, continuous extensions of the provisional license.”
Clyde Kingston died in 2005. The complaint says Ted Kingston inherited or acquired his father’s shares.
The complaint says in the current corporate structure, Ted and Joseph Kingston each own 47.5%. The remaining 5% belongs to the management firm the two relatives co-own.
Off to the races
Despite the concerns regulators had in 1999, the complaint suggests nothing of consequence happened for years. The delay appears to have been a side effect of the law change in the late 1990s. The Bureau of Gambling Control in budget documents has said the change created a backlog of background investigations.
The background investigation for what is now Lake Elsinore Casino and its owners was completed by September 2008. In its report, the Bureau of Gambling Control recommended the licenses be denied.
In 2009, the Gambling Control Commission referred the case to an evidentiary hearing. By February 2016, the evidentiary hearing still hadn’t taken place.
The Gambling Control Commission instead requested bureau staff update the 8-year-old background investigation of Ted and Joseph Kingston. About seven months later, the new investigation was done.
The results were the same. The bureau again recommended the Kingstons and the casino be denied a license. That led to last month’s hearing.
Ted Kingston has been the public face of Lake Elsinore Casino for years, representing the business in local news interviews, promotional events and government meetings. There’s no indication the licensing problems have been bad for business.
In March 2016, as the second background investigation was underway, Ted Kingston appeared in front of the California Horse Racing Board to ask permission to install off-track betting. According to a transcript of the meeting, Kingston discussed the renovations that were then underway at his hotel and casino.
“At the end of December, we were able to work with the city,” Kingston explained. “We put up a digital billboard that’s close to the freeway, right on the edge of our property which we own, which we’ll be able to do marketing and advertising to be able to let the people on the 15 Freeway know what we have available for them.”
The board unanimously approved a motion to allow horse wagering at Lake Elsinore Casino.