Nevada regulators struggle with issue of where to allow slot machines

John Wilen

Tuesday, May 26, 1998 | 9:35 a.m.

Should gaming machines be allowed in fast food restaurants? How about laundries? And whose job is it to decide, anyway?

These are just a few of the questions the Nevada Gaming Commission grappled with Friday in its latest hearing looking into whether its regulations should be re-written to more specifically define which types of businesses should and shouldn't be allowed to offer gaming.

The Commission heard testimony from state Sen. Mark James, neighborhood representative Faye Steinberg; Bob Faiss, who represents the Nevada Resort Association; Mark Lerner, assistant general counsel for Alliance Gaming Corp.; and Sean Higgins, general counsel for slot route operator ETT Inc., and president of the Nevada Coin Operators Association.

Notably absent from the hearing were more community representatives.

"I had expected to see more people from the neighborhoods today," said Commissioner Sue Wagner.

Commissioner Brian Sandoval noted that Steinberg was the only community voice the Commission heard.

"We talk about the quality of life to people out there, and they're not here," Sandoval said. "I don't know if we're trying to put out a fire that's not there."

Steinberg feels neighborhood gaming is a problem.

"There is no reason to put big casinos in a neighborhood community," Steinberg said. "Keep your gaming, but keep it in areas where you don't have a concentration of families."

But aside from Steinberg, most discussion at the hearing centered on a more technical question: are new regulations needed to prevent the proliferation of gaming into non-traditional venues, or are existing regulations sufficient? Participants were split, with James and Faiss calling for new regulations, and the slot route operators arguing that no new rules are needed.

James kicked the hearing off by offering proposed amendments to the two Nevada statutes governing the location and licensing of gaming. To the location statute, James would add a prohibition against gaming in places where it "would unduly impact the quality of life enjoyed by residents of the surrounding neighborhoods."

James would make the licensing statute more restrictive, allowing gaming in bars and grocery stores while prohibiting it in office buildings and retail stores. In some circumstances, the amended statute would require the physical separation of gaming and non-gaming areas of a business. Existing licensed businesses would be allowed to keep their gaming operations as is.

Some commissioners and the slot route operators had problems with James' use of the term "quality of life," in the location statute.

"It's my life they're talking about," Lerner said.

Wagner wondered how James proposed defining quality of life.

"How do you define that?" she asked.

James replied that quality of life is a standard that should be determined by people who live in the community where a gaming operation is planned. The amendment merely ensures that the public has a voice when gaming regulators are considering a license application, James said.

"Those are the people I was elected to represent ... and they should have a voice in the process," James said.

Under his proposal, the public could voice their opposition to gaming proposals during commission hearings, James said.

James, chairman of the state Senate's Judiciary Committee, said he would wait to see what the Gaming Commission does before he decides whether new legislation is needed to curb neighborhood gaming.

"I hope you will not feel it necessary to defer to the Legislature in this instance," James said.

Faiss also called for the Commission to act. He took particular issue with one contention of the slot route operators: that restrictions on the types of businesses that can have gaming should be left up to local governments.

"We disagree that the Commission should leave the matter of business gaming suitability to local zoning authorities and we note that no local government official has come before you to make that request," Faiss said.

Opponents of new regulations simply argued that existing rules already allow regulators sufficient discretion to determine whether a license is appropriate for a particular business. Lerner noted that local governments, such as Clark County, currently prohibit gaming in laundries and fast food restaurants.

"You don't need a new regulation to do that," Lerner said.

Commission Chairman Bill Curran took issue with Lerner, noting there is an entire class of establishments, such as Dotty's, which follow the letter of the law by offering food and beverages, but primarily operate gaming machines.

"They've spent the money getting licensed to sell liquor just so they can have the machines," Curran said.

But Lerner noted such establishments are few and far between.

"You're talking about literally a hand full of locations," he said.

Curran said Dotty's has talked about opening 60 establishments state-wide.

In situations where gaming seems inappropriate, Lerner said, the Commission has the option now of denying an application.

"When the fringe comes up, that's where your judgement comes in," Lerner said.

The fear of route operators, Lerner said, is that the Commission will draft rules far more restrictive than those of local communities. This would be a problem mostly in small communities, where a blanket prohibition against allowing gaming in fast food establishments, for example, might prevent gaming in the one public establishment in town, he said.

Still, Curran said the proposed changes would not have a drastic impact on business as usual.

"I don't think we're planning drastic action," he said. "Outwardly, as far as the streetscape, I don't think we're talking about things that are going to have drastic impact."

As far as potential impact on their businesses, the route operators weren't talking.

"I don't think that's the issue," Higgins said after the hearing. A pending Coopers & Lybrand study will predict the economic impact of any changes, he said.

Commissioners noted that the entire issue is not a simple one, and promised to hold more hearings once regulations are officially proposed.

"We certainly aren't going to come up with a panacea that will address all our ills," said Commissioner Augie Gurrola.

"If this was easy to do, we'd have done it a long time ago," Curran said.

In other action last week, the Commission:

--Approved a United Coin Machine license to operate 15 gaming machines at the Downtown Transportation Center. The Commission also approved an application by the City of Las Vegas to continue to participate in revenues from the machines

--Approved a nonrestricted gaming license for the Ultra New Town Tavern, on W. Jackson, on the condition that a compliance officer be approved by the chairman of the Gaming Control Board

--Approved interest transfers in Liberty Partners in the amount of 33.33 percent each from Sam A. Boyd Family Trust and Ludwig Jerome Corrao to Anthony Austin Marnell II, who will own 66.66 percent of the company

--Approved the MGM Grand's recent $500 million debt offering

--Approved the transfer of a 50 percent interest in Las Vegas Auto/Truck Plaza, on S. Industrial, from Avaness Industries Inc. to Michael Jay Manning

--Approved a nonrestricted race book and sports pool license for American Wagering Inc., owner of Leroy's Horse and Sports Place on W. Tropicana, which does business as Si Redd's Oasis Resort Hotel Casino-Sports Pool, on W. Mesquite, and as the Tahoe Biltmore Lodge-Sports Pool. The Commission also approved applications by the Stratosphere Gaming Corp. and Riviera Operating Co. to participate in revenues from Leroy's

--Approved an application by two principals of American Wagering to participate in the operations of Imagineering Systems Inc., a Reno company recently bought by American Wagering

--Approved the transfer of a 20 percent interest in Turtle Stop #10, on W. Tropicana, from Janak L. Daulat to Dilip N. Chohan. United Coin Machine Co. operates machines at the Turtle Stop

--Referred back to staff a restricted gaming license application filed by 1-15 Diner Plus, in Moapa, after Gaming Board Member Steve DuCharme noted that applicant Betty L. Ewing had failed to disclose the existence of two lawsuits on her application

--Referred back to staff a proposed transfer of interest in Pink E's Fun Food Spirits on W. Flamingo, at the applicants' request. Under the application, 75 percent of the establishment would have been transferred from Robert Burns Jeter Goad, Janett Marie Baird Goad and Dale L. Duncan to Richard A. and Marguerite K. Hunter

The Commission also approved restricted gaming licenses for:

--Rick's Inc., doing business as Sammie's Too, on S. Fort Apache, owned by Richard W. and Sue A. Pearlman;

-M and H Trading Inc., doing business as Discount Food Mart, on N. Eastern Ave., owned by Masud Ur Raoof Qazi;

-Clothesline Laundromat, on N. Nellis, owned by Jeanne M. and Johnny P. Medeiros. Audrey A. Medeiros was licensed as a key employee;

-Country Palace Inc., on E. Lake Mead, owned by Anita Northrop;

-Hamika LLC, which does business as Vegas Market #4, on E. Twain, and is owned by Falah E. and Sam E. Hamika;

-D and G Enterprises, doing business at Shooters Sports Bar & Cafe, on S. Decatur, owned by Drew P. and Gregory S. McConaughy;

-United Coin Machine Co., doing business at a 7-11 Store on S. Eastern, owned by Andrew G. Hill, and at Turtle Stop #15 on E. Warm Springs Road;

-Hot Shots Entertainment Inc., on E. Tropicana, owned by Mary E. Gilligan;

-Market Gaming Inc., doing business at a Vons Grocery on W. Craig in North Las Vegas;

-Anchor Coin, doing business at a Smith's Food and Drug Center on E. Windmill Lane.

The Commission also approved three new games:

--Paulson's Draw Poker, a table game offering players the option of three 5-card poker games. Paulson's Draw Poker was submitted by Pit Six Gaming LLC, and tested at the Imperial Palace Casino;

--Maniac Poker, a slot machine submitted by Videotronics Inc., of Sparks, and tested at the Gold Coast Hotel and Casino, and at Baldini's Sports Casino in Sparks;

--Safebuster, a slot machine submitted by Casino Data Systems, and tested at Circus Circus Hotel & Casino, Sam's Town Hotel & Gambling Hall, and at the Stardust Hotel and Casino.

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