Debate on Nevada slot bill continues

Kiley Russell

Thursday, April 8, 1999 | 9:19 a.m.

CARSON CITY - Debate has resumed on a bill to limit Megabucks and other linked slot networks, with critics saying the measure would boost profits of big Nevada casinos at the expense of slot manufacturers.

Casino executives backing AB651 countered Wednesday that the growth of networked slots could undermine profitability of Nevada resorts and reinforce a monopoly enjoyed by the world's biggest slot maker, International Game Technology of Reno.

"I have to credit IGT for developing a gorilla, but as the gorilla grows, the power of the casinos grows less. We do have fears that the smaller casinos will become franchises of whoever creates the largest system games," said Bill Thorton of the Club Cal-Neva in Reno.

The bill, sponsored by the Nevada Resort Association, would mandate that slot manufacturers pay their share of state taxes based on the amount of money the machines generate. The slot makers also would have to offer such leased games for sale.

NRA representatives claimed IGT and other large slot manufacturers can make casinos pay the taxes because their dominant market shares give them an unfair advantage in contract negotiations.

"Because of the difficulty of dealing with someone who has a 90 percent market share, we all sign the same agreement to transfer the tax burden to us - it's take it or leave it," said Steve Greathouse, a Circus Enterprises executive.

Slot manufacturers called the bill un-American and said the market should determine the terms of any contract signed between manufacturers and operators.

"In the end, the casinos want to outlaw proprietary games," said Stan Fulton, chairman of Anchor Gaming. "It is totally inappropriate for the NRA to come here and ask you to re-negotiate their contracts."

The NRA also accuses slot makers of pushing revenue-sharing games to the exclusion of others, a practice they say eventually could undermine the stability of the industry.

"I believe that the wide-area progressive machines are about 5 percent of games in Nevada, but about 10 percent of the slot revenue that totals $5.2 billion. This is a rapidly growing segment of our business, that's why we need this legislation," Greathouse said.

But manufacturers said the casinos are just out to grab a bigger piece of the gambling pie and aren't really interested in a fair market environment.

"The reason they gave was that we make too much money - their 80 percent wasn't enough and our 20 percent was too much," Fulton said, referring to the normal revenue split between manufacturers and operators on the wide-area progressive games.