Lawmakers agree to draft bill that splits Nevada’s casino industry

Brendan Riley

Tuesday, Feb. 23, 1999 | 8:25 a.m.

CARSON CITY - Major Nevada casinos have turned to the state Legislature for leverage in their battle with slot manufacturers over profits from the popular machines.

A lobbyist for the big clubs convinced Assembly and Senate Judiciary committees on Monday to request a bill draft that could force manufacturers into selling instead of leasing devices such as Megabucks and Quartermania.

The request was made on the last day possible. Monday was the deadline for committee draft proposals - a limit to help ensure lawmakers comply with a 1998 voter mandate for a 120-day session.

Nevada Resort Association lobbyist Greg Ferraro, representing the casinos, asked for the draft - but said talks between the resorts and the manufacturers outside the Legislature could settle the issue.

"I think it's a matter that will resolve itself," he added. "There's a lot of activity."

The resorts' gripe is that the manufacturers can still make money from the slots without assuming any of the risks associated with running a casino.

Circus Circus Enterprises Inc. is the big advocate of selling, rather than leasing, the machines. Other casino businesses behind the proposal include Boyd Gaming Corp., Park Place Entertainment and Caesars World Inc.

The companies affected include slot giant International Game Technology as well as Anchor Gaming and WMS Industries Inc.

Slot manufacturers criticized the bill draft strategy as an unfair attack on slots, which have been highly successful, helping the clubs rake in more money from gamblers.

Megabucks alone won $135 million for casinos and manufacturers last year. That's a small part of the win on all slots, but it was a favorite - taking in twice what it won from gamblers in 1997.

If manufacturers can't be forced to sell their slots, critics say big casinos at least want legislative help in capping their lease payments.

"It's absolutely amazing that they want government to fix prices in a free market," said Brian McKay, IGT vice president and corporate counsel. "The whole concept that the casino operators would like the Legislature to establish is not healthy for anyone."

"They don't have to lease the product if they don't want to."

The games also include highly popular Wheel of Fortune and Monopoly. They're termed "participation games" because manufacturers participate in the profits, taking up to 15 to 20 percent of the revenues as long as the machine is in the casino.

IGT, with 75 percent of the U.S. slot market, says it needs the leases to ensure a steady stream of revenue to develop new games and remain competitive.

Ray Pike, IGT executive vice chairman, said development costs can run $40 million to $50 million a year. If participation leasing is erased, "you'll be looking at more expensive leases," he added.