Slot regulators back off smoking, ad restrictions

John Wilen

Monday, March 29, 1999 | 11:11 a.m.

The Nevada Gaming Commission will no longer seek to control the way stores and bars advertise their gaming offerings, nor will it seek to ban smoking in gaming areas.

Commissioners feel strongly about both issues, but said constitutional concerns and Nevada state law prohibited them from addressing either.

But the Commission moved Friday to limit gambling to certain types of stores -- including bars, grocery, drug and convenience stores -- while making it harder for establishments like fast food restaurants, Laundromats, hardware and department stores to obtain gaming licenses.

And within retail establishments, the Commission will restrict gambling to alcoves physically separated from the rest of the store, and will prohibit cash machines from being placed near gambling machines.

The new regulations will not likely be adopted until May, and will not go into effect until next January.

The regulations will only affect establishments with restricted gambling licenses, mostly stores and small bars. Larger gaming establishments -- such as resort casinos -- would not be affected.

The Commission's campaign to more tightly control gambling at the retail establishment level has arisen because of what Commission Chairman Bill Curran calls the inconsistent manner in which restricted gambling licenses have historically been doled out. Specifically, commissioners are concerned about the spread of gambling to establishments that meet the letter of the current law by offering a minimum amount of food and drink, but primarily exist to offer gambling.

"You can't just put in a pop machine and a candy rack ... put in some Slim Jims and apples and say now we've got meat and produce," said Curran.

Curran mentioned several instances where T-shirt shops and fast food establishments have convinced the Commission to grant them a restricted gambling license by having the "right lawyer."

"Some people win and some people lose," said Curran. "Everybody should know what the rules are."

In an attempt to more clearly define those rules, the Commission is attempting to legally define convenience, drug and grocery stores. While the latter two types of stores are pretty easy to define, the Commission had a harder time with its definition of convenience stores.

Ultimately, commissioners decided a convenience store should be at least 1,000 square feet in size, and should primarily display for sale groceries and other household sundries.

The Commission also debated how to define what types of retail establishments should be allowed to have gambling. Undisputed is the notion that gambling should be incidental to the main business at a store or bar. Defining what that means is a bit more troublesome.

In its proposed regulation, the Commission presumes that gambling is incidental to the business of grocery, drug or convenience store or bar. But the regulation would also leave it up to the Commission to allow gambling in other types of businesses provided that they could prove gambling is incidental to their operation.

"If you're something else, the Commission will still look at it, but you're going to have a higher burden," said Curran.

Several commissioners were concerned that such a regulation essentially does not change current law. If the Commission can still approve a gaming license for a T-shirt shop or fast food restaurant that proves gambling is incidental to its business, or that is smaller than 1,000 square feet, what's the point of having a new regulation at all, asked Commissioner Brian Sandoval.

"The exception would swallow the rule," said Sandoval.

There is also a concern with how to define incidental. Must gambling be incidental to a business's revenues? To its floor space?

Nevada Gaming Control Board Chairman Steve DuCharme noted it is difficult to get accurate financial statements from small retail establishments. By and large, they are not audited, he said. And in the case of a new applicant, the store will not have any historic data from which the Board or Commission can accurately judge how "incidental" gaming is to its business.

DuCharme was also concerned a draft version of the regulation might allow liquor stores to have 15 gambling machines, up from the four allowed under current law.

Commissioners left this provision of its regulation unresolved, directing Jeff Rodefer, the deputy attorney general working to draft the actual regulations, to work with the Nevada Retail Gaming Association and Nevada Resort Association on revising the regulation.

Less controversial was the proposal to restrict gambling in retail establishments to physically separate alcoves. The new regulations will likely require a three-walled alcove with a ventilation system to remove smoke from the air. And cash machines will be prohibited in gaming areas.

Commissioners decided they couldn't outright prohibit smoking from gambling areas as they had planned, because state law explicitly allows smoking in and around gaming machines.

The Commission also decided it could not place restrictions on how retail establishments advertise their gaming offerings without running into First Amendment protections of free speech. Commissioners were concerned, again, with stores where gambling is supposedly incidental that nonetheless advertise their gaming offerings much more prominently than their other businesses.

A proposed regulation would have prohibited restricted gaming licensees from advertising gambling as their primary business.

"This certainly would bring First Amendment rights into question," said Rodefer.

Rather than getting into constitutional disputes with licensees, the Commission decided to drop the proposed regulation.

The Commission also decided it would not address the issue of slot tournaments in retail establishments. The issue came up in a January Commission meeting where Sandoval expressed his disgust with a Reno-area drug store that holds quarterly slot tournaments.

On further review, Sandoval said the Reno drug store appears to be the only retail establishment in Nevada that holds slot tournaments. He said he did not want to pass a law based on the actions of a single store.

"Although I don't like it, ... I just don't think in my opinion it's right to codify something ... for one licensee in the state," said Sandoval.

However, commissioners said they would keep an eye on the issue. If other stores begin holding slot tournaments, Commission action may be needed, they said.

Because of the lead time involved in planning stores, the Commission will apply its new rules to establishments that apply for their gaming licenses after Dec. 31. The regulations will be placed on the Commission's April calendar for more discussion, and will likely be adopted at its May meeting, said Curran.