Australian slot giant recommended for Nevada licensure after cleaning up operations

Thursday, Aug. 10, 2000 | 10:26 a.m.

CARSON CITY -- The world's second largest slot machine manufacturer, which failed twice before to get a license, gained preliminary approval from state regulatory officials Wednesday to enter the Nevada market.

The state Gaming Control Board recommended approval for Aristocrat Leisure Ltd., headquartered in Australia, to be found suitable for a manufacturer and distributor's license and also for a slot route permit.

Frank Schreck, Las Vegas attorney for Aristocrat, said this has been "a 14-year journey" and the company has "changed its spots." Company founder Leonard Ainsworth, he said, no longer has any influence on the operation of the firm that operates in 29 countries and holds licenses in 16 states. It's second in size to International Game Technology of Reno.

The goal, company officials told the board, is to capture 50 percent of the international market. It now has a manufacturing plant in Truckee, Calif., and offices in Reno. It plans to move both of these to Las Vegas in early 2001. It will also start a "creative center" at the University of Arizona in Tucson to develop new themes for its video gaming devices.

Board member Dennis Neilander said this was a company that was nearly debt free, has a "good product" and it will spark competition in Nevada. Board Chairman Steve DuCharme said the firm has new management and he's impressed with the people who are now in charge of seeing that the firm complies with laws in all of its markets.

The company had applied twice to be found suitable in Nevada, in 1984 and 1992. But it withdrew its applications both times when it ran into questions about kickbacks and secret payments to consultants -- controversies involving Ainsworth.

The board questioned company officials for more than two hours about its association with people of "dubious reputation" and its past efforts to make sure it complied with gaming laws in other jurisdictions.

Bill Baker, in charge of compliance for the firm, said it has become a "careful watchdog" to make sure it stays out of trouble in its other markets.

Ainsworth is now in competition with Aristocrat. But his children, his wife and ex-wife own a big share of stock in Aristocrat.

Under the terms of the Nevada license, they will give up their right to vote the stock on any issue involving management of the company. They will be able to have a vote only in cases where the company is going to be sold or their stock value is going to be materially changed.

DuCharme questioned company officials about a John Smith, who allegedly was involved in a money skimming scheme. But they told the board they do not have any association with Smith in Australia any more. There were questions about the company's dealing with a casino official in the Caribbean whose father was a "mobster boss" in Italy. Company officials said they did an investigation and the father did not have any interest in the casino.

But Board member Bobby Siller said this issue was never brought before the company's compliance committee, whose job is to make sure the firm stays out of trouble. He said that information should have been relayed to the committee.

DuCharme told company officials, "You've got an impressive compliance system, use it."

There were also questions about payments to phony promotion companies in Australia but no criminal charges were ever filed against the recipient of the money.

The Nevada Gaming Commission will meet Aug. 24 to give final approval.

After the board's vote, Des Randall, Aristocraft's chief executive officer, said this was "excellent news for the company and all of its stakeholders."