Columnist Jon Ralston: City blindly enters cyber venture

Saturday, Oct. 28, 2000 | 3:44 a.m.

Jon Ralston, who publishes the Ralston Report, writes a column for the Sun on Sundays and Wednesdays. Ralston can be reached at 870-7997 or by e-mail at ralston@vegas.com

ANYONE who has been around Mayor Oscar Goodman since he took office last year has heard him say it: "I will never do anything to embarrass Las Vegas."

The Philadelphia native's heartfelt affinity for his adopted city seems almost as powerful as his affection for his adopted children. Which is why it is so hard to fathom why Goodman has put the city on a fast track to a venture that could leave the community he loves red-faced and maybe with red ink.

And make no mistake: His plan -- to allow an Internet company to rent the city's credibility by using its imprimatur on a new gambling website -- is moving faster than any juiced project I've ever seen. Not only has Goodman been meeting with these entrepreneurs for months, the city's attorneys have long been negotiating with them on a contract that company officials badly want on an agenda for approval.

And if you don't think the backers of VegasOne.com consider this a done deal, just read an excerpt of what they put on their website: "The licensing of The City of Las Vegas' name will create a pre-existing foundation to utilize ..."

Sounds like it's already happened, doesn't it? Why are these folks so confident? Because Goodman and other city officials, romanced by promises of untold riches, are ready to move ahead.

Just look at what happened at the Oct. 18 City Council meeting where the VegasOne.com team gave its proposal -- one of the most self-serving and disingenuous presentations I have seen. Only Lynette Boggs McDonald asked probing questions while Larry Brown and Lawrence Weekly asked a couple of relevant queries. Michael Mack asked no questions but called the idea a "rare opportunity" for the city.

Opportunity for what? Goodman made it sound as if this is no different than the city licensing its name to any other company as Beverly Hills does to the "Beverly Hills Cop" movies. But as Park Place Entertainment's Mark Dodson pointed out, "We have been approached by Internet companies to license the Caesars brand. You have to consider the long-term implications."

Which is exactly what the proponents of this plan don't want the city to do -- they want quick action.

Let's take a look at some of the representations the backers made Oct. 18, led by attorneys Jim Jimmerson and Tony Cabot. Former regulator Phil Hannifin, ex-MGM Grand boss Larry Woolf and gaming math wizard David Sklansky are company directors. (Sklansky is a crony of ex-Stratosphere boss Bob Stupak, who has been on the periphery of these negotiations and raises the question of who else is really involved.)

Jimmerson and Cabot claimed the city could get $120 million annually (at least!). Jimmerson said there is "no opposition" to this proposal, which will come as a surprise to members of the gaming industry who expressed their concerns to Goodman last week and were amazed at his lack of answers. Jimmerson and Cabot pushed the council to act, and Goodman promised to "act with alacrity."

Cabot also told the council that their gambling site will be based in Australia, where the government thinks Internet gaming is just hunky dory. But the truth is, according to media reports from Australia, that the government is trying to freeze Internet gaming licenses.

Cabot also promised to provide the city "full indemnification," which sounds like the same bill of goods the monorail builders sold to Clark County and the state. There are no guarantees.

Jimmerson informed the council that the project could not be put out to bid because this is "the kind of asset not subject to (the bidding process)." Really? If the city could get beyond the propriety of government getting into a business banned in this country and taking these great risks, why couldn't the council solicit bids from Strip properties that might bring in a greater percentage of profits?

Goodman says he told the gamers that he wants to figure out a way where "Las Vegas would be at the table with them in the future." He, like other mayors have been, is frustrated that Clark County controls the Strip. The irony is that the city now has an opportunity to circumvent the Strip folks and finally find a way to get gaming money through this Internet proposition.

But is it too big a gamble? Forget the casinos and their competitive concerns -- although as the state's prime source of revenue, they should have a seat at Goodman's table, too. Their case is vitiated by their past hypocrisy on extra-Nevada and Indian gaming -- their modus operandi, as it is with Internet gaming, is to try to stop it, paint apocalyptic scenarios, lose the fight and then go into the business.

Their worries are only one of many reasons to be suspicious of this idea, which is tantamount to blindly hitching the city wagon behind a group of gold-seeking settlers going into a new frontier that has untold dangers lying in wait.

Goodman, surely chastened by the gamers' visit and staffers who are telling him to slow down, now says he is "going a tortoise pace ... What I don't know is this: If I'm placing a bet on a long shot, I know how much I could lose. I don't know that here. And I don't even know how much I'm betting."

But he does know what he is wagering: His credibility and, more importantly, that of the city he loves so much.