Lake Las Vegas developer proposes relaxation of gaming licensing rule

David Strow

Friday, April 13, 2001 | 10:45 a.m.

Henry Gluck believes Nevada gaming authorities aren't doing enough to encourage new companies and new investors to put money into the state's gaming industry.

The co-chairman of Transcontinental Properties Inc. -- the developer of the Lake Las Vegas resort in Henderson -- is suggesting that it's time Nevada do something about this. His suggestion: Loosen or waive the licensing requirements for certain directors of publicly traded companies.

"Say you have a company that's been on the New York Stock Exchange for 50 years, has a market (capitalization) of several billion dollars, and the directors have been there for 10 years, going through all kinds of scrutiny on that board," Gluck said. "How can they be held to the same criteria (as smaller, lesser-known companies)?

"If you're going to make these people go through a process like that, they're likely to vote against anything that brings them to Nevada."

Gluck argues the time to act is now, as fears rise that the gaming industry is entering a slowdown, and the ownership of casinos grows more and more concentrated in the hands of a small group of powerful companies. And he believes, at least at America's largest companies, the level of internal and external regulation is high enough that there's little risk that the directors would have a background that would make them unsuitable to hold a gaming license.

"This is the time to add it, so you can potentially attract new equity into the state and get some diversification at the same time," Gluck said.

Gluck's suggestions are getting a favorable reaction by some Nevada gaming regulators, including the chairman of the state Gaming Control Board. But the state's top gaming regulator -- Nevada Gaming Commission Chairman Brian Sandoval -- stands four-square against the idea.

"My reaction would be to say that Nevada has a long-standing tradition and policy of thoroughly investigating any potential gaming licensee regarding his or her background," Sandoval said. "I have not seen any evidence that would encourage me to depart from those traditions or policies."

Gluck said his proposal wasn't motivated by any business considerations, but instead a desire to help Nevada's gaming industry evolve. He referred back to his days as chairman of Caesars World Inc., when numerous, major entertainment companies declined his overtures for strategic alliances because of Nevada's thorough licensing investigations.

"That doesn't imply they have anything to hide, but no one wants private holdings or family matters or things of that nature ... if there's the slightest chance they'll be exposed to the public eye," Gluck said. "Why don't we have a Disney or a Viacom or an MCA Universal with a physical presence in Nevada? The regulation has to be reviewed and perhaps modified to be in keeping with today's (issues)."

The control board keeps its investigations strictly confidential; however, matters of concern are often discussed in detail during public hearings.

Another issue for entertainment companies has been concerns their image would be damaged by setting up shop in Las Vegas, though Gluck said those concerns are subsiding as Nevada tries to establish an image as an entertainment center, as opposed to a city based strictly on gambling.

Reactions to Gluck's proposals are mixed. Though Sandoval isn't inclined to support it, Gluck did find some receptive ears on the commission.

"We should look at it, keep an open mind, and do whatever we can to encourage investors to come into the state of Nevada," said commissioner Augie Gurrola, who heard Gluck's presentation. "They're not out to cause any kind of fraud or any of that kind of stuff. Most trying to invest are upright citizens, and we should do our utmost to bring them into the family.

"I think we could do something that could act as a catalyst to bring in more investors. Instead of trying to overregulate, we're trying to loosen up the strings and provide the type of regulations that are essential without overregulating."

Dennis Neilander, chairman of the state Gaming Control Board -- and author of most of the state's new gaming regulations in recent months -- also believes it might be worth consideration.

"It's not something I'm initially opposed to," Neilander said. "I'm always willing to look at advancements, so long as we continue to strike that balance between strict regulation ... and promoting the ability to have new talent come in. I'm certainly willing to sit down and talk about it."

Neilander pointed out that directors don't always need to be licensed. In Nevada's case, licensing is required if a director owns more than 1 percent of a company's stock, or if the director sits on an executive committee with influence over gaming executives or operation.

But don't look for the level of scrutiny to change for those that must be licensed, Neilander said.

"The level of investigation we do is the same for everyone," Neilander said. "I would not see that changing at all."

But Sandoval sees great risk in departing from Nevada's licensing practices for directors.

"The mere fact that you're on the board of a publicly traded company does not give the presumption of suitability," Sandoval said. "Down the line, if we were to do that and something (questionable) were to come up, it would be very difficult to explain."

But Gurrola isn't sure that should stop Gluck's proposal.

"We try to eliminate all the risk possible, but sometimes you have to take a step forward and say, 'There's little chance of something going wrong,"' Gurrola said. "And if something goes wrong, we can correct it. We have the power to bring them forward (before the commission for possible revocation of a license)."

Gluck suggested two possibilities for affecting a change in the regulation -- either by action of the Nevada Gaming Commission, which is the typical route; or by a blue-ribbon committee appointed by Gov. Kenny Guinn.

But Gluck, who first proposed the idea, said he doesn't plan to push it in meetings with regulators or elected officials.

"Once you introduce an idea like that, it's like planting a seed ... if it's watered and nurtured, perhaps it will sprout," Gluck said. "I think from here on out, it's someone else's job to pursue this."