No immediate action planned by Nevada gaming regulators

David Strow

Tuesday, March 19, 2002 | 11:22 a.m.

David Strow

Nevada gaming regulators are examining the relationships Arthur Andersen has with the state's casinos, but no immediate action is planned here, the chairman of the state Gaming Control Board said Monday.

"We have reached out to our colleagues in New Jersey to find out what the basis for their motion is," Dennis Neilander said. "We want to see if we can find out what information they might have that might be relevant in Nevada. We're still fact-finding at this point."

Andersen is the dominant auditing firm in Nevada's casino industry. At least five major casino operators -- MGM MIRAGE, Harrah's Entertainment Inc., Mandalay Resort Group, Station Casinos Inc. and the Aladdin -- use the Chicago firm as their independent auditor. None have indicated to date that they plan to fire Andersen following its indictment on federal obstruction of justice charges.

"They (Andersen) have a very good track record in Nevada, and as far as we can tell, they've been about as far removed from the Enron matter as you can get," Neilander said.

Harrah's, however, could have its hand forced in Nevada by New Jersey regulators, since it operates two casinos in Atlantic City. The New Jersey Division of Gaming Enforcement is seeking an order that would bar any Atlantic City operator from doing business with Andersen. That could force Harrah's to drop Andersen as its corporate auditor.

Harrah's declined comment on what action it will now take. The company's shareholders are set to vote on whether to retain Andersen at Harrah's May 2 annual meeting; the board has recommended keeping Andersen, but has indicated it will reconsider this decision if shareholders vote against Andersen.

The other Nevada casino operators do not have current holdings in Atlantic City, though MGM MIRAGE plans to open the $1 billion Borgata, a joint venture with Boyd Gaming Corp., in Atlantic City in 2003.

Neilander said the board has been in contact with Andersen since news of the Enron scandal broke late last year, adding that "the indictment raises that to a whole new level."

But legal differences between Nevada and New Jersey gaming regulations make it less likely Nevada gaming operators would be forced to cut ties with Andersen.

Nevada gaming regulations do bar casino companies from doing business with "unsuitable" companies or individuals. "But to get to that step, we'd have to go through a formal (hearing) process," Neilander said.

"I don't know that we have the legal ability to do that (force casinos to cut ties with Andersen)," Neilander said.