Acquisitions prompt look at antitrust regulation

Friday, May 3, 2002 | 11:12 a.m.

Nevada gaming regulators would have more say on whether industry mergers and acquisitions would be in the best interests of the state under a proposed regulation.

Multiple licensing criteria outlined in a proposed regulation amendment was unveiled by the state Gaming Control Board at Thursday's monthly meeting in Las Vegas.

A spokesman for the Nevada Resort Association said the organization would carefully analyze the proposal to determine the effects on local casino companies.

The board agreed Thursday to set up a series of workshops on the proposal to collect comments before sending a recommendation to the Nevada Gaming Commission, which would have the final say on the regulation.

The regulation under study would give the board and the commission the authority to consider how much control a company would have over a market when considering multiple licensing that would occur with a merger or acquisition.

The proposal is similar to antitrust regulations used by the Federal Trade Commission and the Department of Justice to determine whether a company has an unfair competitive advantage by acquiring a rival.

Board member Scott Scherer, who prepared the draft, said the board decided to review the regulation and the issue following Park Place Entertainment Corp.'s acquisition of Caesars Palace and Caesars World Inc. in 1999; Station Casinos Inc.'s 2000 purchase of the Fiesta hotel-casino in North Las Vegas and the Reserve hotel-casino in Henderson; and Harrah's Entertainment Inc.'s acquisition of Harveys Casino Resorts in 2001.

"We wanted to give more guidance to the industry in what would pass muster and what wouldn't," Scherer said.

Other purchases that prompted dialogue on competition in recent years were Station's purchase of the Santa Fe hotel-casino and MGM Grand Inc.'s acquisition of Mirage Resorts Inc.

The proposal's criteria is based on what percentage of market share would result in a company's excessive bargaining power over suppliers and its ability to artificially depress wages and benefits by having too much control over a market.

The proposal sets percentage benchmarks for influence of the state market (10 percent), a county (40 percent) and distinct municipal or localized markets (60 percent).

The regulation also outlines criteria the board and commission will consider, including percentage of slot machines, table games, gross revenue, hotel rooms, employees and total payroll controlled by any single company.