License issue called moot by Toronto firm

By Liz Benston (contact)

Friday, Jan. 24, 2003 | 11:01 a.m.

A Canadian real estate company that once had a stake in the P.T.'s Pub chain of video poker bars in Las Vegas was denied a gambling license by Nevada regulators Thursday.

An official with Toronto-based Acktion Corp., which has changed its name to Morguard Corp., said the move will have no effect on the company because it wanted to get out of the casino business anyway.

The company was denied a license by the Nevada Gaming Commission based upon allegations by state investigators that the company refused to cooperate with background inquiries of key employees.

The company failed to produce adequate financial information and other records typically required of executives prior to granting a license to operate gaming establishments in Nevada, board officials said.

The commission rarely issues a denial -- a decision that puts a black mark on a company's record and can make it difficult for the company to receive a casino license anywhere in the country.

The issue is moot, Morguard Secretary Eugene Hretzay said.

The company has since divested of its P.T. Pub holdings through its majority ownership of Revenue Properties Co. Ltd., a rival Canadian real estate company that owned the chain with Las Vegas businessmen Phil and Tom Boeckle.

Aktion Corp. made a hostile takeover bid for Revenue Properties a few years ago, followed by a move to acquire a greater stake in the company. The takeover bid -- which led to a greater than 70 percent ownership stake in Revenue Properties -- prompted Nevada gaming regulators to initiate an investigation of Aktion.

So-called suitability investigations are required of entities that have more than a 10 percent interest in a Nevada gaming company.

"We ourselves did not want to own a casino or get into gaming," Hretzay said. "The only reason we had to undergo this investigation was that we went over the (ownership) threshhold."

The company initially filed an application with Nevada regulators in 1998 but soon asked that the investigation be put on hold because it aimed to force Revenue Properties to divest of the pubs once it acquired a majority stake.

The deal took until the end of last year to close.

"It took such a long time to get out of the gaming business that we tripped over the regulations. It's an unfortunate set of circumstances and we're not happy about it."

Nevada regulators refused to withdraw the application and said the company further broke the rules by taking control of Revenue Properties without the Gaming Control Board's assent.

"We were told it could take months for a (gaming license) approval so the decision was made that since we wanted out of the gaming business, we made a decision to close the deal" without board approval, Hretzay said.

Morguard hasn't admitted to any rulebreaking.

"We feel that the spirit of the regulations were not contravened," Hretzay said.

The company's chief executive, Rai Sahi, has been a vocal critic of the gaming business.

"We're a real estate company," Hretzay said. "We felt that Revenue Properties' foray into gaming was taking their eyes off the core business. It took a lot of management time away from their core venture and the returns weren't there."