Firm behind ‘Nevada Numbers’ expanding

By Liz Benston (contact)

Thursday, March 6, 2003 | 10:56 a.m.

Despite run-ins with Nevada regulators and financial difficulties, the Nevada Gaming Control Board Wednesday approved a permanent license for the start-up company behind a well-publicized statewide keno game, giving the company a shot at expanding the game into more casinos and offering new game variations.

Regulators initially applauded Las Vegas Gaming Inc. for its "Nevada Numbers" game, which uses the lottery concept of pooling bets across a wide geographic area to fund a top jackpot. Nevada Numbers' $5 million jackpot, which is far higher than typical keno games, has helped reinvigorate a dying casino pasttime that can't effectively compete with an ever-expanding array of glitzy slot machines, regulators say.

But the company, which was operating under a conditional, two-year license, came under regulatory scrutiny last year for a billboard advertising campaign that made the game appear similar to a lottery.

Lotteries are illegal in Nevada.

In approving the license Wednesday, Gaming Control Board Chairman Dennis Neilander warned of disciplinary action should the game cross the line into lottery territory.

"I think (Nevada Numbers) is good for the (keno) game and good for the state. But it needs to be advertised correctly."

The license must still be approved by the Nevada Gaming Commission.

Las Vegas Gaming introduced a field trial of the game in summer 2001. The company's Nevada Numbers game is now offered in 33 casinos, with eight more in the process of adopting the game. But no player has yet won the top jackpot -- a prospect that isn't helping the game's popularity, company officials say.

The company's expensive advertising campaign also hasn't yielded the kind of results it had hoped for.

Las Vegas Gaming President Russ Roth acknowledged that the company had projected selling from about 500 on up to 1,000 tickets per day.

"We're lucky to get 100 tickets per casino per day," he told board members.

Still, the game appears to be catching on, with casinos reporting increased play in their usually slow keno parlors and other casinos without keno interested in offering the game, said Zak Khal, vice president of gaming operations.

"Most of the properties are saying it's saving their keno game," he said.

After months of operating on negative cash flow, the company expects to at least break even by the end of the year if it adds one Nevada casino and one out-of-state Indian casino per month to the Nevada Numbers link -- a fairly conservative estimate, Roth said.

The company is stepping up plans for joint promotions with Nevada casinos that provide properties advertising for the game in exchange for casino promotions for Nevada Numbers players, Khal said. It also is increasing marketing efforts to tribal casinos nationwide, he said.

The game is now offered in tribal casinos in Arizona and New Mexico.

In the next few months, the company also expects to acquire Imagineering Systems Inc., a keno equipment and servicing company with about 20 employees and offices in Las Vegas, Reno and Laughlin.

Las Vegas Gaming now uses the company's equipment to distribute Nevada Numbers but wants to control the distribution end of the business, Khal said.