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July 23, 2014

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Peppermill faces $1M fine for slot machine spying

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The Peppermill in West Wendover.

Updated Friday, Feb. 14, 2014 | 9:40 a.m.

CARSON CITY – A $1 million fine is being levied on Peppermill Casinos Inc. that owns operation in Reno, Sparks, Henderson and Wendover for sending out an employee to illegally gather information on the slot machine win percentages of its competitors.

The state Gaming Control Board and the Peppermill signed a settlement Thursday in which the company admitted the allegations in the two-count complaint.

The complaint alleged that since 2011, Peppermill employee Ryan Tors had a slot machine “reset” key that allowed him to enter the slots in other competitors to determine the amount of hold. That’s the amount of money kept by casino on the wagers.

On July 12, 2013, security caught Tors using a reset key at the Grand Sierra Resort in Reno. A subsequent investigation revealed that, beginning at least in 2011, Tors had used the reset key to obtain the information in 10 other casinos in the Reno-Sparks and Wendover areas.

The complaint, drafted by Senior Deputy Attorney General Michael Somps, said Peppermill’s management instructed Tors “to use a slot machine reset key to access and obtain theoretical hold percentages information from slot machines belonging to one or more casinos that are competitors.”

The stipulation, signed by Peppermill president William Paganetti Jr., said the casino company cooperated with board investigators in providing records and interviews with executives.

Paganetti said the Peppermill, one of the largest clubs in Reno, did not use the information gained by Tors to change the hold percentage in its slot machines or to gain a competitive advantage over other casinos.

The board said, however, it would file another complaint against Peppermill if it found the illegally obtained information was being used to change the slot machine hold percentage.

Gaming Control Board records show the win percentage on slot machines statewide in 2013 was 6.4 percent.

A reset key enables a person to place the slot machine into an out-of-service mode and permits the person access “to theoretical hold percentage information, diagnostic information, play history, events logs and game configuration.”

The Peppermill Casinos own Western Village in Sparks, Rainbow Club and Casino in Henderson, the Rainbow Casino and the Peppermill Inn & Casino, both in Wendover.

The Nevada Gaming Commission must approve the stipulation.

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