ELECTIONS: LEGAL GAMBLING A BIG WINNER
May 8, 2003
On Nov. 5, legal gambling was a big winner in several states around the country. Voters approved gambling initiatives in Arizona, Idaho, Iowa, North Carolina and Tennessee, and pro-gambling governors were elected in Maryland and Pennsylvania. Some of the initiatives represent direct threats to Nevada’s gaming industry, the cornerstone of our state’s struggling economy.
“It (the election) was about cross-border shopping,” said gaming securities analyst Andrew Zarnett. “When budgets get difficult and governors see residents taking revenues out of state, they want to keep them at home.” Zarnett added that he expects seven states — Iowa, Kansas, Kentucky, Maryland, Nebraska, New York and Pennsylvania — to expand legal gambling over the next 18 months. He should have included California, which has embarked upon a major expansion of Indian gambling.
For his part, American Gaming Association President Frank Fahrenkopf, a Nevadan, called the general election “a ripple” in the evolution of legal gambling in the U.S. He said the most important initiative was in Iowa, where voters in eight counties reauthorized riverboat gambling for eight more years.
Of more concern to Nevada, however, was a proposition to expand Indian gaming in neighboring Arizona, where 17 tribes spent $21 million to pass a measure that will increase the number of slot machines allowed in tribal casinos and permit them to offer house-banked blackjack. Arizona’s Indian casinos, several of which are operated by Harrah’s and other Nevada gaming licensees, compete directly with Las Vegas. And that’s an issue that should be addressed urgently by our Legislature and the Nevada Gaming Commission.
Gaming Commission Regulation 5.010 defines “unsuitable operations” as follows: “It is the policy of the Commission and the (Gaming Control) Board to require that all establishments wherein gaming is conducted in this state be operated in a manner suitable to protect the … general welfare of the inhabitants of the State of Nevada.” … Any activity on the part of a licensee … which is inimical (contrary) to the … general welfare of the people of the State of Nevada or which would reflect or tend to reflect discredit upon the State of Nevada or the gaming industry is an unsuitable method of operation.”
Translation: Nevada gaming licensees who operate virtually unregulated Indian casinos are engaged in “unsuitable operations” because (1) Indian gaming isn’t regulated to Nevada’s strict standards and (2) Indian casinos are a direct threat to our state’s economy and, therefore, to the people of the state of Nevada. I rest my case.
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The most egregious example of an unsuitable operator is Station Casinos of Las Vegas, which has signed a multi-million-dollar contract to manage the huge new Thunder Valley Indian casino scheduled to open next June near Roseville, Calif., a short two-hour drive from Reno on I-80.
“Thunder Valley is the best place in the country for Indian gaming,” bragged Station vice president Glenn Christenson. “It is well positioned to take advantage of one of the largest gaming markets in the country.” And so it is, at the expense of established (and well-regulated) casinos in the Reno-Tahoe area.
Because unregulated Indian casinos don’t play by the same rules and don’t pay their fair share of state taxes, however, I wonder how our Legislature and Gaming Commission can ignore the fact that a Nevada gaming licensee is engaging in activities that are clearly “inimical to the general welfare of the people of the State of Nevada.”
One Reno casino, Fitzgeralds, has challenged Station Casinos in federal court by filing a civil suit that could block Station’s management contract with the National Indian Gaming Commission, a dependency of the bureaucratically inept Bureau of Indian Affairs. “If my lawsuit were to hold them (Station) up for three years, I’d be voted Man of the Year in Reno,” said Fitzgeralds CEO Phil Griffith. That’s for sure, but why should he have to file a federal lawsuit when the Nevada Gaming Commission could kill Station’s management contract on grounds of unsuitability?
When I worked for the gaming control agencies in the mid-1960s, Nevada licensees had to choose between doing business here or elsewhere. Back then, our regulations prohibited anyone who “owns, controls or has any interest of any kind in any gaming establishment or game outside the State of Nevada” from holding a Nevada gaming license. That was a good rule then, and it should be reinstated by the 2003 Legislature, even if it makes some licensees (and campaign contributors) unhappy. I challenge our local lawmakers, State Sen. Mark Amodei and Assemblyman-elect Ron Knecht, to sponsor such legislation early next year.
Last month, Mike Baughman of Carson City (whom I don’t know) wrote a provocative letter to another newspaper on this subject. Baughman observed that Nevada law (NRS 463.0129) defines gaming as a revocable privilege and declares that “the gaming industry is vitally important to the economy of the state and the general welfare of its inhabitants.” He then noted that Station Casinos’ Thunder Valley project “will have an adverse impact on the economy of the Reno-Tahoe area” and asked whether Station’s mega-project serves the best interests of our state and its inhabitants. His answer (and mine): “No!”
Given the potentially lethal threat that Indian gaming represents to Nevada’s depressed tourist economy, it’s time for our elected representatives and gaming control officials to crack down on Nevada licensees who want it both ways. Let’s make them choose: Are they for us or against us? Nevadans should demand answers, and our gaming controllers should enforce the law and their own regulations. How about it, Mr. Neilander?
Guy W. Farmer, a semi-retired journalist and former U.S. diplomat, was press spokesman for the Nevada gaming control agencies during the period 1963-66.