Report critical of rules, agency

19 February 2007

NEVADA -- A new report that suggests Gov. Jim Gibbons radically change how gaming regulators and the convention authority operate may not get much support -- even from the people who prepared it.

Last week, Gibbons' transition team working group that explored gaming and tourism issues suggested some of Nevada's gaming regulations be eliminated because they obstruct the entrance of new technology and outside investment into the industry.

Another suggestion questioned the need for the Las Vegas Convention and Visitors Authority, saying that room taxes, which fund the convention authority, should be eliminated, rolled back or put into other areas.

Almost immediately after the document surfaced, however, participants in the 22-member working group began distancing themselves from some of the report's suggestions, especially the notion that the convention authority be re-evaluated.

"We are fully supportive of the LVCVA and what they do," said Lesley Pittman, Station Casinos' vice president of government affairs, who attended the working group's two meetings in Las Vegas and Reno. Pittman noted that Station Casinos Chief Financial Officer Glenn Christenson is on the convention authority's board of directors.

"I think this was a good exercise to come up with some ideas and address the challenges our industry faces," Pittman said. "But a lot of these ideas need further vetting before even being submitted for any type of action."

The seven-page document was written by Las Vegas Sands Corp. President Bill Weidner and was posted on the governor's Web site last week.

MGM Mirage Chairman Terry Lanni, who attended the Las Vegas meeting, also dismissed any criticism of the convention authority.

"We do not agree with that assessment," Lanni said. "We're pleased with the LVCVA and we think they do an efficient job. People have their opinions. I just don't happen to agree with this one."

Weidner directed the working group, hosting one meeting at the company's The Venetian and a second meeting for Northern Nevada representatives. He said the report was based on his notes and contained a summary of ideas floated for discussion during the two meetings.

"There were a lot of ideas brought up and we had discussion on many ideas," Weidner said. "Our goal was to try and find ways to drive more revenues a derive more income. We wanted to find ways to increase tax revenues without increasing taxes."

One committee member, who asked not be named, said Weidner "drove the meeting and he drove the direction that he wanted to go. There wasn't a lot of input from everyone in the final document."

Other committee members hinted the item about the convention authority stems from a decades-long feud between the agency and Las Vegas Sands Chairman Sheldon Adelson, who has long advocated eliminating the convention authority.

Weidner said he discussed the working group with Gibbons before the meetings. Afterward, he submitted the report to the governor directly and talked about some of the suggestions. Once it was placed on the Web site, Weidner sent copies to all committee members.

"The governor wants to make sure the integrity of the industry remains intact and the suggestions brought forward preserves that integrity," Weidner said.

Working group members didn't have access to the final report until the middle of last week.

"The document was not finalized or endorsed by the entire team," Pittman said. "But it does reflect some of the ideas thrown out for discussion."

MGM Mirage Vice President Punam Mather, who participated in the Las Vegas hearing, said the report read like meeting notes.

"This is a list of everything we talked about," Mather said.

Carson City gaming attorney Scott Scherer, a former Gaming Control Board member who attended both meetings, said ideas were suggested but never voted upon by committee members.

Gibbons' press secretary, Melissa Subbotin, said the suggestions from all of the governor's 10 working groups are just ideas and not set policy.

"These are purely recommendations from outside parties and some will be considered," Subbotin said. "We know there will be concerns, but these will be reviewed by the governor's staff. As of now, they are not hard, fast and final policy from our office."

Gaming Control Board Chairman Dennis Neilander, who didn't participate in any of the meetings, said he is open to ideas on ways the agency can better regulate the industry. However, he added, much of what was discussed in the report is already being addressed.

Some of the suggestions, Neilander said, contradict the premises of Nevada's Gaming Control Act.

"The gaming control standards in Nevada are high, but it's a policy decision because we have so many visitors," Neilander said. "Public confidence is the principle thing we do as regulators. Fixing a game after it's been put on the casino floor is inconsistent with our standards."

In the report, it was suggested that new slot machine and gambling technology bypass the Gaming Control Board's testing laboratory and be placed immediately on casino floors. The games and devices could be evaluated later, but the move would allow the newest products to get in front of customers ahead of competing gambling jurisdictions.

"Our attitude relating to our major industry must change to focus on the customer first, react more quickly to market opportunity, and become leaders in adopting revenue enhancing and cost-saving new technologies," the report stated.

"To continue regulatory 'business as usual' is to risk losing market share, hampering new financing sources and discouraging the investments needed to drive Nevada's economy forward. A comprehensive 'attitudinal' review of regulatory control ought to be conducted whereby entirely new approaches to regulation are carefully considered and adopted."

The report stated that delays in getting new games through the control board testing laboratory forces new slot machine and table game technology to be initially unveiled in California American Indian casinos, which have a lower regulatory approval threshold.

"These delays put the nation's first casino state behind the curve in adopting the newest gaming technologies, and at risk of losing market share and tax revenues to California and other less restrictive venues," the report stated.

The Gaming Control Board went to the Legislature's Interim Finance Committee last year to get funding for a $2 million expansion of the testing lab. In April, the facility will be moved out of the downtown Sawyer Building to a 15,000-square-foot location on Pilot Road south of McCarran International Airport and near most of the major slot machine manufacturers.

"We think this facility will address some of the issues about getting products through the lab in a timely manner," control board member Mark Clayton said.

Slot manufacturing representatives were absent from the committee, but Scherer said new gaming systems, which can track customer's play and have numerous accounting features, are the industry's biggest concern for a timely approval process.

In addition, the document suggested restrictions on investment by private equity groups should be loosened and international casino customers should have an easier time obtaining visas to enter the market.

"We simply must foster a reputation for being flexible and nimble in embracing new pools of capital to attract investment dollars needed to drive our economy," the report said.

Neilander said gaming regulators approved $1.3 billion in private equity investments last year.

"A standard process has been created while still protecting the state's interests," Neilander said.

The recommendation to re-evaluate the convention authority brought the most scrutiny by group members.

Scherer said, "There was a fair amount of agreement around the room that the LVCVA collects too much in room taxes, but that was a far cry from abolishing the LVCVA."

Harrah's Entertainment Senior Vice President Jan Jones there was talk about directing room taxes into other areas to help tourism.

"It wasn't a discussion we had in real detail," Jones said. "The LVCVA does an extraordinary job."

Weidner believes the room taxes collected by the convention authority could go toward road construction. He said the Las Vegas Sands pays more in room taxes than it does in gaming taxes.

"The governor wanted us to think outside the box in looking at ways to help the state," Weidner said. "And that's what we did."

Convention authority spokesman Vince Alberta said more than 11 percent of the room taxes collected are already directed toward the Clark County Transportation Department.

He said the marketing efforts of the convention authority have made Las Vegas the nation's No. 1 destination for trade shows over the last 12 years.

"Our business model has been successful and continues to be successful," Alberta said. "We listen to our stakeholders and they have expressed a tremendous amount of support for what we do."

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