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Gaming Guru

Richard N. Velotta

Gaming Commission Set to Vote on Hard Rock Settlement

16 November 2004

The 10-month controversy over the Hard Rock Hotel's racy advertising campaigns is expected to come to a close this week when the Nevada Gaming Commission considers a settlement agreement hammered out last month.

The five-member commission is scheduled to vote Thursday on a settlement in which the Hard Rock would admit to no wrong-doing, but pay a $100,000 fine -- the maximum allowable -- to end a complaint brought by the state Gaming Control Board.

While most commission watchers are expecting an affirmative vote on the settlement agreement, it was a negative commission vote on a similar deal in May that extended the life of the Hard Rock controversy.

A month prior to the May vote, the Hard Rock agreed to a settlement with the Control Board to pay $300,000 in fines, the maximum amount for each of three counts leveled against the resort for ads it produced on billboards and in publications.

Representatives of both the Hard Rock and the Control Board were surprised when the commission unanimously rejected the settlement in its May meeting. Hard Rock officials had said they were attempting to put the issue behind them and agreed to the settlement to avoid paying costs associated with defending their position.

The commission sent attorneys for the Hard Rock and the Control Board, which is represented by the attorney general's office, back to the negotiating table to address concerns it raised on the settlement.

Meanwhile, community activists rallied around the commission's rejection of the settlement as an opportunity to put the Hard Rock's ad campaign in the public spotlight and air matters of community standards and taste. When that happened, First Amendment advocates came to the defense of the Hard Rock. Before long, the commission found itself in the middle of a bigger fight than it had anticipated.

In September, the commission took the issue of advertising content out of play by dismissing two of the three counts of the complaint against the Hard Rock.

Commission Chairman Pete Bernhard recommended that the Hard Rock and Control Board attorneys go back to settlement talks one more time to resolve the remaining issue. Last month, the attorneys delivered.

The settlement addresses the final count of the Control Board complaint, involving an agreement the Hard Rock had with regulators that advertising and other promotional materials be reviewed by a compliance committee. The Control Board complaint alleged that the hotel failed to do that.

Hard Rock attorney Jeffrey Silver said his client thought the mandate applied only to "special events or promotions" rather than all ads, noting that there are about 50 ads a day churned out on behalf of the Hard Rock and the compliance committee meets quarterly.

Hard Rock President and Chief Operating Officer Kevin Kelley said when the settlement was announced last month that he was relieved that the deal is on the verge of being approved.

Kelley said the settlement asks the hotel's management "to use good judgment" -- something he says has occurred all along.