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Arnold M. Knightly

Regulators tell casinos to clean up act

23 July 2009

LAS VEGAS, Nevada –- Two weeks after imposing a heavy fine against a Strip casino for not properly controlling illegal activity inside a nightclub on the property, state gaming regulators let gaming licensees know they have other concerns about how casinos are operating.

In a letter to casino licensees that was posted on the Gaming Control Board's Web site, regulators Tuesday proposed holding a series of seminars to discuss a variety of regulatory issues that, if left unchecked, could lead to disciplinary action against the casinos.

"It's an invitation to open up some dialogue," said state Gaming Control Board member Randall Sayre, who wrote the letter. "It's appropriate that there is some avenue for not just us to dictate what we see as trends, but for the industry to come forward and say, 'Hey, maybe you guys should interpret this for us so we know what we're dealing with.' "

The letter notes that, while casino companies are focused on addressing regulators' concerns about operations at nightclubs, ultralounges and topless swimming pools operating on their properties, "there are other areas where regulatory concerns have surfaced."

"Either through lack of knowledge or apathy, licensees are creating regulatory challenges in areas requiring corrective action in other areas beyond nightclubs," the letter said.

Sayre's letter lists how casinos conduct promotions, tournaments and contests, race and sports book operations, intellectual property theft and questionable and misleading advertising as areas of concern.

Sayre said the list was "purposefully general" in hopes that casino licensees might come forward with other areas of concern they would like to discuss.

"There are often times interpretation issues that clearly some open dialogue would help," Sayre said. "I thought it would be healthy to do something like this if the industry had an interest."

The letter comes nearly two weeks after Planet Hollywood Resort agreed to pay a $750,000 fine to Nevada casino regulators for not properly overseeing operations at the resort's Privé nightclub, which is owned and operated by an outside company.

A hearing before the state Gaming Commission on the nine-count complaint against the resort filed July 9 is scheduled for today.

The complaints against Privé and the resort included charges that nightclub employees were ejecting drunk customers and dumping them in the casino unattended or asking hotel security to remove them. Nightclub employees and patrons were also charged with physically and sexually assaulting customers, and minors were reportedly served alcohol.

Sayre said after the fine was announced that Gaming Control Board agents, with the help of the Metropolitan Police Department, could be investigating as many as nine hotel-casinos about activities inside their nightclubs, which could lead to more six-figure fines and other punishments.

State gaming regulators in the past have levied fines against casino operators for activities outside the casino.

The most famous case was the $100,000 fine the Hard Rock Hotel paid in 2004 for using sexually suggestive advertising that was not properly reviewed by the property before distribution. The original complaint included counts that said the ads reflected poorly on the gaming industry and Nevada, but those were dismissed by the commission.

The proposed workshops would be for operators "at ground level who deal with issues on a daily basis," Sayre said, not policymakers and lawyers hoping to make decisions on statutes and regulations.

"I felt it appropriate that the whole industry didn't get focused on just one area," Sayre said. "There were some other areas that clearly both the regulatory system and the industry could benefit from some open dialogue."

MGM Mirage spokeswoman Yvette Monet said the company, which owns nine casinos on the Strip, gives "high priority" to compliance issues raised by regulators and expects the "highest levels of compliance" from various business partners.

"We value the guidance the (gaming control) board has given to date," Monet said. "We look forward to continuing these discussions."

David Schwartz, director of the University of Nevada, Las Vegas' Gaming Research Center, said the letter is in keeping with the board's history of trying to safeguard the industry's reputation.

"All of these things are a potential headline in a bad way," Schwartz said. "This is a good approach that it shows they are willing to work with the industry. They're not just running around handing out fines because somebody has violated the letter of the law in a very small way. They see potential problems and they're trying to address it now."