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Benjamin Spillman

Report cites LVCVA for lax oversight

5 December 2008

LAS VEGAS, Nevada -- A conservative Nevada think tank Thursday turned up the heat on the public agency charged with promoting Las Vegas, alleging the agency has a culture of lax oversight, overly cozy relationships with contractors and spends tax dollars on luxuries such as fine food and wine for officials.

The Nevada Policy Research Institute bundled its allegations with thousands of pages of public documents from the Las Vegas Convention and Visitors Authority, the agency it accuses of playing fast and loose with the taxpayers' money.

NPRI Vice President Andy Matthews and investigative reporter John Dougherty said the documents provide evidence the LVCVA, under the direction of President and CEO Rossi Ralenkotter, doesn't adequately scrutinize how the advertising agency R&R Partners delivers on the terms of a contract worth $87 million annually.

They also identified more than a dozen incidents in which LVCVA officials spent thousands of dollars on fancy hotels, upscale dining, expensive wine and liquor while schmoozing clients and business partners in locales from Kansas City to China to Dubai.

"The public has a right to know how its hard-earned tax dollars are being spent," Matthews told a group of local reporters who visited NPRI headquarters in a storefront office near McCarran International Airport for a briefing on the research.

So far the LVCVA -- whose board of directors includes officials from every major local government and several of the world's top gambling resort companies -- has had little to say in response.

LVCVA board president and Las Vegas Mayor Oscar Goodman says he'll respond in detail once he's had a chance to review the allegations.

But that doesn't mean no one is paying attention.

Dick Cooper of Cooper Research & Communications of Reno attended the NPRI press briefing and distributed tax forms from the institute he said raised questions about its funding sources.

Cooper wouldn't say who hired him. He said he wasn't working on behalf of a public agency or R&R Partners but was working for "the other side."

He attended with R. David Groover, a Las Vegas private investigator and former Metro detective who once worked on behalf of Gov. Jim Gibbons when the governor was accused of assaulting a woman in 2006.

Groover also declined to say on whose behalf he attended the press event.

The scrutiny of NPRI comes in part because the institute counts Las Vegas Sands President and Chief Operating Officer Bill Weidner among its directors.

Weidner and his boss, billionaire casino builder Sheldon Adelson, are harsh critics of the LVCVA.

Weidner and Adelson say the LVCVA is unfairly using tax dollars to run the Las Vegas Convention Center, which they say undercuts private convention venues such as Sands Expo Center.

Las Vegas Sands spokesman Ron Reese said Weidner had nothing to do with the decision to scrutinize how the LVCVA spends public money.

"Mr. Weidner is singularly focused on guiding our company through a challenging economic environment, and any insinuation that he somehow masterminded this investigation is inaccurate," Reese said via e-mail.

Regardless of motive, the copious documentation NPRI released Thursday both in print and online presents Ralenkotter and others affiliated with the LVCVA with tough questions.

One batch of documents showed Ralenkotter signed off on a $25,000 donation to a Denver charity after the charity decided to recognize him with a humanitarian honor and lavish banquet.

Subsequent record requests from the Review-Journal turned up details that showed in addition to the donation Ralenkotter authorized thousands of dollars in more spending on steaks, fine wine, booze and a night at the Ritz-Carlton in Denver to plan the banquet.

Other documents compiled by NPRI suggested effectiveness of the cheeky slogan "What happens here, stays here" could be fading and possibly even turning off some potential visitors.

The slogan is the most public result of R&R's work for the LVCVA.

According to a survey from June included in the documents, unfavorable responses to the slogan increased in Seattle and Philadelphia and favorable responses fell in Phoenix.

R&R Partners partner Pete Ernaut said it was "ridiculous" to suggest the documents show the slogan is losing steam.

He said visitation, occupancy and room rates in Las Vegas have increased greatly since the slogan was first tested in 2002 and the June dips don't offset the progress.

"Does it have ebbs and flows? Of course it does," Ernaut said. "There are times when it has peaks and valleys. In the overall, it is undeniable it has been a fantastic success."

In addition to questioning the effectiveness of "What happens here, stays here," NPRI identified R&R subcontractors that are owned in whole or part by R&R officials who billed the LVCVA for millions of dollars, and in some instances don't appear to have disclosed precisely where the money went.

Specifically, NPRI says the documents show R&R Partners CEO Billy Vassiliades hired his own company, Airwave Productions, to do millions of dollars of projects for the LVCVA.

NPRI also questioned documents that suggest R&R Partners pays another company, Initiative Media Worldwide, before Initiative submits invoices and that Initiative blacks out details of the bills.

Ernaut, who said he was responding on behalf of Vassiliades, said Initiative bills in advance because its role is to buy tens of millions of dollars in airtime for ads and it can't always afford to carry the balance.

"So we may bill that partially ahead so we are not carrying that money," Ernaut said. "It is just a cash flow issue."

Although LVCVA officials are still reviewing the allegations to formulate responses, the totality of the findings come at a bad time for the agency.

In an e-mail, LVCVA spokesman Vince Alberta said he identified some mistakes in the conclusions drawn by NPRI.

He said a trip to Dubai was reported in Dubai currency when it should have been reported in American dollars, which would make it less costly.

Even before allegations of lax spending, there were forces in Nevada eyeing the LVCVA budget as a source to tap to offset fiscal shortfalls elsewhere.

"At first glance, the document clearly contains factual errors and mistatements (sic) that are misleading to the public," Alberta wrote.

In the most recent fiscal year, the LVCVA generated $282 million in revenue, about 80 percent of it from hotel room taxes.

So far those pushing to divert more room tax revenue to other recipients have failed, save for some voluntary agreements by the LVCVA to make some lump-sum contributions to road projects.

In a statement distributed Wednesday and again Thursday, Goodman referenced the efforts to divert money from the LVCVA as possible motivation for the NPRI research.

"Over the years, some of these same individuals have sued the LVCVA, attempted to block the expansion of the convention center and tried to financially cripple the organization with a state ballot initiative," Goodman wrote.

On Thursday, Matthews of NPRI said the research was funded in large part by "out-of-state" donors and foundations that contribute to efforts to make government more transparent. He declined to identify the source of the funds, but did speak to the source of the facts in the allegations.

"The source of all this is the LVCVA itself," Matthews said. "I think there is a reason they would rather (criticize NPRI) than address the substance of what we have uncovered."