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Chris Jones

Nevada, Hard Rock Reach Settlement

19 November 2004

LAS VEGAS -- What was once one of the year's most-discussed local controversies ended with nary a whimper Thursday when the Nevada Gaming Commission unanimously reached a $100,000 settlement with Las Vegas' Hard Rock Hotel.

The hip hotel-casino ran afoul of state regulators in January when members of the Gaming Control Board slapped it with a three-count complaint alleging Hard Rock's sexually suggestive advertising reflected poorly on the gaming industry and the state and that the hotel-casino failed to have the ad vetted by a compliance board. Each count carried a maximum fine of $100,000.

The complaint sparked a maelstrom of public debate, prompting concerned parents to call for a communitywide crackdown on most forms of suggestive advertising by casinos. Civil libertarians argued with equal vigor such a ban would violate First Amendment speech protections, and even state regulators struggled to determine where to draw the line.

But in the end, all that mattered was Hard Rock's failure to comply with a 2002 promise to the state that the company's internal compliance committee would review any suggestive promotional material before such ads went public.

And after Thursday, even that step won't be necessary, parties on both sides of the dispute agreed.

The first two counts of January's control board complaint, which cited Hard Rock ads that allegedly encouraged risque sexual activities and illegal behavior, were dismissed by the commission in late September.

But a third count was worthy of the maximum fine because Hard Rock failed to internally review its advertising content prior to its distribution, commission Chairman Peter Bernhard said Thursday Jeff Silver, a partner at Gordon and Silver, who represented the Hard Rock, said that violation resulted from a misunderstanding of the hotel-casino's 2002 agreement with the state.

"The (control) board felt anything that had questionable or suggestive elements had to go to a complance officer and the compliance committee," said Silver, who added that Hard Rock's understanding of the deal did not apply to advertising but risque promotions such as shock jock Howard Stern's annual appearance at the casino.

To avoid future misunderstandings, Thursday's settlement stipulated that Hard Rock's management team -- not its compliance committee -- would be responsible for determining the appropriateness of the company's future ads.

"If they do something that's totally illegal or inappropriate, they (management) have to bear responsibility," Silver said. Senior Deputy Attorney General Toni Cowan, who previously argued the ads in question promoted illegal activity, said Thursday's resolution was "good for all parties" and will help gaming companies and regulators work together to avoid similar challenges in the future.

"I think it's a clearer situation than it was a year ago," Cowan said. "There were a lot of people who felt (the state) should not regulate (advertising), and there were a lot of people who were upset about the nature and the content of the billboards. These issues were difficult, will always be difficult, but I think it was important that we had this case so that all of the parties sat down and thought about ... how we need to move forward in the future. ... But I think the industry was advised now that we all need to work together to find reasonable solutions to these issues."