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Best of Liz Benston

Gaming Guru

Liz Benston

Friendly relationship between taverns, casinos up in smoke

27 December 2006

NEVADA -- Last week's hearing on statewide smoking restrictions exposed a rift in the mostly friendly though somewhat distant relationship between slot bars and their bigger, richer cousins in the gaming industry - a sore spot that will probably heal over time but was intriguing to watch while it lasted.

Even though many bars look to slot machines as their single largest source of revenue, they operate under different rules than casinos - which, as last week's court hearing showed, can lead to bad blood.

Both types of businesses are generally aligned on issues of taxation and regulation, because a bar in Nevada is more like a casino than a "nongaming" business like a bank, medical clinic or department store. They also have similar interests, such as keeping the state gaming tax low and accommodating smokers.

Nevada law allows small businesses such as convenience stores, grocery stores, bars and even laundromats to offer up to 15 slot machines with a so-called restricted license if gaming is "incidental" to the business. In spite of that caveat, many bars across the state generate up to half or more of their revenue from slot machines - a fact well-known among regulators who would prefer that the law be vague than audit businesses under hard and fast rules about what percentage of gaming revenue constitutes "incidental."

The difference between a "restricted" license and a "nonrestricted" license, which allows a location to offer more than 15 slot machines as well as table games, is the stuff of Gaming Control Board meetings and gaming law manuals. It's significant, for instance, that each group has its own political lobbying organization.

Those differences took center stage after slot bars filed suit to prevent the enforcement of a voter-approved smoking ban. One of their chief arguments was that the ban violated the equal protection clause of the Constitution because it discriminated against "similarly situated" businesses.

The Nevada Clean Indoor Air Act, which was upheld by a District Court judge on Thursday, exempts gaming floors in casinos, which are defined as businesses holding "nonrestricted" gaming licenses. It also exempts bars that don't serve food, though bars that prepare food would fall under the ban.

"'Casino' means an entity that contains a building or large room devoted to gambling games or wagering on a variety of events," the law states. A casino, it says, "typically uses the word 'casino' as part of its proper name."

In a town with many variations across the bar-to-casino spectrum, this definition isn't as easy as it might seem. Customers probably don't think of Skinny Dugan's as a casino. But according to state regulators, the Las Vegas bar's roughly 30 slots put it in the same legal category as the Mirage and Wynn Las Vegas.

In court, attorneys for bars said it wasn't constitutional that food-serving bars with 15 slot machines be forced to ban smoking when bars with 20 or 35 slot machines would be exempt by virtue of having a "nonrestricted" license.

In the midst of the debate, the Nevada Resort Association - the casino industry's lobbying arm - opposed the Tavern Owners Assn. by arguing that its equal protection argument was invalid. The reason for taking action, resorts attorney Todd Bice said, was to protect the legal distinction between restricted and nonrestricted locations. Having a judge potentially rule that the two license holders were similar could throw the entire regulatory system into confusion, he said.

"They are not all the same ¦ they are two vastly different animals," Bice said. "An unrestricted license gives them the right to do a lot more than a restricted license."

Attorneys for the bars mocked Bice's argument, speculating that the real reason the casino association got involved was to ensure the smoking ban was enacted - which could force some customers to switch from smoke-free bars to smoker-friendly casinos.

Bar representatives showed the court several slides showing restricted and nonrestricted locations that appeared the same save for the addition of a handful of slot machines.

With legions of smoking customers at stake, the gloves came off.

Bice accused bar interests of "duping the public" by raising the question of whether hotel and motel rooms were included in the ban.

"Taverns raised the issue of hotel rooms to help rile up the public" to vote against the ban, he said.

In September, the Nevada Supreme Court rejected a ruling by District Judge Bill Mattox in Carson City that the act includes hotel and motel rooms because they are "indoor places of employment."

In response, attorneys for the bars said the exemption for casino floors was irrational because big casinos have long catered to families and children with attractions such as movie theaters and bowling alleys that spill into gaming areas.

The distinction between bars and casinos is "ridiculous in the context of protecting children," attorney Mark Ferrario said. "What differentiates my clients is that we don't reach out to minors."

The state is charged with fostering the growth of the entire gaming industry, not protecting some businesses at the expense of others, Ferrario added.

"My clients are just as vital to the economy as Mr. Bice's clients," he said.

While avoiding a discussion of the obvious differences between employment and profit at, say, the Mirage and the average slot bar, Bice said typical casinos are much larger and are required to have hotel rooms. Smoke dissipates better in these rooms than it does in bars, which are smaller, he said to audible guffaws from the audience.

Some casinos are little more than super-taverns because they predate a 1992 law requiring casinos with nonrestricted licenses to have at least 200 rooms, Bice said.

Gaming Control Board records list more than five dozen such "grandfathered" locations in Clark County, including small neighborhood casinos without hotels and large bars with more than 15 slots.

There are many more small or newly built bars capped at 15 slot machines around town that will be subject to the ban.

Unfair? Maybe. But unconstitutional? Not quite, Judge Douglas Herndon said Thursday.

After hearing his legal arguments attacked at every turn, Bice introduced himself to the court with a few jokes.

"Darth Vader gets more love than I get," he said.

He recommended that the court install some chicken wire around the podium like that used in low-rent bars to protect bartenders from abusive customers.

"We might need that in this establishment," he joked.