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Best of Liz Benston

Gaming Guru

Liz Benston

Resort Group Gears Up for Legislative Session

21 January 2005

LAS VEGAS -- When MGM Mirage pulled its membership from the Nevada Resort Association in 2003 after a divisive legislative tax debate and again when the company announced its pending merger with Mandalay Resort Group last year, observers wondered whether the state's premier casino trade group was faltering.

As another legislative session nears, the group's chairman calls that concern overblown and says the association is starting the year with commitments from the rest of the state's major casino companies -- including industry giant Harrah's Entertainment Inc. -- as well as new members such as the Golden Nugget and Hard Rock casino hotels.

The association hasn't lost any members besides MGM Mirage, representatives say.

"We're a very strong core group that represents a majority of the industry," Chairman and Station Casinos Inc. President Lorenzo Fertitta said. "It's basically a group effort. We're aligned, we're on the same page ... on issues that affect the gaming industry."

Venetian owner Las Vegas Sands Corp., American Real Estate Partners L.P., which owns the Stratosphere and Arizona Charlie's properties, as well as other downtown casinos not owned by Boyd Gaming Corp. are not members of the association.

Some still say the group's focus on lobbying has cost it a valuable advocate and may alienate other members.

MGM Mirage spokesman Alan Feldman said the association's board of directors has chosen to emphasize lobbying over public awareness and education, which is more needed than ever before.

"The industry itself has grown, the reliance on gambling alone has changed, the issues we deal with are much more complex" compared with years past, Feldman said. "And we remain in a situation all these years later where the vast majority of businesses in this state do not contribute to the welfare of the community but leave it to the gaming industry to take care of the community."

That MGM Mirage left the association because the broad-based business tax plan backed by the industry failed in the Legislature is an oversimplification, Feldman said.

"There really have been a long series of issues, as you look across the Legislature and any number of different individuals and subject matters," he said. "We didn't feel the Legislature had a strong understanding of our industry. We didn't feel they had the strong understanding that we felt we could give them on our own."

Harrah's Senior Vice President of Government Relations Jan Jones said her company is sticking with the association this year but will press for more public outreach over "inside lobbying."

"It is our belief that the NRA has to change," Jones said. Even so, "holding (the industry) together is in our best interest."

"We'll take a 'wait and see' attitude to see if the NRA can evolve to that level," she said. "We think the NRA needs to go through a period of self-evaluation."

The American Gaming Association, which lobbies on the federal level for major casino and slot companies, "has done a far superior job of doing public education," she said.

The Washington-based organization caters to the media and the general public with a Web site containing industry sources, research studies and statistics, among other things. Over the past few years, AGA Chief Executive Frank Fahrenkopf has publicly testified before state legislatures nationwide on the issue of casino taxes and has aggressively moved to debunk research promoted by anti-casino groups.

Fertitta said the notion that the resort association is an insider group that simply lobbies behind the scenes is inaccurate.

The association aims to educate legislators as well as the general public about what the gaming industry does and why it is important to Nevada, he said.

"Historically, I think for the wrong reasons, the NRA has been viewed by legislators as a group of five or six big casino companies," he said. "It really couldn't be further from the truth. Gaming is really an integral part of the economy."

Fertitta, former Gov. Bob Miller and Larry Ruvo, senior managing director of Southern Nevada Wine & Spirits aim to strengthen the industry's position among legislators this year through a separate entity called the Nevada Tourism Alliance. The alliance, crafted in November, will serve as an association of sorts for nongaming vendors and suppliers with a stake in the casino industry.

The Tourism Alliance held its first meeting last week with 50 nongaming members.

Resort association President Bill Bible said the tourism alliance marks the latest effort to increase public awareness based on concerns shared by members.

"All of the companies realize (education) is important," he said.

Companies are responding by having their own representatives spend more time with legislators, efforts which complement the association's work, he said.

Station Casinos is one of those companies.

The gaming industry's position on the tax issue appeared to get lost amid the bickering between lawmakers and interest groups in the 2003 session, Fertitta said.

"There were a lot of different views and disagreements," he said. "A lot of people giving their opinions but not enough communication between gaming and other businesses here in Nevada. A lot of legislators were getting a mixed message."

The industry wants other nongaming businesses to pay a greater share of the tax burden but also seeks stable casino taxes, Fertitta said.

The growth of the casino industry in Nevada is in large part due to seemingly limitless access to capital, he said.

"The reason companies in Nevada are able to borrow at rates lower than other places is the perceived consistency and stability in the Legislature," he said. "If we want to continue down the path of growth, we have to continue to walk the walk and talk the talk. It's important that that (point of view) comes from other companies that benefit" when new casinos are built, he said.

Jones said more needs to be done to communicate to legislators and the public "how many ways the industry gives to Nevada."

She also said the tourism alliance should eventually merge with the resort association because their concerns are the similar.

MGM Mirage expects to close its $7.9 billion purchase of Mandalay in the first quarter, while Harrah's anticipates becoming the world's largest gaming company by the second quarter once it consummates its $9.4 billion buyout of Caesars Entertainment Inc. Both MGM Mirage and Harrah's have robust in-house lobbying operations.

The association doesn't expect to bleed members as companies grow, gaining their own power and influence, Fertitta sad. Smaller companies without the mammoth resources of an MGM Mirage also see the benefit of joining their peers in the NRA.

The association's board of directors meets quarterly and informally discusses issues more frequently to build a consensus, Fertitta said.

Feldman said MGM Mirage discusses issues with the Nevada Resort Association regularly and hasn't ruled out the prospect of joining forces in the future. "Were they to come to us with a public education program, that would be entirely possible," he said.