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Gaming Guru

Richard N. Velotta

Clayton To Recuse Himself From Megamerger Debate

9 February 2005

NEVADA -- Mark Clayton's greatest strength as the state's newest gaming regulator may be his ability to analyze complex securities issues.

"His background will make him a huge asset of the board," said state Gaming Control Board Chairman Dennis Neilander. "He's cutting edge in the industry for negotiation of those financial instruments and new types of financing."

So it's an ironic twist that Clayton, appointed as a new board member by Gov. Kenny Guinn Tuesday to replace Scott Scherer, won't be voting on two high-profile securities matters involving the megamergers of MGM Mirage with Mandalay Resort Group and Harrah's Entertainment Inc. with Caesars Entertainment Inc.

His non-participation in the Harrah's-Caesars deal is a no-brainer -- Clayton actively participated in putting that deal together. But Clayton, 39, said from his office Tuesday that he also wouldn't participate in the MGM Mirage-Mandalay merger debate either to avoid any appearance of the board putting that deal through more regulatory scrutiny than the other.

Praise continued to pour in Tuesday on the appointment.

"What a brilliant choice," said gaming attorney Jeffrey Silver of Gordon & Silver, a board member in the late 1970s. "When someone with Mark's credentials goes back to government work, it's a real coup for the state of Nevada and the regulatory process."

Going back to government work -- a reference to Clayton's stint as the chief of the Corporate Securities Division of the Gaming Control Board from May 1993 to June 1995 -- is likely to come at some personal expense.

Clayton will be paid $113,843, according to state officials. Caesars officials would not disclose Clayton's current salary, but sources indicated he would "take a significant pay cut" to leave the private sector.

"He's certainly familiar with the trappings of the corporate world," Silver said. "I can't think of a better selection."

Neilander called Clayton "a straightforward guy who cares about being fair and about making the right decisions."

He said he would understand why Clayton would recuse himself on the merger decisions, knowing he would be "avoiding any kind of appearance of impropriety."

Neilander said the three-member board, which also includes former FBI agent Bobby Siller, would rely on Clayton's expertise in securities. But the state's newest gaming regulator knows the job goes beyond the financial realm.

"First and foremost, I want to see Nevada's status as a leader in gaming industry regulation continue to stay strong," Clayton said. And, because of his corporate securities experience, he expects to stay on top of expanding equity infusions in the state.

"There are various financial vehicles that are tools for development and I intend to stay abreast of that market," Clayton said. "I don't want to be premature and opining that one vehicle to raising funds is superior to another. In the '60s, publicly traded companies were new to the industry. Now, there are new instruments on the horizon, such as private equity funds that I'll be watching."

Clayton, who plans to continue to make his home in Las Vegas upon accepting the appointment, said he hopes to take a few pages from the Caesars playbook regarding his views on problem gambling.

His company, he said, developed an industry model for responsible gaming, which included self-exclusion remedies.

Clayton said he did not want to speak in too much detail about some of the pending technological issues to be aired by the board and other issues slated to come before the panel.

In addition to the two mergers, expected to reach regulators by the end of March, a licensing hearing is on the horizon for the Wynn Las Vegas resort. The board also is expected to take action on various wireless technology issues in the months ahead.

Clayton said he expects to formally take office next week and begin voting on matters by March.

At the February board meeting in Carson City today and Thursday, Neilander and Siller can handle business, but if they disagree on an issue, the item would be forwarded to the Nevada Gaming Commission without a recommendation.