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Rod Smith

Gaming Commission to Hear Hard Rock Ad Dispute

21 September 2004

LAS VEGAS -- The Hard Rock Hotel's dispute with gaming regulators over several of its ads is turning into a full-bore confrontation over the First Amendment that will begin Friday when the Nevada Gaming Commission hears motions on the case.

And, ironically, Gaming Commission Chairman Peter Bernhard said late Monday the public petitions he had previously invited will not be heard at Friday's hearing.

Bernhard decided to gag third parties even though regulators had previously rejected a settlement in the 9-month-old case because they said the issues involved were too important to decide without a full public discussion.

The battle that's shaping up stems from a series of suggestive billboard and print ads that the Nevada Gaming Control Board wants banned because they suggest illegal activities and allegedly damaged the industry's reputation.

Since the Control Board complaint was first filed, the Hard Rock Hotel has changed its tune from trying to amicably settle the complaints brought by the state over its suggestive advertising campaign to insisting its First Amendment rights are being violated.

It has been joined in its battle with the state by the Nevada Resort Association, representing the gaming industry, and the American Civil Liberties Union of Nevada.

The state attorney general's office is equally adamant, arguing that Nevada gaming regulators have the responsibility of maintaining public confidence in the industry.

In fact, Attorney General Brian Sandoval's office, in a filing opposing a motion by the Hard Rock seeking dismissal of the case, argues that state regulations take precedence over any constitutional arguments raised by the Hard Rock and its allies.

Further, the attorney general's office is arguing that constitutionally protected speech is limited to the advancement of truth, science, morality, government and the arts in general.

Finally, the attorney general's office early this month reversed its position on public input, arguing "friend of the court" pleadings would be premature at this time because they would usurp its ability to shape the issues.

The new position that public pleadings will not be heard seems to fly in the face of apparent invitations for "friend of the court" pleadings extended at the July Gaming Commission meeting by Bernhard and Senior Deputy Attorney General Toni Cowan, who represents state gaming regulators.

Former Sen. Richard Bryan, a partner in Lionel, Sawyer and Collins who represents the Nevada Resort Association, said "at best" he was surprised by the attorney general's apparent reversal on public input.

Nevertheless, Bernhard said late Monday he will not allow public input, including testimony from the NRA or the ACLU, at Friday's hearing.

Instead, he will independently decide on whether to accept the "friend of the court" motions. If he does accept them, he said, they will only be considered at trial in November if the commission rejects the Hard Rock's motion to dismiss the case. That motion will be considered Friday.

The ACLU Monday argued in its own filing that once the smoke clears, the core issue in this case is the unconstitutionality of Nevada's gaming regulations.

The ACLU of Nevada's general counsel, Allen Lichtenstein, said the state regulations unconstitutionally call for sanctions against gaming license-holders if they exercise their free speech rights in a way that state officials believe reflects unfavorably on the industry.

The Hard Rock and the state attorney general's office early this year tried to negotiate a $300,000 settlement to resolve the complaint.

Jeffrey Silver, a partner in Gordon and Silver who represents the Hard Rock, said originally his client only wanted to "buy its peace," and agreed to the proposed settlement to make the original complaint disappear, not because it was admitting guilt.

He said the company had wanted an agreement that would allow the resort to avoid the cost of a trial in terms of money, manpower and distractions, even though it believed its ads clearly were intended to be satirical.

For example, one of the ads showed a naked male and female lying atop a gaming table with dice by their sides and a card in her mouth. The ad's tagline said: "There's always an urge to cheat."

Cowan argued the ad encouraged casino players to cheat at table games, while Bernhard said it was absurd to allege that the company was encouraging customers to go into the casino to cheat. He noted the word "cheat" could just as easily be construed to have a sexual meaning.

However, the Gaming Commission rejected the settlement in July, saying the state's arguments were preposterous and that the ads raised larger policy issues affecting the industry and the community that had to be addressed.

At the commission's July hearing, the attorney general's office asked for more time to negotiate an agreement, but Bernhard instead scheduled a hearing on pretrial motions for Friday and a trial for Nov. 18, even though he still urged Hard Rock and the state attorney general's office to continue trying to negotiate a settlement.

Those talks broke down, however, and Hard Rock changed its tack with a motion filed in August that the case against it should be dismissed, arguing that no government agency can act as a censor based on its perception about what is in good taste.

"Absent any inherently misleading statements or any statements advertising illegal products or services, any attempts to regulate advertising content are presumptively unconstitutional," the Hard Rock argued in its motions.

At the end of August, the Nevada Resort Association spoke up for the first time with a "friend of the court" brief filed on behalf of the gaming community that also argued that state regulations and efforts to enforce them violate the free speech protections of the U.S. Constitution.

NRA President Bill Bible said the trade association intervened in the case because issues with industrywide significance are involved, and cannot prudently be ignored.

"The question is whether (the Gaming Control Board) may police the content of such advertising in a manner inconsistent with First Amendment guarantees," Bryan argued in his brief.