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Rod Smith

Nevada Gaming Commission: Hard Rock Ad Issues Unresolved

3 August 2004

Despite two months of talks between the Hard Rock Hotel and the state attorney general's office, the Nevada Gaming Commission on Thursday said larger policy issues affecting the industry and the community had to be addressed before the casino's allegedly pornographic advertising case can be resolved.

Commission Chairman Pete Bernhard scheduled a hearing on pretrial motions for Sept. 24 and a trial for Nov. 18.

Bernhard also rejected a motion by Senior Deputy Attorney General Toni Cowan, who represented the Gaming Control Board at the commission hearing, to stay the disciplinary action against the Hard Rock until the trial is completed.

"I'm reluctant to put a complaint on hold any time someone says there's a policy issue," he said, arguing the commission can proceed on the policy and disciplinary issues at the same time.

Cowan had also asked the commission for more time to resolve the issues through negotiations before scheduling a trial. But the commission was unreceptive, feeling larger issues than just a penalty against Hard Rock are involved.

Commissioners in May had rejected a previously proposed $300,000 settlement that had been approved by the Nevada Gaming Control Board to resolve a three-count complaint against the company for a marketing campaign that reflected poorly on the gaming industry and the state.

For example, one ad showed a man with scantily clad woman lying atop a gaming table with chips nearby and a card in her mouth. Above the two there is text that reads "There's always a temptation to cheat."

Commissioners expressed doubts that any reasonable person could realistically interpret the Hard Rock ads as promoting illegal activity as alleged.

Hard Rock Hotel President Kevin Kelley said for now all the billboards that caused the initial fuss have either been taken down or the wording in the advertising has been modified.

However, the billboards now around town still show models engaged in the physical activities that precipitated the uproar. But the written messages on the signs have been altered so they cannot be construed to suggest illegal activities, which the Gaming Control Board in May claimed was the real issue.

Cowan said Thursday the attorney general's office have been making "gratifying" progress in settlement negotiations since then, but admitted it appeared impossible to resolve two issues.

The stumbling block is the extent to which gaming regulators should be involved in private sector advertising decisions, which has been the focus of public comments on the case. Civil liberties attorneys have argued against any infringement on First Amendment rights of casino operators.

Jeffrey Silver, who represented the Hard Rock before the Gaming Commission, said whenever the state talks about a form of censorship, there are prior restraint issues that are important to hotel operators. He said the Hard Rock's primary concern was not accepting the state's responsibility, but being left with no guidance about what the Hard Rock could and could not do in advertising.

The issue involved setting up a compliance process that is acceptable to the Hard Rock and the state for reviewing possibly pornographic advertising.

The complaints against the Hard Rock involve violating the settlement of a previous case that called for a review of advertising by a compliance committee.

But the commission, at its hearing in May, stumbled over the question of who was responsible for deciding when an allegedly pornographic ad was sufficiently objectionable to require peer review.

Silver said what made resolving the issues so difficult was not knowing how involved regulators want to be in setting advertising policy for casino operators.

Bernhard and Silver both said any requirement for such a procedure approved by the Gaming Commission could then be considered a mandatory regulation for other casino operators.

Kelley said he is still hoping for an outcome that leaves his property in a good relationship with gaming regulators but helps the rest of the industry deal with the issues and the concerns of regulators.

Gaming commissioners in May were reluctant to establish a policy that could be considered prior restraint and that would have industrywide implications without community and industry input and full public hearings.

However, Allen Lichtenstein, general counsel for the American Civil Liberties Union of Nevada, reiterated his group's view that the state's efforts to control the Hard Rock advertising were unconstitutional.

"Several of the issues concerning the provision in the code that allows them to take action against some company for what the commission considers inappropriate advertising is unconstitutional," he said. "It's unfortunate this hasn't been recognized by the commission, so to go forward with a trial is unfortunate. To put anyone at risk for penalties that are unconstitutional is just flat out wrong."

In other action Thursday, commissioners approved Station Casinos' request to take over management at Henderson's Gold Rush and Magic Star casinos, approved a request to transfer 100 percent of Sheldon Adelson's shares in Interface Group Holding Co. to Las Vegas Sands, and granted an 18-month extension to a limited gaming license held by Marvin Lipschultz, majority owner of the Golden Palm.