Commission Rolls Over Dotty’s In Sop To Big Gaming

(Michael Chamberlain/Nevada Business Coalition) – “Government has one business: That’s to beat the crap out of you.” — Somer Hollingsworth

The Nevada Gaming Commission provided a perfect example of this today. It set the stage to yank the gaming licenses of scores of legitimately-licensed businesses that heretofore had been operating perfectly legally.

So what about the operation of these businesses changed so that now they no longer comply with Nevada’s gaming regulations?

Absolutely nothing. The Commission, at the behest of the big gaming companies of the Nevada Resort Association (NRA), simply amended the regulations regarding which businesses qualify for a restricted gaming license.

But it didn’t just change the rules going forward; it made the changes retroactive, applying to locations that had been operating for as long as 11 years. In effect, it declared that prior Commissions had made a series of mistakes over the last decade-plus by improperly issuing gaming licenses to business that did not deserve them.

Even though every member of the current Commission had voted in favor of granting these licenses and even though the licensees had not obtained these licenses fraudulently or under false pretenses nor had they done anything wrong after receiving their licenses, the Commission nevertheless voted to take them away unless these businesses make expensive modifications to their locations.

Today the NRA convinced the NGC to amend its rules regarding who is eligible to receive a restricted gaming license allowing the business to operate up to 15 slot machines. By the NRA’s own admission these changes were inspired because its members were concerned about competition from Dotty’s and other taverns employing the same model, such as Jackpot Joanie’s and Molly’s.

The direct result of these changes is that these companies will have to make modifications costing tens of thousands of dollars at each location to comply with the new regulations or lose their gaming licenses. A gaming license is a make-or-break proposition for most bars.

But this decision will have far-reaching implications. By asserting the right to change regulations retroactively the Commission is introducing a level of uncertainty that could be devastating. Never again can a company obtaining a gaming license be sure that the Commission would not later vote for amendments that could take it away.

As the attorney representing Jackpot Joanie’s pointed out today, it’s already risky enough to finance a gaming business in Nevada. Even multi-billion dollar hotel-casinos can only apply for their gaming licenses after they’ve spent the multi-billions constructing them and there’s no guarantee the license will be issued.

Now the Gaming Commission is declaring that it can change the rules to snatch that license away, years later, even if the company has done nothing wrong. Nothing, that is, except to threaten bigger competitors.

What bank or investor would be willing to take the risk to finance a business under those conditions?

Dotty’s, Jackpot Joanie’s, Molly’s and the others that have adopted this model are the most directly affected.

But the real victims are the thousands of other Nevada businesses that will never get off the ground – the entrepreneurs and investors who will refuse to risk their money in Nevada. The real victims are the tens of thousands of Nevadans who would have worked at these companies. The real victims are the rest of Nevada.

(Michael Chamberlain is Executive Director of Nevada Business Coalition.)