Gambling operations big and small face off
April 9, 2013
Nevada’s major resorts want new restrictions on smaller gaming companies they say are pushing into their turf.
The little guys say the big operators are just trying to shut them down to cut out the competition.
Assembly Majority Leader William Horne, D-Las Vegas, who sponsored Assembly Bill 360, said the major resorts have invested billions to construct hotel-casinos and all the things that go along with that.
“And across the street, they could have a business come in and just open a warehouse,” he said. “They haven’t made the same investment that the non-restricted property has and are paying less in taxes on that business model.
“I don’t think the two should be competing against each other,” Horne said.
Horne got some questions about the bill, including from Las Vegas Republican Wesley Duncan.
“The reason behind doing this is the smaller business 10 to 20 miles from the Strip, that those are competing with big gamers siphoning off business and they haven’t made the proper investment?” he asked.
“They are expanding into a scope which has been historically enjoyed by the non-restricted gaming properties,” Horne said.
The legislation is aimed at the six largest among those so-called smaller gaming corporations — those with a total of more than 500 gaming machines in their bars, taverns and convenience stores. It would impose on those companies — such as Dotty’s — the same gaming tax now paid by the major resorts. But under the bill, the slot license tax the restricted locations now pay would not be lowered.
Those restricted operations don’t offer the amenities major resorts do, and the gaming revenue is far from incidental to their profits, Nevada Resort Association lobbyist Pete Ernaut said. The current rules say gaming should be “incidental to their primary business,” meaning food and drink, he said.
He said the restricted operations are limited to no more than 15 slots in a location, but they are much larger than a small bar. The claim this is David vs. Goliath and anti-competitive is incorrect, Ernaut said.
“There is a vast difference between our entry fee and theirs,” he said, referring to the investment.
Sean Higgins, a tavern owner and lobbyist for the Nevada Restricted Gaming Operators, said those taverns aren’t just slot alleys, that they already have a minimum nine-seat bar, 2,000 square feet of space, areas in which to sit and eat and an operating kitchen.
“Yet here they are before you today to try put more restrictions in place,” he said.
On top of the slot licensing tax restricted operators now pay, that would have his members paying a higher tax rate than the big resorts. He pointed out that, in lieu of the gross gaming win tax the resorts pay, his clients pay an annual slot license rate that is six times what the resorts pay per machine.
Higgins said the small taverns and businesses such as Dotty’s aren’t competing against the big resorts; they have their own clientele. He also said those small businesses make a substantial investment per gaming machine — on the order of the same amount a major resort commits when building.
Higgins pointed out regulators testified that the existing law is adequate for them to do their job of regulating both large and small operators.
Those small entities are competing against many smaller resorts in locals markets, Ernaut said. The bill would restore “the bright line” between restricted and non-restricted gaming licensees, he said.
But Duncan questioned whether the 15-machine limit wasn’t already a “bright line.”
The debate also touched on banning sports-betting kiosks from restricted locations — the subject of a bill debated in the Senate Judiciary Committee last week.
Ernaut said those kiosks have been permitted administratively but that he thinks restricted licensees can’t have them because the rules say not more than 15 slot machines “and no other game or gaming device” are allowed.
Higgins said the kiosk is “a communications device” that communicates a bettor’s desires back to the sports book in a non-restricted location.
The committee took no action on the legislation.