A choice for Station Casinos

If I were the chairman of the Nevada Gaming Commission (perish the thought), I'd force Station Casinos of Las Vegas to choose between its Southern Nevada gaming interests and its stated intention to manage Northern California Indian casinos that will compete directly with struggling casinos in Reno and at Lake Tahoe.

"You can retain your Nevada gambling license and forget about California," I'd tell Station's owners, "or you can choose to manage tribal casinos, but not both. Take your pick." I'd base my ultimatum on Gaming Commission Regulation 5.010, which requires Nevada gambling licensees to operate "in a manner suitable to protect the... general welfare of the inhabitants of the state of Nevada."

Indian casinos at Auburn and in the Bay Area, located on "feeder" highways to Reno and Lake Tahoe, are clearly "inimical (contrary)... to the general welfare of the people of the state of Nevada," in the words of the regulation. In short, Station's California operations are "unsuitable" in Nevada.

So what are the Gaming Commission and Control Board, the State Legislature and Attorney General Brian Sandoval waiting for? This is an issue that involves potentially devastating consequences to the gaming-based economy of Northern Nevada, so it should be high on their list of priorities. But I haven't heard a word from any of them. Does this mean they're going to sit idly by while a Southern Nevada gaming licensee declares economic war on Northern Nevada in an obvious conflict of interest?

Back in the mid-1960s, when I worked for the Gaming Commission and Control Board, we took tough, and even unpopular, enforcement actions against gaming licensees who failed to abide by the rules of the game. Led by then-Gov. Grant Sawyer and legendary Gaming Board Chairman Edward Olsen, we revoked Frank Sinatra's gambling license for hosting Chicago godfather Sam Giancana at the singer's North Lake Tahoe club (the Cal-Neva), closed the Silver Slipper Casino on the Las Vegas Strip for cheating, and successfully defended the state's "Black Book" against legal challenges from the Mob.

Gov. Sawyer was proud of his strict gaming control policies, and I was proud to have played a small part in his attempts to clean up Nevada's legal gambling business. In his 1993 autobiography, "Hang Tough!" published by UNR's Oral History Dept., Sawyer recognized "the obligation of the state to protect the health and welfare of its citizens and its (gambling) industry" and added that his administration "would not tolerate any organized crime influence in Nevada."

Today, however, Nevada's enemy isn't organized crime; it's Indian gaming. That's why our gaming control agencies, our Legislature and our attorney general should step up to the plate and defend the best interests of the people who put them in office, as required by law. I'm surprised that Attorney General Sandoval, a former Gaming Commission chairman, hasn't made the Indian casinos issue one of his top priorities.

Some will say that my proposal violates the principles of free market economics by forcing Station's management to choose between its Las Vegas interests and the Northern California Indian casinos. Sorry about that, but Nevada casinos -- as part of a privileged industry -- must play by tighter rules than other businesses in our state. A Nevada gambling license is a revocable privilege, not a right, and the Gaming Commission has broad powers to impose reasonable conditions of operation as long as they're not arbitrary or capricious. So I reiterate my question: What are they waiting for?

If you think that I'm exaggerating the economic threat represented by Station's Indian casinos, consider this: Thunder Valley Casino, expected to open in June on I-80 at Auburn just east of Sacramento, will peel off thousands of Reno and Tahoe-bound visitors. And just last week Station announced that it will manage a large Indian hotel-casino on I-80 in southern Sonoma County just 30 miles from San Francisco, and another tiny tribe revealed plans to build a casino on Highway 49 in Amador County, a drive-in feeder market for South Lake Tahoe.

The Reno-Sparks Convention & Visitors Authority estimates that more than one-third of Reno visitors from the Bay Area also visited California tribal casinos last year. You do the math. An earlier study estimated that Northern California's tribal casinos would cause a decline of at least 20 percent in Northern Nevada gaming revenues, with a corresponding loss of jobs in the local economy.

California's virtually unregulated tribal casinos simply don't meet Nevada's gaming control standards, nor do they pay their fair share of state and local taxes. Last month, the California Gambling Control Commission accused some tribes of failing to make required payments to the state and charged others with violating federal and state labor laws. But the Indians claim immunity from such laws on grounds of "sovereignty." Meanwhile, Gov. Gray Davis wants tribes to contribute $1.5 billion to help close the state's estimated $34.6 billion budget deficit. Good luck!

In order to tax tribal casinos, Congress would have to amend the 1988 Indian Gaming Regulatory Act, which prohibits states from taxing them. No wonder Station Casinos -- which announced first-quarter net income of $12.6 million last Wednesday -- wants to ride that gravy train. "States like California have given away the store, and now they're trying to get it back," said Prof. I. Nelson Rose, who teaches gambling law at Whittier Law School in Costa Mesa, Calif.

Nevada gaming licensees should stay out of that dubious game. Which is why Station should be forced to choose between California and Nevada. One or the other, but not both. Take your pick. Fair enough? I think so.

Guy W. Farmer, a semi-retired journalist, was press spokesman for Nevada's gaming control agencies during the period 1963-66.


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