The Nevada Gaming Control Board has boxed itself into a corner.
Like some other enforcement agencies, the board sometimes confirms an investigation is under way, but won’t comment on its substance.
Such silence exposes the board to criticism — including from the Culinary Union, which has attacked regulators for condoning business practices it opposed — such as when Station Casinos required workers to reapply for their jobs after purchasing the first Fiesta casino in 2000.
The board broke its own silence rule Jan. 31 when Gaming Control Board Chairman Dennis Neilander told reporters the board’s audit, enforcement and corporate securities divisions had been investigating Columbia Sussex, which owns the Tropicana on the Strip and five other Nevada casinos.
Neilander said he “had some concerns” about gaming operations at the company’s Las Vegas and Laughlin properties and was using undercover enforcement agents to conduct a probe. The board had interviewed regulators and others in New Jersey — where the company was recently denied a gaming license, forcing it to sell its Tropicana casino there — and is set to interview top executives.
Why did regulators discuss their probe of Columbia Sussex?
Neilander said his hand was forced after Culinary Union statements, published in a Sun column, complained that regulators were doing little about a company that had broken the law in another state.
Many investigative agencies — think FBI, for instance — would remain silent in the face of criticism. But Neilander might have been embarrassed by the union’s incorrect implication that he and his staff were sitting on their hands.
By disclosing but a few details, Neilander revealed that regulators are, in fact, doing their job.
Even after letting the cat out of the bag, the Gaming Control Board won’t speculate what will come of its investigation of the owner of the Tropicana.
Understanding the board’s mandate offers some guide.
The board is primarily concerned with keeping corrupt and fraudulent influences out of casinos, making sure games are run fairly and ensuring that appropriate taxes are paid. But there’s plenty of room for management missteps, layoffs and shabby hotels — three of the many claims made by Tropicana critics that are commonly found in the gaming business — because those issues are not specifically addressed in state law.
New Jersey regulators denied the company a license based on, among other things, evidence that the company lied to regulators about layoffs and delays in implementing a compliance committee. Industry experts speaking anonymously in Las Vegas say these misdeeds may be bad but put Nevada regulators in the uncomfortable position of punishing an already financially troubled company based on subjective reasoning.
As far as reasons for denying a license, being uncooperative with regulators isn’t as compelling as failing to maintain an adequate bankroll or allowing minors to play slot machines, for example.
Nevada law allows the board to levy fines or revoke licenses if companies “reflect discredit” on the state, but the board has been reluctant to do either over the years.
(In one rare example, the board fined the former owner of the Imperial Palace USD 1.5 million — the second-largest gaming fine in Nevada’s history — for holding theme parties celebrating Adolf Hitler’s birthday.
Regulators also are wary of putting properties out of business and workers out on the street — and have intervened to help prevent that.
By way of example: Financially troubled Binion’s was racking up IRS liens and facing other regulatory problems when the Gaming Control Board, concerned about the potential loss of more than 900 jobs, helped engineer a three-way deal passing the casino into corporate hands.
On paper, Columbia Sussex is already violating Nevada’s “foreign gaming” statute, which requires that casino operators follow rules and regulations in other regions. The rule calls for regulators to investigate the substance of these misdeeds but doesn’t trigger an automatic penalty in Nevada.
The board isn’t required to file a complaint against Columbia Sussex, and complaints are what trigger public hearings. Lesser problems can, and have been, settled out of the public eye.
And that’s how the investigation into Columbia Sussex might have ended — quietly and privately — were it not for the Culinary forcing the issue. For its efforts, and because Neilander broke policy and publicly acknowledged the investigation, a public hearing at which complaints against Columbia Sussex would be bared now seems more likely.