Incoming freshman Assemblyman Ruben Kihuen, a Las Vegas Democrat, would like to see expiring gift card money flow to the state treasury by defining it as abandoned property. Photo by Jeff Scheid.

CARSON CITY -- Incoming freshman Assemblyman Ruben Kihuen went out to dinner with a friend recently, planning to use a $100 gift card he had received last year as a Christmas gift to pay for the meal.

To Kihuen's dismay, the gift card had expired, meaning the high-end restaurant that issued the card had received a $100 windfall at the expense of the gift card giver.

Kihuen, a Las Vegas Democrat, said he would like to change this practice and instead have expired gift card money flow to the state treasury by defining it as abandoned property.

If a merchant has no address for the owner of the card, which is typical, the money would go to the state.

"If people lose their money, there should be some way to give it back to them," he said. "We could use that money for educational programs, after-school programs, for all kinds of things."

Kihuen has submitted a request for a bill to accomplish this in the 2007 session of the Legislature.

Kihuen said researching his proposal revealed that the gift card industry is now a $60 billion a year business and that as much as 15 percent of all gift cards go unused across the nation for one reason or another.

Reverting the unused portion of the expired card to the state, as the Texas Legislature did in 2005, would provide a new source of revenue, he said.

"It's the people's money," Kihuen said.

The value of the expired portion of a gift card is probably not significant to the company that issued it, he said.

But it could bring in millions to the state for various programs, Kihuen said.

Gift cards can have expiration dates in Nevada, although many don't.

Some states have banned the use of expiration dates.

Assemblyman David Parks, D-Las Vegas, introduced a bill in 2005 that would have prohibited expiration dates on gift cards. But the measure was weakened considerably.

The bill that passed says that if a gift card has an expiration date, either the date of expiration must be printed on the card or a toll free telephone number must be printed on the card so the owner could determine the expiration date.

Another measure by Assemblyman Joe Hardy, R-Boulder City, to ban expiration dates on gift cards, saw no action in the 2005 Legislature.

If the Legislature doesn't want to abolish expiration dates, then the unused value of expired cards should revert to the state, Kihuen said.

The Texas Legislature passed a similar bill in 2005 that transfers unused and expired gift card value to the state by defining it as abandoned property.

A fiscal note on the Texas legislation anticipated $20 million in revenue to the state in fiscal year 2009.

Nevada as a smaller state would see much less revenue, but still it likely would be in the millions of dollars, Kihuen said.

The lawmaker declined to name the restaurant in question where his card was not accepted.

Paul Hartgen, president of the Nevada Restaurant Association, said he would be surprised to see a gift card not honored by an eatery even if it had expired.

"The restaurant industry likes repeat business a lot," he said.

"No pun intended, but not honoring a card would not leave a good taste in a customer's mouth."

The association will be involved in testifying on any such gift card legislation, which also could deal with other issues, such as fees charged by some gift card issuers that can decrease the value of a card over time, Hartgen said.

Other issues are how to handle charitable gift card donations and how to reimburse a merchant if a card is used after several years but the unused portion already has been forwarded to the state, he said.

Gift cards have become a huge part of the restaurant business, as they have for many other types of businesses, Hartgen said.

Parks' 2005 bill did restrict the use of service fees on gift cards.

Glen Garey, general counsel for the Texas Restaurant Association, said the final version of the legislation passed in Texas in 2005 was acceptable to the group.

"We just wanted it to be fair to the merchants," he said.

In its fourth annual National Retail Federation Gift Card Survey released in November and conducted by BIGresearch, the group found that gift card sales will total $24.8 billion this holiday season, a $6 billion increase over 2005 when gift card sales hit $18.5 billion.

The retail trade association said in the release that different retailers have different polices for gift cards.

Some stores' gift cards expire over a certain period of time, usually 12 months or more, and some stores' cards depreciate month by month if a card has been inactive for a certain period of time.

The association reported that most retailers are moving away from expiration dates and depreciation fees in response to their customers' requests.