Regulators prepare for possible wave of gaming bankruptcies

The state Gaming Control Board is tapping personnel within its already depleted ranks to establish a team of experts to handle regulatory and licensing requirements that are expected to spring up because of anticipated bankruptcies and financial restructurings in the casino industry.

In a letter sent out to casino companies and posted on its own Web site, Board Chairman Dennis Neilander said, "The board will be focusing resources on debt restructurings and regulatory considerations necessary to complete these debt restructurings."

The team will be drawn from Control Board staffers working in the board's seven divisions and will include experts in auditing, investigations and corporate securities.

The group, which will report to Neilander, will "dictate the course through which applications and ancillary processes for approval to bring gaming licensees out of bankruptcy will be most efficiently readied" for gaming regulators, the letter states.

Neilander noted in his letter that setting up the group could cause delays in the board's regular duties.

"The time frames within which the board typically performs standard regulatory routines and practices may be disrupted, depending upon the volume and complexity of applications for bankruptcy-related approvals the board and (Nevada Gaming) commission receive," Neilander wrote.

"Already, there are a few large gaming companies in bankruptcy, along with a few smaller licensees," Neilander said in his letter why the special team is necessary. "More are anticipated and, potentially, there could be several."

Two casino companies operating in Nevada have already filed for bankruptcy and several others are in discussions with their lenders to renegotiate their debts either in or outside of bankruptcy court.

Tropicana Entertainment and Herbst Gaming filed for bankruptcy already and have entered into agreements with creditors that could see new owners taking over their Nevada properties.

Nevada gaming law requires any individual or company owning at least 10 percent ownership in a casino to be licensed by Nevada regulators.

Station Casinos could enter into a prepackaged bankruptcy as early as next week, while smaller operators Riviera Holdings Corp., Hooters Hotel and Black Gaming in Mesquite are currently negotiating with their banks.

MGM Mirage, which had $13.5 billion in long-term debt on Dec. 31, and Harrah's Entertainment, which had $23.1 billion in long-term debt, also have been mentioned as bankruptcy candidates.

The change comes as the board is facing the elimination of 32 positions, which are currently unfilled, under Gov. Jim Gibbons' proposed budget plan.

Contact reporter Arnold M. Knightly at aknightly@reviewjournal.com or 702-477-3893.