County delays vote on changes to slot-machine regulations

Tavern owners won’t know until today if their locations comply with changes proposed for a Clark County regulation governing the operation of slot machines.

The requirements are directed at a business model operated by the Dotty’s tavern chain.

Following more than three hours of public testimony Tuesday, Clark County commissioners put off a vote on the regulation for 24 hours so that various amendments introduced just before the hearing could be incorporated into a final version.

Tavern industry representatives complained they didn’t have enough time to review proposed amendments and called the process confusing.

One of the owners of Jackpot Joanie’s — a tavern modeled after Dotty’s — told commissioners that if the ordinance passes, he would be forced to “seek legal relief.”

At issue is the Dotty’s business model — which has come under fire by state gaming regulators, rival tavern operators and local elected officials — over the past few years. The locations offer minimum food and beverage and 15 slot machines in what many have termed as a slot parlor or slot arcade.

“When I walk into a tavern, I know what I see,” Commissioner Larry Brown said. “Dotty’s is something different. No one is going to convince me that gaming is incidental to the primary business.”

LIKE A TYPICAL TAVERN

In 2011, the Clark County Commission changed tavern regulations to force Dotty’s to appear more like a typical tavern, with bar-top slot machines and a restaurant.

However, Commission Chairman Steve Sisolak — backed by the the Nevada Resort Association, tavern operator Golden Gaming and locals casino giant Station Casinos — believed Dotty’s skirted the regulation and drafted new rules.

The new ordinance has two requirements: The tavern facility must operate a full-service kitchen and embed more than half of the location’s slot machines into a bar top, or show that slot machine revenue is 50 percent or less than other revenue.

If a tavern doesn’t meet at least one of the conditions, the number of slot machines it’s allowed could be slashed from 15 to seven. The ordinance also specifies the size of the bar and the hours of operation for the kitchen.

Dotty’s and other tavern operators complained that they complied with the 2011 changes and are now being punished a second time.

A partner in Jackpot Joanie’s said he spent $100,000 per location to make changes in 2011. He would need to spend another $2 million this time around.

Golden Gaming attorney Sean Higgins warned commissioners that rejecting the ordinance would lead to “slot parlors on every corner.”

He said Dotty’s didn’t comply with the 2011 changes.

“Gaming is a privileged license,” Higgins said. “If people had complied in 2011, we wouldn’t be here today.”

The issue that surfaced Tuesday revolved around grandfathering in older locations that might not meet the new requirements. Commissioner Susan Brager offered an amendment before the hearing that allows locations opened before 2006 to be exempt from the ordinance. Other locations not in compliance would have to meet several conditions within a year or face the loss of their business license.

An amendment offered by Commissioner Chris Giunchigliani — which would exempt all currently operating taverns from the ordinance — was rejected.

“Government should never stifle competition,” Giunchigliani said. “Go forward from today’s date, clarify bar tops and be done with it.”

DOTTY’S A TARGET

The target of the ordinance is Dotty’s, which has 120 taverns statewide, including 80 with 15 slot machines each. Only 25 of the company’s 28 locations in unincorporated Clark County fall under the proposed changes.

Dotty’s Chief Operating Officer Mike Eide said bringing those locations into compliance with the new ordinance would cost the company $10 million. Eide said Clark County officials “did not express dissatisfaction” with how the company’s slot machines were located following an inspection last year.

He called the ordinance “poorly drafted” and contains “serious intended or unintended consequences.”

Dotty’s, operated as Nevada Restaurant Services, opened in Las Vegas in 1995 with one location on Maryland Parkway. State gaming regulators, who approved Dotty’s, didn’t think the company would succeed.

State gaming and local gaming law requires that revenue produced by slot machines in nonrestricted locations — 15 machines or fewer — be incidental to a business’s primary purpose, such as selling food.

However, a definition of the word incidental has never been given, leaving the figures determination to regulators and government bodies.

Most Dotty’s locations collect far more then 50 percent of their revenue from gaming.

The commission hearing room resembled a sports arena with competing fans on opposite sides. Both employees of Golden Gaming’s taverns, and Dotty’s employees wearing red T-shirts, testified that passage or failure of the ordinance could cost jobs.

Golden Gaming Chief Operation Officer Steve Arcana showed a video about the company’s employees.

“Dishwashers, chefs, bartenders,” Arcana said. “These are the real the employees of real taverns.”

Tony Hanshaw, a Dotty’s bartender, said he’s not sure what would happen if the ordinance passes.

“Station wants us closed, PT’s wants us closed. Maybe you want us closed,” he said. “I don’t want to be on welfare.”

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871. Find him on Twitter: @howardstutz.