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Gaming companies sue to block Strip arena petition

CARSON CITY — A lawsuit was filed Wednesday challenging a petition for a special taxing district to fund a 20,000-seat sports arena on the Strip.

A group that includes MGM Resorts International and Boyd Gaming Corp. filed the lawsuit in Carson City, alleging fraud in the gathering of 157,000 signatures.

The measure would authorize a 0.9 percent sales tax to be imposed in a three-mile area encompassing the Strip, with the aim of targeting mostly tourists. The revenue would help fund a half-billion-dollar arena on land owned by Caesars Entertainment.

Several Strip resorts oppose a publicly funded arena, arguing that it would pose unfair, subsidized competition to private venues.

"We’ve been expecting there would be the challenge," said former Clark County Commissioner Bruce Woodbury, whose nonprofit group is working with Caesars to develop the arena. "I’ve gotten good advice that the petitions were valid … but that’s for the court to decide."

Woodbury, an attorney, said he will press the District Court judge to rule as quickly as possible. That way, if his group wins, the measure can be put to the Legislature by the time the session starts on Feb. 7, he said.

Lawmakers must act on the proposal within 40 days or it goes to voters in the 2012 general election.

Scott Scherer, an attorney who represents the opposing group, argues that those who collected signatures engaged in "rampant fraud and misconduct."

"We strongly believe that the signature-gathering process was tainted and that the signatures should be considered invalid," Scherer said in a written statement.

He will ask the Secretary of State to withdraw the initiative from the Legislature.

Scherer contends "false advertising" was used to mislead voters into signing a petition for a tax increase that would benefit a single company.

Some workers circulating petitions told people in Northern Nevada that the arena would be built in their county, rather than the Las Vegas area, Scherer said. That’s untrue because the initiative limits the location to the Caesars site, he said.

Workers jotted information on petitions that is required by law to be completed by those signing them, Scherer said. And some filed false affidavits stating they had personally circulated the petition and obtained the signatures, when the evidence proves otherwise, he said.

Caesars and Woodbury’s group decided to petition for the sales tax after county commissioners in June rebuffed all proposed arenas requiring public money.

The same casino operators challenged the petition three months ago, saying it contained misleading language and omitted important details. A District Court judge rejected their arguments and upheld the petition.

Woodbury said if the initiative survives the court battle, he and other arena supporters will lobby the Legislature to avoid having to wait two years for the measure to go on the ballot. Still, he realizes this is a tough time to push for a sales tax when lawmakers must wrestle with a $3 billion state budget shortfall.

"Timewise, we would prefer a legislative decision, but we understand there are obstacles," Woodbury said.

The Associated Press contributed to this report. Contact reporter Scott Wyland at swyland@reviewjournal.com or 702-455-4519.

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