Release of casino regulator’s letter on heels of nightclub fine isn’t coincidental

I'm not exactly sure, but I think Gaming Control Board member Randall Sayre put the entire casino industry on notice.

The language of Sayre's July 21 letter addressed to "ALL LICENSEES AND INTERESTED PARTIES" seems clear enough. He not only calls into question the business practices of some unnamed licensees, but he also "invites" those licensees to join the control board in a proposal that would create "informal seminars covering our collective areas of concern."

You know, get together for coffee. Have a chat, and, oh, by the way, about the drugs and prostitution flowing like a river at your nightclubs. Gotta take care of that.

While I wouldn't claim to possess an expertise in gaming regulation or a comprehensive institutional memory of the casino business, I can say without hesitation I've never read anything like Sayre's letter. (It's available online at the control board's Web site at gaming.nv.gov.)

The casino regulator appears to be calling out the industry. Are appearances deceiving?

Control board members have gotten steamed when they think they're getting the runaround from an individual licensee. Prospective casino operators who have failed to be forthcoming have had their heads handed to them on occasion. It's not common, but I've seen control board members lose their tempers in meetings. Former control board members Gerald Cunningham and Bobby Siller weren't shy about speaking their minds.

But I've never seen one send the entire industry a letter in essence calling operators a bunch of regulatory round heels who have forgotten they're in a licensed and privileged industry. Sayre is more polite than that, of course.

"Either through lack of knowledge or apathy, licensees are creating regulatory challenges in areas requiring corrective action," he writes.

No kidding.

He then listed "just a few" examples: "The conduct of promotions; Approval and conduct of tournaments and charitable events; Race and Sports Book Operations; Intellectual property theft, and Questionable and misleading advertising."

Color me intrigued.

How many more examples are on Sayre's master list?

I notice he wasn't joined in the authorship of the letter by control board Chairman Dennis Neilander and member Mark Lipparelli. This might have an innocent explanation, but it makes me wonder if Sayre's eating lunch by himself these days down at gaming control headquarters.

That's not the only question raised by the letter. Its release on the heels of a $500,000 fine at Privé nightclub inside Planet Hollywood isn't coincidental.

If I didn't know better, I'd suspect the letter was written to help soften the blow of some pending regulatory and law enforcement investigations that promise to embarrass the casino industry.

The Privé investigation established that the club's employees dumped drunken customers inside the casino. The employees were also suspected of physically and sexually assaulting patrons. It's the kind of stuff county business license officials and the district attorney's office should feast on.

Meanwhile, I'm waiting to see whether the IRS criminal investigation of Pure nightclub at Caesars Palace results in indictments.

Local sports betting insiders are still wondering what happened at the Palms race and sports book after the illegal bookmaking and money laundering operation of brothers Jeffrey and Michael Jelinsky was smashed by federal investigators. The diminutive Poker Palace in North Las Vegas was fined $250,000 for allowing illegal bookmakers to lay off their bets there.

Perhaps the most unintentionally entertaining moment in Sayre's missive is his statement that casino licensees might have committed regulatory sins "through a lack of knowledge or apathy."

How understanding of him.

The fact is that gaming licensees are put on notice when they receive their license that it's a privilege. They hire gaming lawyers such as Frank Schreck and Robert Faiss, who helped write the state's gaming regulations. Major gaming companies keep teams of CPAs and former members of local and federal law enforcement in their stables. Those companies also have compliance committees tasked with ensuring the regulations are followed.

There is, quite simply, no reasonable excuse for a major casino corporation to claim a "lack of knowledge," and the fact they sublease their controversial nightclubs reeks of an attempt to establish plausible deniability.

That's the trouble with Sayre's letter. It talks a little bit tough, but then only suggests regulators and licensees get together for some "informal seminars" and only "depending upon industry interest."

Far from laying down the law, Sayre is doing the casino industry a PR favor at a time it figures to need one.

John L. Smith's column appears Sunday, Tuesday, Wednesday and Friday. E-mail him at Smith@reviewjournal.com or call (702) 383-0295. He also blogs at lvrj.com/blogs/smith/.