A LAWYER PARTS THE CURTAIN OF NOSTALGIA – NEVADA’S GAMING ODYSSEY

By U.S. Senator Richard H. Bryan (Ret.)

When the Comstock Lode was discovered near City in 1859 hundreds of prospectors, entrepreneurs, and adventurists crossed the Sierra Nevada and came to Nevada seeking their fortune. They brought with them a gambling culture.

In 1861, the Nevada Territory was created, and Abraham Lincoln appointed James Nye as the Territorial Governor. Nye opposed games of chance and urged the Territorial Legislature to ban them. Responding to the Governor’s request, the legislature imposed stiff penalties for running or participating in a game of chance.

Thus, began a 70-year odyssey with Nevada decriminalizing gambling in 1869 and then reversing course at the height of the Progressive Era and banning nearly all forms of gambling in1909.

9 NEVADA GAMING LAWYER SEPTEMBER 2020 With the decline of mining, happens here, stays here” continues Nevada’s population at the turn the mystique that Nevada is a very of the 20th century had declined to different place. 45,000. In desperate need of a new industry and recognition of the From 1931 to 1945, gambling was change in the social mores of the regulated at the local government country, Nevada liberalized its level. Gaming establishments were divorce laws, shortening the period treated like other businesses and to establish a Nevada residence and cities and counties issued business expanding the grounds for divorce. licenses and collected taxes. The Among the first to take advantage state played no role. That was of the new law was Mary Pickford, about to change. WWII brought “America’s Sweetheart,” who came thousands of GI’s to train at Stead to Nevada to get a divorce so she Air Base in Reno and at the Las could marry another Hollywood Vegas Army Air Corp Base. In 1941, icon – Douglas Fairbanks. Her Tommy Hull opened the El Rancho lawyer was Pat McCarran. The Vegas in , on the highway initial reaction by the bar was to Los Angeles. The following year, outrage, at the transparent the Last Frontier opened nearby. attempt to create a short time The Las Vegas “Strip” was born. Nevada residence. Cooler heads Gambling was becoming a major prevailed as more pragmatic industry and a new chapter in the lawyers recognized this was a new opportunity for the legal profession evolution of gambling regulations and in short order Reno become was about to begin. the “Divorce Capital” of America.

With the onset of the Great The 1945 legislature enacted Depression and the continuing legislation that would transform decline of mining, once again gaming regulation. The legislation Nevada was in search of a new required a state gaming license industry. A freshman legislator prior to the issuance of a local from Winnemucca, Phil Tobin, gaming license and imposed a introduced legislation legalizing “gross gaming tax” on licensees. gambling and Governor The Nevada Tax Commission was Balzar signed the bill. The initial designated as the state agency to framework for Nevada’s largest issue gaming licenses and to collect industry was now in place. Mayme the gross gaming tax. Calculation Stocker’s Northern Club in Las of the gross gaming tax due was Vegas and the Bank Club in Reno simple: all of the licensees’ were among the first gaming winnings minus payouts to winning licenses issued. The combination customers. The gross tax provision of Nevada’s liberalized divorce was controversial. Governor laws and casino gaming subjected Carville favored enhanced taxes Nevada to harsh criticism. Nevada on the gaming licenses to be was branded as a modern-day issued rather than a gross tax. Sodom and Gomorrah. That legacy Notwithstanding his opposition to a has faded but the Las Vegas gross gaming tax, the bill approved Convention & Visitor’s Authority’s by the legislature contained a gross highly successful campaign “What gaming tax and Governor Carville

NEVADA GAMING LAWYER SEPTEMBER 2020 10 allowed the legislation to become crime, “The Mob,” looking to 14 cities, including Las Vegas, and law without his signature. The expand its operations, saw an called 600 witnesses to testify. decision to impose a gross gaming opportunity in the burgeoning tax on the industry was farsighted. gaming mecca of Las Vegas. Television was in its infancy, but an The gross revenue collected in the Siegel persuaded his friend, Meyer estimated 30 million people tuned in. The gangsters were the star most recent biennium was $1.5 Lansky, that Las Vegas presented witnesses and their testimony or billion and represents 18.5% of a new opportunity. Lansky and invocation of the Fifth Amendment the total general fund. Siegel, joined by and , purchased the El was riveting theater. The national The new legislation was silent on Cortez in 1945. “The Mob” had publicity Kefauver received earned the question – what authority, if established its first gaming beach him a vice presidential nomination any, the Tax Commission had to head in Nevada. The following on the national Democratic ticket inquire into the background of year, they sold the . in 1956. prospective licensees. The Tax Together with Billy Wilkerson of Kefauver brought his Committee to Commission turned to Attorney the Hollywood Reporter, they Las Vegas on November 15, 1950 at General, , later a U.S. began development of the the Federal Courthouse, now the Senator, for guidance. Bible’s Flamingo – placing Siegel in site of the . The Las Steve Cukrov - stock.adobe.com

response was one of the most charge. Plagued by costly overruns Vegas hearing was less dramatic significant legal opinions in the and a disastrous opening, “The than some of the earlier hearings, history of Nevada’s regulation Mob” had had enough and Siegel but the testimony of William J. of gambling. Bible opined that was murdered gangland style in Moore, a manager at the Last although the newly enacted Los Angeles. His assailants were Frontier and a member of the State legislation did not expressly confer never identified. Tax Commission, exposed the role upon the Tax Commission the of “The Mob” in controlling the Elsewhere in America a reform authority to conduct background “race wire.” In the days before cell movement swept across the checks, the legislature, by phones and TV, information on Country – closing many illegal authorizing the Commission to sporting events was transmitted to gaming operations in a number grant gaming licenses, included the by a “race wire.” The of cities. Organized crime had the implicit authority to inquire information transmitted included prospered during the Prohibition into the background and probity not only the results of a horse race, Era and sought to expand its of the applicants seeking a license. but included the odds and payoff. The modern era of the state’s gambling interests. “The Mob” primary role in regulating gaming and its activities were prominently Moore explained that , and collecting taxes had begun. featured in major newspapers and a few years earlier, had gained other publications engendering control of the race wire. Casinos Nevada, and Las Vegas in much negative publicity. could only get access to the wire particular, experienced enormous if they paid Siegel. No payoff, no growth during WWII and the In 1950, Senator Estes Kefauver access. The 1949 State Legislature years that followed. Las Vegas’s from Tennessee introduced a changed that and mandated equal population tripled from 8,000 to resolution to investigate the access for all casinos. nearly 25,000 in the 1950 census. role of “The Mob” in interstate In 1941, J. K. Houssel Sr. opened commerce. The The Kefauver Committee hearing the El Cortez Hotel and Casino Special Committee to Investigate exposed the activities of “The Mob” in . The Ongoing Crime in Interstate in Las Vegas and led to threats property quickly turned a profit. Commerce were formed and by Congress to impose new taxes On the “Strip” the El Rancho Vegas chaired by Kefauver. The on Nevada’s gaming casinos. and Last Frontier were generating Kefauver Committee, as it came Responding to the potential impressive numbers. Organized to be known, held hearings in federal threat, the state took a

11 NEVADA GAMING LAWYER SEPTEMBER 2020 more aggressive role in regulating the be licensed. The bill was During the 1977 legislative session, casino industry. In 1955, the state controversial. George Dickerson, I served in the State Senate on the legislature created the Gaming a former Clark County District Judiciary Committee. Nevada was Control Board (“Board”) and made Attorney and then Chairman of the about to lose its status as the only it a division of the Nevada Tax Commission, resigned as a matter state to have legalized casino Commission. Its purpose was to of principle because he was gambling. Nevada’s gaming eliminate undesirable elements in concerned this would weaken the regulators were about to embark Nevada gaming and to require state’s control over gaming. The upon uncharted waters. Protecting regulations for the licensing and legislation passed. Today, the Las the integrity of Nevada’s gaming operations of gaming. Vegas Strip is dotted with casino was the guiding principle. Among properties costing into the billions the potential issues: what control, Four years later, Governor Sawyer to construct. The amount of capital proposed legislation removing if any, would Nevada regulators to construct such properties could have with respect to a Nevada the Tax Commission from its not have been amassed without a licensee whose conduct in New role in regulating gaming and corporate structure. creating a new entity – the Nevada Jersey reflected unfavorably on Gaming Commission (“Commission”). Nevada’s industry? What if New

Under the new structure, the Board Jersey’s regulations were weaker would make recommendations on DEPUTY DISTRICT than Nevada’s and held New licensing and disciplinary issues. ATTORNEY – STATE Jersey’s licensees to a lower The final arbiter would be the standard? There was much

Commission. As an interesting aside, LEGISLATURE uncertainty. New Jersey had not yet two state Senators – Carl Dodge from As a Deputy opened a gambling establishment. Fallon and Pete Echevereia from and Public Defender, I had no The answer was the Foreign Washoe County – [who would later experience with gaming regulatory Gaming Act. The genius of the become Commission chairmen] held issues. The only case I prosecuted act was that the Nevada licensee different points of view on the that involved a gaming casino was would not only have to comply proposed legislation. Dodge opposed a dealer at the Riviera Hotel it, Echevereia supported it. with New Jersey regulations who was charged with embezzling but would have to operate in gaming chips. Judge Mowbray Sixty years later, Nevada’s accordance with Nevada’s standard allowed cameras in the courtroom bifurcated regulatory structure is of honesty and integrity. Any and when I brought a crap table still regarded as the Gold Standard. action by a New Jersey licensee into the courtroom, it generated As legalized gambling spread in New Jersey that posed an a lot of publicity. The Los Angeles across America and the world, unreasonable threat to the control times featured the crap table in many jurisdictions adopted the of gaming in Nevada would subject its cover story. The defendant Nevada model. the New Jersey licensee, who also was convicted. held a Nevada gaming license, to As new casinos grew in size and disciplinary action in Nevada. cost, the old model requiring every In 1968, I was elected to the person who had any interest in a State Assembly and among my The Foreign Gaming Act was gaming property to come forward other committee assignments referred to the Senate Judiciary for licensing was impractical. In was the Judiciary Committee. Committee. It was my first real 1969, newly elected Governor The Judiciary Committee had experience with the gaming proposed a corporate jurisdiction over gaming issues; regulatory process in Nevada. gaming act permitting corporations none of the gaming legislation As a member of the Committee, to obtain gaming licenses, the Assembly Judiciary Committee I played an active role in securing obviating the requirement that processed was groundbreaking its enactment. It would prove to be everyone with an interest must or controversial. a valuable experience in the future.

NEVADA GAMING LAWYER SEPTEMBER 2020 12 ATTORNEY I offered the Chief Deputy job to Stan Hunterton (then an him and he immediately accepted. Organized Crime Strike GENERAL’S OFFICE I charged Ray with selecting a team Force prosecutor), was lead Bob List, as Attorney General, had of deputies. His first choice was prosecutor on the case, and assembled an impressive group of Phil Pro, a former colleague in the came to Nevada a couple of Deputy Attorneys General. Shortly U.S. Attorneys office and later a years later. The conviction after my election, I interviewed Federal District Court Judge for resulted in immediate them and decided to retain most 36 years. Walt Lloyd, Bill Hammer, revocation of the gaming of them. and Patty Becker were added to license, and the Board and the team. They were all young, Commission ordered the My most pressing challenge was intelligent, and eager to prove that casino closed. Although to fill the vacancy created when they were up to the task. Relations there was no statutory Bud Hicks, the Chief Deputy in with the Board were frayed and on authority; Ray and his the Gaming Division, resigned to occasion that presented its own set team devised a plan to accept an offer to join a prominent of problems, but they functioned appoint a supervisor so law firm. Bud enjoyed the respect well as a team. that the casino would not of the Board and Commission and have to be closed but There was no time for on the job members of the bar who regularly management would be training. Issues at the Aladdin, appeared before state regulators. removed from any Tropicana, and Stardust surfaced Filling that vacancy would be a operational control of shortly after Ray and his team tall order. the casino. Judge Harry took over. Clairborne granted injunctive relief reopening The gaming industry was in transition. Publicly-traded the casino, under a corporations were beginning to 1. The Aladdin Hotel Commission appointed supervisor, Leo Lewis. move into the gaming marketplace. In the summer of 1979, Organized crime was suspected of The following year, I The Aladdin Hotel Corp., argued the appeal in the being involved in several gaming and its principals, James properties and I anticipated the Ninth Circuit, and the Abraham, James Tamer, Commission’s closure Attorney General’s office would be Charles Goldfarb, and Ed playing a major role in advising order was affirmed. Monazym were convicted in Wayne Newton and Nevada’s gaming regulators and federal court in Detroit of a defending their decisions on any Ed Torres then bought racketeering conspiracy to the Aladdin. license revocations. allow hidden owners to control the hotel/casino. As I pondered my choice, I had a chance meeting with , then the Chairman of the Commission. He suggested Ray Pike, who he characterized as very smart and with considerable experience in the U.S. Attorney’s office. The name Pike was familiar to me. Doug Pike and I had taken the bar together in 1963, and his son, Ray, had been a member of the Las Vegas High School debate team. I vaguely remembered him as an impressive debater who I had once judged in a debate.

I placed a call to Ray and scheduled a meeting with him. Although Ray had no gaming experience, I was impressed with him. In checking with his colleagues in the U.S. Attorney’s office they were fulsome with praise.

13 NEVADA GAMING LAWYER SEPTEMBER 2020 2. The Tropicana development, as it brought because the investigation had tighter regulation from the not yet been completed. The legitimate money here SEC, as well as the fledging was provided by owner Securities Division at the The Board, consisting of Roger Mitzi Stauffer Briggs, who Board. The rest is history. Trounday, Richard Bunker, and had a lot of money, but was Jack Stratton, unanimously unsophisticated and naïve. approved their recommendation Her partner was an RV for a limitation on Sachs and motorhome millionaire Tobman. Two weeks later, the from Minnesota named Commission reversed the Board Deil Gustafson. The hidden on a 5-0 vote. Trounday, the owners were the Civella Board Chairman, believed he brothers (Nick & Carl) from had been “stabbed in the back” City, and their front and immediately resigned man was Joe Agosto. Their from the Board. world turned upside down when Carl Thomas went to By the time Ray Pike left the Kansas City, Missouri to Attorney General’s office to meet with the Civella’s in accept an offer in the private the basement of their sister’s 3. The Stardust sector, the team he had assembled home to describe how he had become seasoned gaming had orchestrated the slot The genesis for the Stardust attorneys with considerable skims at the Bingo Palace issues dated back to the experience. The position of Chief 1970s with the Argent Deputy in the Gaming Division Corporation. Frank enjoyed a high profile in the Rosenthal, Tony Spilotro, gaming industry and both Bud and the mob had Hicks and Ray Pike had received been looting the Casino for attractive offers in the private years. After reviewing the sector when they left the Attorney evidence, Pike and Pro General’s office. Legal skills took the lead in filing a would be the primary criteria for complaint on behalf of the Ray’s replacement, but the ability Board that resulted in the to work with the Board and ouster of Argent and the Commission would be important. Chicago mob and a fine of I wanted a Chief Deputy who was one million dollars. independent and was strong enough to provide the Board and There were questions about the the Commission with the best replacement owners, Herb Tobman legal advice possible even if the and Al Sachs. Pike and Pro Board did not like the advice. and Stardust. Unknown to recommended a one-year license the participants, the which would require them to Department of Justice renew their gaming license the Organized Crime Strike following year. The rationale for Force in Kansas City and this strategy was, if problems the FBI had a bug in the surfaced with the new owners, basement and recorded the burden would be on them to the whole story. When get approval for a new license. the wiretap was unsealed By contrast, if Sachs and Tobman and hit the press, the were issued a full license and participants were toast. problems surfaced questioning The silver lining was that their suitability, the burden in late 1979, Ramada Inns would be on the Commission purchased the Tropicana. to prove their unsuitability. Patty Becker came into the Gaming I think this represented The FBI had provided Pro and Division as a part time deputy. the entry of the first Pike with information that the Major cases like the Aladdin, outside publicly-traded Bureau was conducting a Tropicana, and Stardust were very corporation to enter the skimming investigation that was time-consuming, so shortly after major gaming market. wide ranging. This information coming to the division, she became This was a significant could not be made public a full time Deputy in the Gaming

NEVADA GAMING LAWYER SEPTEMBER 2020 14 Division. I spent a lot of time with purpose – to extend casino play. The plaintiff was engaged in the Patty and other gaming deputies. I “The Mob,” however, had retail clothing business on the found her to be smart and tough. effectively used it as a way to get premises of the Las Vegas Hilton Although she was the youngest large sums of money out the back and the Stardust . A deputy in the division, she could door and avoid paying taxes. A unanimous decision by the hold her own on any legal issue or marker was issued – not for casino Supreme Court rejected the strategy being considered. I liked play – but to funnel money to the plaintiff’s argument and upheld that quality about her. In the early organized crime owners. the enforceability of the regulation. 1980s, gaming was a man’s world; no woman had ever served as the To close that loophole, the In Spilotro v. ex rel Gaming Chief of the Gaming Division. Commission adopted a series of Commission, 99 Nev. 187, the I talked to Patty about some of the regulations, including requiring plaintiff, Anthony J. Spilotro, challenges she might face. She administrative and accounting challenged the constitutionality of acknowledged that there would be control systems. The protocol NRS 463.157, which empowered challenges for her as a woman but required casinos to document the the Commission to adopt said she was ready for them. For markers issued with detailed regulations establishing a list of me, the issue was how would the information and to prove that the excluded persons, the so called industry react to a woman being casino had made a legitimate effort “Black Book,” “who are to be appointed? I knew she was the to collect. If the casino met the excluded or ejected from any right choice and I was prepared to requirements, the markers could be licensed gaming establishment.” deal with any fallout. My choice deducted from the casino’s gross The Commission on December 7, was a fortuitous one. She would winnings and designated as 1978, issued an order placing successfully argue and prevail “regular markers;” if not, the Spilotro on its list of persons to on three of the most important marker was deemed irregular be excluded. The court affirmed cases that went to the Nevada and no deduction was allowed. the constitutionality of the Supreme Court during my time The regulations adopted by the “Black Book,” but required the as Attorney General. Board were the subject of the Commission to prepare findings appeal. In a Per Curiam decision, of fact that was the predicate for In Summa Corp. v. State Gaming the Supreme Court upheld the their action. Control Board, 98 Nev. 390, the Commission’s regulations. In my four years as Attorney issue presented to the court was the General, the state made great deductibility of uncollected markers In State of Nevada v. Glussman, progress in removing elements of from the state gross gaming tax. 98 Nev. 412, the case before the organized crime from the gaming Since the enactment of the gross court was a challenge to the industry. As we shall see, there was gaming tax by the 1945 legislature, constitutionality of a statute that more to be done, but the days of casinos have been taxed on their provided that “any person or entity “The Mob” in Nevada’s gaming gross earnings minus payouts to that does business on premises industry were coming to an end. gaming customers. Credit extended occupied by a gaming licensee to gaming customers for casino play may be required to apply to Much credit goes to the is evidenced by a “marker”. A Nevada Gaming Commission for legal work of a young, “marker” has a legitimate business a determination of suitability.” talented, and dedicated staff of attorneys who went to toe to toe with some of the most experienced attorneys in the state and generally emerged victorious.

GOVERNOR’S OFFICE As I took office in January of 1983, the national recession continued to have a severe impact on Nevada. I was forced to make painful budget cuts. The gaming industry felt the pain as well – visitor

15 NEVADA GAMING LAWYER SEPTEMBER 2020 volume was down and “high roller” served for 18 years in several travel to Nevada had declined. public offices and I valued my reputation for integrity. During my campaign for Governor, gaming issues surfaced and so I My appointments to the Board talked frequently with Paul Bible. reflected my philosophy – that Paul advised me that “there was a there would be no interference general perception that the ability from the Governor’s office. The to obtain gaming licenses was Board should follow the evidence. centered on having the right I appointed Jim Avance, a former influence.” Treating everybody North Las Vegas Chief of Police, the same – no special favors – and Dick Hyte, a CPA. I had been became a part of my campaign very impressed with Patty Becker platform. The day I was sworn as the Chief Deputy in the Gaming in as Governor, I announced my Division, so I appointed her to the appointment of Paul Bible as the remaining seat on the Board. No The Commission issued an Chairman of the Commission. woman had ever served on the emergency Order of Suspension Paul’s family had deep roots in Board and it would be 40 years and Appointment of a Supervisor. Nevada. His father had been the before another would be appointed. The Stardust challenged the Order Attorney General and a United I made it a point to take Patty to of Suspension and Appointment States Senator. My father had visit with several key gaming of a Supervisor. The District been a member of the debate operators so that there would be Court affirmed the decision of team with Alan Bible at the no mistake that she enjoyed my the Commission, which was University of Nevada. Paul was a complete and total confidence. immediately appealed to the highly respected member of the For some time there had been Nevada Supreme Court. The Nevada Bar and had represented rumblings about skimming at the Supreme Court held an emergency gaming clients. Stardust. In December of 1983, it hearing and suggested that the Before accepting the appointment, came to a head. The FBI unsealed Commission hold a hearing and Bible made it clear that if I ever affidavits alleging skimming. The allow the licensee an opportunity requested him to vote a certain Board followed up with its own to challenge the Commission’s way on a gaming matter that he investigation and submitted to the emergency order. During the would tender his resignation. Commission a 45-page affidavit hearing, a settlement was entered I assured him that would never outlining how the skim was into between the Stardust and the be an issue; that it was his job to accomplished and requesting the Board. Among its provisions was a make the decisions based on the Commission close the Stardust stipulation that the Stardust waive evidence before him. By the time ex parte without a hearing. its right to an appeal. Presciently, I was elected Governor, I had When Paul Bible received this as it turned out, Bible asked request, he called me and I the Stardust principals if they arranged to meet him that evening voluntarily agreed to the terms of at his Reno office. I was heading the settlement. They responded in to the Prospector Club with the affirmative. Months later, the Bonnie for a Christmas party. I Stardust filed suit in U.S. District was wearing a tux and Bonnie Court asserting they had been wore a formal gown. Paul outlined coerced into signing the Control the evidence contained in the Board’s settlement. The District Board’s affidavit and asked me Court and the Ninth Circuit Court what I thought. My response was, of Appeals ruled Bible’s colloquy “Paul, you’re Chairman of the with the principals foreclosed Commission, now Bonnie and I that contention. have a party to go to.” The Stardust principals also Bible was sensitive to the timing owned the Fremont and the of the Commission’s actions. Sundance casinos. The actions Closing the casino would put a lot taken by the Commission resulted of people out of work at Christmas in the sale of all three of the time. The legislature had enacted casino properties. a supervisors statute allowing the gaming establishment to remain The 1983 session of the legislature open but under the operational authorized the Commission, upon control of the Supervisor. the recommendation of the Board,

NEVADA GAMING LAWYER SEPTEMBER 2020 16 to adopt regulations governing Should control be private or pari-mutuel wagering. The public? What is the role of legislation did not mandate simulcasting? John O’Reilly the enactment of pari-mutuel urged me to convene a meeting regulations. That was left to of the Gaming Policy Committee. the discretion of the Board and the Commission. The Gaming Policy Committee is chaired by the Governor and The old world of gaming was includes representation from the changing. A new world of Commission, Board, state electronic wagering had begun. legislature, the gaming industry, As the premier gaming destination and members from the public at in the world, the Nevada large. I appointed John O’Reilly as legislature wanted to be sure a public member to the Committee. that Nevada would not be left Prior to the committee convening, behind if there were new O’Reilly prepared a report on the opportunities to be explored. history of the Committee and the declared this was not the time issues the Committee had for a pari-mutuel structure. taken up. The Committee had met on 30 occasions over 22 At the conclusion of the meeting, years. In reviewing issues the it was clear that there was little policy committee had appetite for moving forward. Jim addressed in those past 22 Avance, the Chairman of the Board, years, I concluded a pari- moved that there was “an mutuel regulatory structure insufficient wagering base to was an appropriate one for support either a local or statewide the committee to consider. system…and therefore…para mutuel regulations (should) not I convened the Policy be adopted…at this time.” John Committee on October 27, O’Reilly seconded the motion and 1983, in Las Vegas. The the Policy Committee unanimously committee received the approved Avance’s motion. John testimony of several O’Reilly had done his homework. witnesses who provided He was an active member of the detailed explanations of how Committee and his questions of the a pari-mutuel pool worked. witnesses were always insightful. The witnesses generally agreed that an intrastate pool In the 1980s, Ivan Boesky was a would be too small. One Wall Street trader who had become witness – Joseph Joyce, the the “King Arbitrager.” Casting his President of the Arlington eye on Holiday Inns, he acquired Racetrack, was particularly 8.6% of their stock. He then rhapsodic about the benefits approached management of to the state. Other witnesses Holiday Inns informing them were less enthusiastic. that he intended to acquire a controlling interest in Holiday There was a tremendous Inns and replace the company’s amount of information to be management. This could be digested and I decided that a Following the legislature’s avoided, he added, if Holiday Inns follow up meeting would be adjournment, there was much purchased his existing stock at a needed. The follow-up meeting discussion about pari-mutuel substantial premium above its met in Reno on May 16, 1984. wagering. Among the issues market price. Holiday Inns The Nevada Association of Race raised: would the costs incurred to purchased Boesky’s stock at a and Sports Book Operators were create a regulatory structure premium and Boesky made unanimous in their opposition. exceed the revenue generated? millions. This practice came to Warren Nelson, one of Nevada Should the pari-mutuel pool be be known as “greenmailing.” gaming icons, who operated the intrastate only or interstate? What Cal-Neva Casino in Reno, was Boesky’s success caught the security issues would be raised? called back to testify and he attention of Donald Trump. Bally’s

17 NEVADA GAMING LAWYER SEPTEMBER 2020 was his target of opportunity. crime a top priority. Frank Trump’s actions generated a fair “Lefty” Rosenthal and Carl amount of publicity and he was Wesley Thomas were added accused of “greenmailing.” I got a to the “Black Book.” call from Trump’s local counsel requesting a meeting with me at John assumed the chairmanship the Governor’s office in Carson at a time of unprecedented City. At the appointed time, Trump growth in the gaming industry. and his local counsel arrived in my John brought his organizational office. After a brief introduction, skills to bear and established Trump launched into a soliloquy procedures for the Commission about how much he had heard to receive periodic updates from about me and how eager he had the Board. Some gaming been to meet me in person. I may establishments had compliance not be the sharpest knife in the committees, but under John’s drawer, but I had been to a few tenure they became the rodeos and I know when someone established practice. is “blowing smoke.” The meeting ended with Trump vehemently During my tenure as Governor, protesting that he was not trying the history of gaming in Nevada to “greenmail” Bally’s. evolved and provided the foundation for not only gaming Bible, as Chairman of the As Bible’s time as Chairman was in Nevada but the expansion Commission was contacted by coming to a close, he informed of gaming around the world. Bally’s attorneys who inquired me that he would not seek The gaming regulatory process as to what Nevada regulators reappointment. With the pioneered in Nevada as well as could do to prevent Trump from legislative session on the horizon the entertainment experience acquiring a controlling interest in he recommended that he resign pioneered in Nevada is the Bally’s and then “greenmailing” early so that his successor could foundation of world class them. Bible said nothing in be appointed in time to prepare entertainment complexes that Nevada’s gaming regulations for the legislature which would we now see not only around the would prevent Trump from convene in January. That made United States but throughout moving forward. sense to me. the world. Trump, however, owned two John O’Reilly had come to Nellis casinos in Atlantic City and Bally’s Air Force Base as a Staff Judge owned one. Bible informed the Advocate. He liked what he saw attorneys that under New Jersey and recognized an opportunity law no gaming licensee could own in Las Vegas. He took the more than three gaming properties Nevada Bar and joined a local in New Jersey. Steve Wynn was law firm. John and I were unhappy with the regulatory officed in the same building and environment in Atlantic City and we saw each other several days might be willing to sell the Golden a week. As I prepared for my Nugget, his casino there, so he campaign as Attorney General, could develop a new property in I shared office space with him. Las Vegas. If Bally’s purchased the We worked well together. His Golden Nugget, Trump would be participation as a member of prevented from acquiring Bally’s the Gaming Policy Committee because, with Trump’s two existing was impressive. John also had gaming properties and Bally’s new an accounting background and acquisition of the Golden Nugget, an M.B.A. I offered him the U.S. SENATE Trump would own more than three chairmanship and he accepted. In the decades following Nevada’s properties in Atlantic City. Bally’s As with Paul Bible, I told him there legalizing gambling, Nevada was purchased the Golden Nugget and would be no interference from the viewed by many as a pariah state. Wynn used the proceeds to acquire Governor’s office. The transition Under the common law, gambling property on the strip in Las Vegas was a smooth one. debts were unenforceable. The and to build . Some enforcement of such debts was would say that Trump had a role Under John’s chairmanship the contrary to public policy and that in the development of the Las Commission continued to make was the law in Nevada as well. Vegas strip. persons with ties to organized

NEVADA GAMING LAWYER SEPTEMBER 2020 18 In the Congress, gaming was not effectively blocked federal a favored industry. Unfavorable legislation that would have hurt The first challenge came with the national publicity about the Nevada’s gaming industry. introduction of the Professional activities of “The Mob” and its and Amateur Sports Protection infiltration into Nevada’s gaming In 1989, when I came to the Act. Its avowed purpose was industry placed Nevada gaming Senate, Nevada was no longer to effectively outlaw sports operations at considerable risk. the only state to have legalized betting nationally. As the only state with legalized gambling; New Jersey and Mississippi had joined the club. gambling, Nevada had no natural Working with Senator DeConcini In Nevada, where gaming is our allies. The only procedural weapon from , who chaired the largest industry, Senator Reid and available to Nevada in the Senate subcommittee which had I viewed the protection of the was the filibuster. Southern States jurisdiction of the bill, we were gaming industry from unwarranted had effectively used it to prevent successful in carving out an votes on civil rights legislation. federal intrusion as one of our exemption for Nevada, Oregon, Fortunately for Nevada, Senator primary charges. In New Jersey, Delaware, and Montana were Pat McCarran had amassed gaming was limited to Atlantic City exempt as well. Interestingly, considerable seniority since his and, in Mississippi, gaming was New Jersey was given a one-year election to the Senate in 1932. restricted to limited areas of the window to request an exemption He was a powerful force to be state. As Governor, I was invited but failed to exercise its option. reckoned with and he knew how to give a welcoming address to a Ironically, two decades later, New to wield power. gaming conference in Atlantic City Jersey wanted sports betting and because New Jersey’s Governor took the lead in the legal fight Nevada and the Southern States, had refused to attend. It was a to have the statute declared for very different reasons, saw the different era but much like unconstitutional, which the filibuster as a procedure to protect McCarran’s time it was the Nevada Supreme Court did. their interests. Sixty votes are delegation in the Senate – Reid required to invoke cloture, the and I – who would have to do the Four years later, a National procedure required to end a heavy lifting. Gambling Impact Study filibuster. Nevada and the Southern Commission was created. The Senators entered into what some Senator Bradley, the senior Senator Act authorized a comprehensive referred to as an “unholy alliance.” from New Jersey who had been an study of the social and economic Nevada Senators would oppose All-American Basketball player at impact of gambling in the United cloture on civil rights legislation Princeton and later played with States. It was obvious from the and Southern Senators would the New York Knicks, was a beginning that the opponents of oppose cloture on legislation critic of gambling and gambling would seek to stack adversely impacting Nevada supportive of the deck against Nevada. The gaming issues. No Nevada a sports betting ban. appointment of Kay James as the Senator had ever voted chair and James Dobson, founder for a cloture petition Senator Lautenberg, of Focus on the Family, confirmed until the 1960’s when New Jersey’s other our worst fears. The Act provided Senator Cannon Senator generally for the appointment of 9 members broke ranks to followed Bradley’s to the Commission. Reid and I were support cloture on lead on successful in making the case for a the civil rights gaming issues. more balanced commission and bill. McCarran secured the appointment of Bill Bible, Chairman of the Board; John Wilhelm, the President of

the Hotel Employees and Restaurant Employees Union; and Terry Lanni, Chairman and CEO of the MGM. Our work was not done. Kay James and other anti- gaming commissioners

19 NEVADA GAMING LAWYER SEPTEMBER 2020 attempted to circumvent the protections of the open meeting law and employed other tactics which were a cause for continuing concern.

Ultimately, the final report recommended only two areas for an appropriate federal regulatory role – Indian Gaming and the Internet. Regulation of gaming

legislation were hypocritical. Fahrenkopf on behalf of AGA All talk but little action. offered effective rebuttals.

I focused my line of questioning The bill did not become law. was left to the states. on Dr. Wethington, President of the University of Kentucky, Another experience in my Senate In 2000, my last year in the Senate, appearing before the Committee career makes the point that on the Amateur Sports Integrity and in a dual capacity representing the gaming issues Nevada Senators Gambling in Amateur Sports Act NCAA as well. The NCAA had would be required to take the lead was proposed. The purpose of the recently negotiated a $6 billion on any legislation that would be legislation was to close the so contract with CBS. When my turn damaging to the industry. Senator called “Las Vegas loophole” that to ask questions came, I began Conrad Burns of Montana had allows legalized gambling on with a series of questions directed introduced legislation assisting his amateur sports in Nevada. The to Dr. Wethington. How much state’s agriculture industry. forces arrayed against us, included money had the NCAA allocated to There was a cost to the federal not only the moral critics of combat this supposed national treasury. Under pay-go rules, gambling but major league crisis? The answer was that a then in sports organizations, university video had been produced presidents, coaches, and the NCAA. outlining the dangers of betting on college games. I asked the cost On March 29, the Senate of the video was told $25,000. Commerce Committee convened Not much, considering the recent under the chairmanship of Senator broadcast deal with CBS. How John McCain. An impressive list many full-time staffers at the of witnesses was called, including NCAA were assigned to this crisis? a college coach, a university Three, I was told. How many effect, legislation that had an president, Nevada gaming NCAA member schools are there? additional cost to the federal regulators, and academics who 1,074 members was the reply. treasury had to be offset by new had studied gaming. The Turning to the University of revenue. Committee was told there was Kentucky, how many student a crisis in America with sports athletes or bookmakers had been Burns had chosen an additional wagering on amateur athletics. prosecuted for illegal gambling on tax on gaming, which was As a member of the Committee amateur sports? Dr. Wethington generally considered an easy I was allotted considerable time could recall none. target. I met with Trend Lott from to examine witnesses who were Mississippi, the majority leader. supporting the legislation. In my , then the chairman He called in Burns to his office and view, the NCAA and college of the Commission; Bobby Siller, said “we can’t have that – get a presidents who supported the Member of the Board; and Frank

NEVADA GAMING LAWYER SEPTEMBER 2020 20 new offset.” His parting comment priority. In 1988, he was elected to the first of two to me was, “Don’t tell anyone I was terms in the U.S. Senate. Senator Bryan was the helpful.” In Mississippi, supporting only Senate member to simultaneously serve on the gaming industry was not the following U.S. Senate Committees: Finance; Commerce, Science and Transportation; and universally appreciated. Banking, Housing and Urban Affairs. He authored the Southern Nevada Public Land Management Gaming legislation at the federal Act of 1998. level was not my only concern. The casino industry is potentially Senator Bryan graduated from the University of impacted by a plethora of federal , Hastings College of Law; Order of the regulations. The U.S. Treasury Coif. He has awarded Doctor of Humane Letter proposed a regulation which would from the University of Nevada, Reno, where he earned his Bachelor of Arts degree. have severely limited casino play by imposing an ill-timed Senator Bryan has been recognized by Best withholding requirement that Lawyers in America®, Government Relations would have interrupted patron Practice, Land Use and Zoning Law, 2008-2020; play. I was able to explain the Best Lawyers in America®, Lawyer of the Year, impact on the industry and Gaming has been the catalyst for Land Use and Zoning Law, 2019; Education Hero, Treasury withdrew its proposal. Nevada’s growth. Las Vegas has The Public Education Foundation, 2019; ACLU become the entertainment Lifetime Achievement Award, 2018; "Legal Elite," Nevada Business Magazine, 2015; Distinguished Because casinos are included capital of the world. The “Noble Nevadan, Presented by the Nevada System of within the federal definition of Experiment,” although far from Higher Education, 2011; Mountain States Super a bank, when Treasury proposed perfect, has served the state well. Lawyers®; and named Alumnus of the Year by the reducing the number of cash University of Nevada, Reno. In addition, he has reports that had to be filed, I Former U.S. Senator focuses his been honored in Clark County with the Richard H. was successful in making sure practice at Fennemore Craig on government Bryan Elementary School, as well as the Richard that casinos enjoyed the same relations at the federal, state, and local levels, H. Bryan State Office Building in Carson City and reduction in required cash reports. particularly in the area of public land use issues. Richard H. Bryan statue and plaza on the campus He began his legal career in 1964 as a Deputy of the University of Nevada, Reno. District Attorney in Clark County, Nevada. Two It’s been nearly 80 years since years later, he was named Clark County's first Senator Bryan is also a Trustee for the National Phil Tobin and the 1931 Nevada Public Defender. In 1968, Senator Bryan was Judicial College, a member of the Board of legislative launched legalized elected to the Nevada State Assembly and re- Trustees for the Las Vegas Metro Chamber of gambling. In 1930, Nevada was elected in 1970, he was elected to the State Commerce, Chairman of the Board to Preserve the least populated of the then Senate in 1972 and re-elected in 1976. The Nevada, Member of the City of Las Vegas 48 states with 90,000 residents. former prosecutor won his first statewide election Centennial Committee, a Board Member of the Today, Nevada’s population is as Nevada's Attorney General where he played a Great Basin National Park Foundation and a Board approaching 3 million. Although major role in successfully defending Nevada's of Director for The Mob Museum. He is admitted mining has had a recent gaming regulatory structure in the federal courts. to practice law in the State of Nevada and the District of Columbia. Senator Bryan proudly renaissance with its production In 1982, Senator Bryan was elected to his first of of gold, it and agriculture are no served in the United States Army, 1959-1960, two terms as the Governor of Nevada. Under his 2nd Lieutenant, Adjutant General Corps and United longer the economic engines leadership, economic diversification and the States Army Reserve, Judge Advocate General driving the state’s economy. attraction of new businesses to Nevada became a Corps, Discharged as Captain.

21 NEVADA GAMING LAWYER SEPTEMBER 2020