Not any longer, although it remains one of the very toughest. We’ll get back to that. Rules for casino ownership vary from state to state and, with so many states in the U.S. now having casinos, it would be impossible to enumerate the different levels of scrutiny that gaming companies face from state to state. For instance, in Nevada, anybody with a less-than -10% stake in a casino does not have to be licensed. Wall Street lobbyists have suggested bumping that level to 15%, but that proposal fell upon deaf ears.
No less an authority that the director of the University of Nevada-Las Vegas’ Center for Gaming Research, David G. Schwartz, was foxed by your question. "It gets difficult to qualify exactly what's meant by ‘strictest,’" Dr. Schwartz wrote. "With [Securities & Exchange Commission] rules, there are general corporate-governance guidelines that will be standard everywhere -- it all comes down to ‘suitability,’ which is pretty subjective."
For example, Jack Binion was denied a license in Illinois in 2000, accused of having strewn "a trail of poor business practices, regulatory violations and financial malpractice" behind him. Binion, however, was still a licensed operator in Indiana, Louisiana, and Nevada at the time. He had also previously "taken the Fifth" before a federal grand jury, which further worked in his disfavor.
Although, theoretically, the loss of an owner’s gaming license in one state will trigger suitability investigations in others, this rarely occurs. After Caesars World executive Clifford Perlman was run out of New Jersey in 1981 for being mobbed up, he was deemed perfectly suitable in Nevada just two years later and was tapped to oversee MGM Grand in 1989, before leaving the industry the next year.
The Garden State has not been loath to crack down on big-name operators. In the last five years, it expelled hotelier Columbia Sussex outright and forced then-MGM Mirage to either sell its Atlantic City holdings or its Macao ones, due to its affilation with Pansy Ho, daughter of controversial casino billionaire Stanley Ho. (That decision is currently being revisited.) Not surprisingly, MGM chose Macao. By contrast, the Nevada Gaming Commission rarely denies a license – so rarely that it is a major news event whenever it occurs – and only to small-fry operators … although convicted felons are quietly discouraged from applying. Nevada regulators prefer to levy stiff fines than confiscate licenses. Neither Columbia Sussex nor MGM suffered any repercussions in other states due to their Atlantic City misadventures.
Tomorrow: The state that’s even tougher than New Jersey … and why MGM is getting a second look in the Garden State. And is that Atlantic Club sale a sure thing?
