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Nevada lawmakers asked to reinstate rebates by race books

May 21, 2013 3:08 AM by Phil Hevener

Horse Racing PreaknessThe politics associated with gaming industry expansion are getting a severe test as lawmakers across the country ponder gaming expansion proposals as sources of additional tax revenues.

This is where it’s good for a reminder that the individual components of the gaming industry do not speak with one voice in their long reach for customers.

The conflicts are often represented as David and Goliath struggles between large and not so large business interests. The degree to which this is accurate depends on perspectives, but advanced courses in reading between the lines are often helpful because the spokesmen for opposite sides have a lot of talent for spinning issues this way and that before legislative committees or in response to reporters’ questions.

A few examples:

Nevada lawmakers have been asked to reinstate the rebates that were once routinely offered by race books. They were an incentive to their best customers, people wagering the most money.

The Nevada rebates ended in 1992 under pressure from California. Its tracks were selling signals to Nevada books but not allowing rebates. California reversed its course but the Nevada ban remained in place although the Nevada Gaming Commission had authority to allow rebates on a case at a time basis.

The Nevada race book handle has continued to plunge. “It’s a slow death,” remarked Lionel Sawyer attorney Greg Gemignani who spoke to a State Assembly committee on behalf of a proposed bill (SB 425) to reinstate rebates authority at all of the state’s race books.

“With this bill,” he said, “Nevada has a fighting chance to regain lost ground with competitive pricing.”

Seems pretty straight forward…right? But wait a minute, there was another side anxious to be heard and it was offered by Las Vegas attorney Anthony Cabot who was speaking – would you believe – on behalf of the Nevada Pari-Mutuel Association, whose rate committee negotiates the prices paid for simulcast signals at local books.

“We’re against the process that would emasculate the (Gaming) Commission, which can allow rebates on a case by case basis.”

You’d have thought Commission members had trouble speaking for themselves.

“Has anyone in the last 15 years,” Cabot wondered, “asked the Commission to allow rebates?” The answer to that appeared to be a resounding no.

Cabot suggested rebates would help larger books to “starve out smaller books.” He did not stop there, arguing that rebates might result in books having to pay more for television signals.

“This is a complicated issue with many moving parts,” cautioned Gaming Commission Chairman Peter Bernhard who said the Commission would move quickly to hold hearings if or when it receives a request to offer rebates from casinos.

But proponents of the change persisted that legislative action is the way to go.

The continuing drop in race book business caused one supporter of the proposed legislation to spin it as a jobs issue. “There’s nothing that will affect jobs more than the evaporation of a line of business.”

Assembly Judiciary Committee Chairman Jason Frierson took a moment to think it over, finally saying, “This issue seems to be wholly reconcilable.”

Whether he’s right remains to be seen as Nevada’s legislation machinery grinds forward.

Internet gaming: Signs of conflicts fuel its coming growth. Gov. Sandoval was saying last week that he has had some preliminary talks with officials in other states, talks he hopes can quickly lead to interstate agreements that benefit Nevada’s first in the nation status.

Station Casinos launched the only legal real money games in the country several weeks ago through its Ultimate Gaming subsidiary. The agreements will come, eventually, an insider at one of the companies with an interest in this issue told me several days ago, “although it probably will not occur as quickly as some people hope.”

This source was thinking of the regulatory and taxing issues that must be settled before an agreement with anyone is in place, even with New Jersey where two “very savvy Republican governors” are strongly committed to doing what they can for their respective gaming industries.

But putting the nuts and bolts of an agreement in place, a dance, if you will, that must satisfy any number of influential interests is a lot more complicated than taking aim at a distant goal.

Look at how (New Jersey Gov.) Chris Christie’s promise to bring sports wagering to Atlantic City casinos has turned into an extended waiting game as sports betting on the Boardwalk works its way toward a hoped for Supreme Court hearing.

Of course this talk of an extended trek toward interstate agreements may contain a grain or two of hope that Congress will eventually get around to passing federal Internet legislation.

That would be nice. But in the meantime, the big thinkers at Station Casinos are savoring the possibilities associated with the thoughtful use of this new marketing tool. The benefits could extend much further than the number of people crouched over their home computers.

Phil Hevener has been writing about the Nevada gaming business for more than 30 years. He can be reached at PhilHevener@GamingToday.com.

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