Could Nevada baccarat suffer from Calif. lawsuit?

April 22, 2014 3:08 AM
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Could Nev. baccarat suffer from Cal. lawsuit? Could Nevada baccarat business feel the impact of a California lawsuit filed by the United Auburn Indians against a Sacramento casino?

Whatever the outcome, the actions that brought it on are more examples of the many moving pieces associated with the marketing of expanded gaming.

A California source with a good understanding of the gaming business on and off Indian lands says card clubs have been “pushing the envelope” during recent years and the gaming commission may have overlooked issues that required more attention.

The result is small casinos are now operating “inside the licenses of card rooms.”

What probably prompted this lawsuit, my friend explains, is the fact that card rooms are offering no collection baccarat, which has led to an explosion of business.

Big surprise, huh?

Native American and Nevada casinos are feeling the impact. The new banking operators are known as “proposition banking groups” and they actually pay high marketing fees to the card rooms for the right to bank the games and offer the lucrative proposition bets.

The banking of the gaming (baccarat, blackjack and pai gow) is seen by some as a “severe breach” of the legislation that allowed the current generation of card rooms.

The suit filed April 4 by the Auburn Indian Community owners of the Thunder Valley Casino against Casino Royale and Pacific Gaming Services asks that the outside banking groups with their profitable proposition bets be banned and that banking be returned to the players.

Spokesmen for the groups on either side of this issue could not be reached for comment but the California Commission has scheduled a May 7 meeting that may address some of the issues involved in this case.

The Superior Court suit alleges Casino Royale has run an “illegal gambling operation for its own profit since California law prohibits gaming establishments from having an interest in a card game.”

It continues, “Defendants regularly flout the state’s prohibition on banking games which declares illegal any game in which the bank does not systemically and continuously rotate among the players...”

Didn’t bank on that: A not-so-funny thing happened to Deutsche Bank on the way to its current Las Vegas Strip address at the Cosmopolitan, a hip kind of cutting edge facility whose non-gaming features received favorable notice even as the casino has struggled.

The bank accepted a daunting challenge when it took over the Cosmo and opened it in December 2010. Deutsche executives never really saw themselves as a long term operator.

Contrary to the tone of some recent news stories, the decision to sell is not a recent one. All the usual suspects (well-known licensable potential buyers) have long since taken close looks at the Cosmo and said thanks, but no thanks.

The bank reportedly hopes to get about two billion, but Las Vegans familiar with the Cosmo and its struggles smile and shake their heads at that kind of optimism.

Developer Bruce Eichner broke ground back in 2005, a time when the good times looked like they might go on forever in the gaming business. The bank took over after Eichner defaulted on a loan.

Companies such as Caesars and MGM were long ago seen as the most likely buyers but neither company has much of an appetite for adding more hotel rooms to their respective inventories on the Strip.

Focus on big picture: Internet poker in Atlantic City is not producing the kind of eye-popping performance levels its proponents had hoped to see.

But there appears to be a bigger picture that may deserve more attention than it has been getting as the number of New Jersey accounts pushes past 300,000 and revenue from games other than poker continues to grow.

Poker activity benefits from a pool of players. That’s not an issue for Internet slots or blackjack games. Look at the New Jersey numbers for March from a big picture perspective. Poker generated only $3.2 million of the $11.9 million posted by all Internet games during March.

And, the number of Internet accounts opened at all the New Jersey casinos pushed past 290,000 by the end of March, more than 40,000 higher than the figure a month earlier.

The next couple of months will tell an interesting story with respect to poker as the World Series of Poker officials within Caesars turn up the heat under their marketing efforts for the six or seven weeks of poker’s biggest event, which begins the end of May at the Rio in Las Vegas.

Much of the focus remains on New Jersey because the state reports more information than is available in Nevada where the Internet gaming menu is limited to poker. Influential casino companies catering to locals are against expansion to other games.

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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