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Casino bosses feud over room tax plan

Jun 3, 2008 7:04 PM

Gaming Insider by Phil Hevener | These are taxing times in Nevada. Emotions have been tested to the max and feelings battered as varying approaches to the state’s funding needs are argued.

Recent results have seen gaming’s most powerful movers and shakers lining up on opposite sides of critical tax issues, their disagreement generating after-shocks felt as far away as the Washington headquarters of the American Gaming Association.

MGM Chairman Terry Lanni has resigned from his duties as an AGA director and a member of the compensation committee. Lanni says it’s because he has more than enough company business to keep him busy in Nevada and elsewhere for the time being.

Others with front row seats to the pushing and shoving among powerful personalities suspect Lanni was reacting to differences with Harrah’s CEO Gary Loveman, the current AGA chairman and a supporter of the room tax increase proposal engineered by Steve Wynn, an AGA director and another of its former chairmen.

For that matter, Lanni may not be any happier with Wynn who went to Kirk Kerkorian in an effort to line up MGM support for the room tax increase.

He shouldn’t have done that, Lanni is said to have growled.

Wynn may now agree, but at this point the less said the better is the way AGA and industry insiders are characterizing things. The news media has generally ignored this story, which is just fine as far as they are concerned.

The hope is that with some quiet time and a chance to chill out a bit, Lanni will return to an active AGA role.

"He’s like the face of corporate," a senior executive sputtered, his voice projecting disbelief that things could have come to this.

But the MGM boss has his allies on the issue, people he describes as being "on the same page."

That was Lanni’s way of saying his company and joint venture partner Boyd Gaming (The Borgata in Atlantic City) are in agreement on their opposition to a proposed increase in the Nevada room tax.

So where’s the conflict?

Wynn Resorts, Harrah’s and Station Casinos have a "page" of their own, all three supporting the room tax increase plan. Wynn got the ball rolling toward this agreement several weeks ago meeting with leaders of both political parties, leaders of the Education Association and senior officials at other gaming companies.

The point is, Wynn has said, the funding mechanisms for Nevada’s educational needs are broken. They need fixing.

"We want to take a step toward fixing it. We’re not interested in being spoilers … People may disagree about the best way to get the job done, but education and the teachers need some friends."

An assistant slot manager at one of the big resorts makes more than someone who has been teaching for 20 years.

As it stands now, the room tax proposal was enough to persuade state teachers to withdraw their petition initiative.

But a consensus is not coming easily, or maybe not at all.

Lanni sees the room tax increase as a horrible idea. Loveman, sees it as a step in the right direction that removes the disastrous possibilities associated with a boost in the gaming revenue tax.

Lanni doesn’t buy that. He’s skeptical petition sponsors could have come up with sufficient signatures to get it on the ballot. Even if they did, organized industry opposition could have defeated it.

But that’s not the point is the quick response of Wynn and those who contend the need of the moment is for a positive response to the need of education.

Loveman is a remarkable leader and intellect who has the ability to offer opinions with a style that suggest Moses delivering the 10 commandments. Steve Wynn has always brought similar qualities to his myriad role as a top guy.

Lanni is another remarkable intellect and leader who heads the state’s largest private employer and taxpayer. But he may be feeling as though his opinions did not get the respect they deserve.

"Asking or expecting visitors to pay for the education of our children is not a good idea," he says.

Lanni prefers an increase in the existing payroll-based business tax, a plan that he says would have other business sectors playing a larger role in the ultimate equation. Raising it a full point would generate about $400 million. This, Lanni says, is a big step in the right direction considering the budget deficit over the next two years is expected to reach a billion, maybe more.

I wonder if Steve Wynn had any sense of the storm his efforts would ignite? Probably not because his intention was to defuse a looming problem, not create one.

Boyd Gaming spokesman Rob Stillwell has another point, arguing that the room tax could bite its supporters in the you-know-what if business continues soft for an extended period and there are fewer people checking into rooms.

In the meantime, Vegas being Vegas, the entertainment capital of the world, can’t you imagine the Fertitta brothers over at Station Casinos considering another approach?

Like maybe trying to find a way to sign the starring players in this saga to one of their Ultimate Fighting Championship events?

Can you picture Lorenzo saying to brother Frank, "Now that’s the way to solve these things!"