Gaming regulators seeking input over ‘complex’ Dotty’s debate

Nevada gaming regulators are giving both sides in the Dotty's "tavern or slot parlor" controversy a dress rehearsal next week before the issue is addressed by the Clark County Commission.

The Gaming Control Board has scheduled a workshop for Wednesday to gather input on the state regulation that covers restricted gaming licenses, which are issued for locations with a limited number of slot machines.

In a notice, the control board said it is seeking input to help determine the meaning, affect, use, and/or implementation of word "incidental" when determining what level the operation of slot machines is viewed as "incidental to the primary business."

The issue centers around the Dotty's Gaming & Spirits chain of 64 locations statewide. Dotty's has been operating in Nevada since 1995.

Under the Dotty's business model, the locations don't operate kitchens, so smoking is allowed. Dotty's offers customers prepackaged food and minimal beverage options, including beer, and focus heavily on gaming. None of the Dotty's locations have bartop slot machines.

But the businesses are considered taverns under state and county laws, ordinances and regulations.

Gaming Control Board Chairman Mark Lipparelli called the issue "complex."

The board attempted to address the matter on March 10 when it recommended approval of three new Dotty's locations in Las Vegas, North Las Vegas, and Reno.

After a lengthy discussion, Lipparelli told Dotty's representatives, including the business's founder Craig Estey, that state regulators have struggled with the concept of a bar or tavern and a definition of the word incidental.

"We run into complications because everyone is going to have a slightly different perception of what that is," Lipparelli said at the hearing. "So the outcome of that in prior commission meetings was let's just say that bars, taverns, convenience stores, are the places where restricted gaming can be conducted."

The hearing was scheduled after two Clark County Commissioners sent a letter to Lipparelli and Nevada Gaming Commission Chairman Pete Bernhard seeking an interpretation of the regulation.

Dotty's, which has 22 taverns in unincorporated Clark County, has drawn scrutiny from commissioners, rival tavern owners, slot machine operators and the Nevada Resort Association.

A public hearing on proposed changes to the county ordinance that governs taverns, scheduled for last Tuesday, was moved to April 5. Four different proposals with changes to ordinance have been submitted by Clark County Commissioners Steve Sisolak and Chris Giunchigliani, the resort association and a group of tavern owners.

Commissioners Lawrence Weekly and Giunchigliani asked the state's top gaming regulators how the regulation applies to taverns that "arguably operate primarily as gaming establishments without food service or a traditional bar structure with embedded (slot machines)."

Weekly and Giunchigliani said the county wanted to avoid enacting a regulation that was inconsistent with the policy of Nevada gaming regulators.

The proposed ordinances offer different changes, including language that covers distance between locations and slot machine requirements, such as mandating the use of bartop slot machines.

Dotty's officials have objected to many of the changes, including the move toward bartop games. The move could force the company to change out 66 percent of its gaming equipment.

Because of their tavern designation, Dotty's pays a flat fee per slot machine and is not taxed on gaming revenue.

In December, county commissioners pointed to an audit of several Dotty's locations by the business license department found that gaming revenues accounted for 90 percent or more of each location's cash flow.

The resort association, which doesn't believe Dotty's is paying its fair share in gaming taxes, called the businesses "slot saloons" in a letter to Clark County Commissioners this month.

The letter was signed by the CEOs of locals casino companies Station Casinos, Boyd Gaming Corp., Cannery Casino Resorts, the Silverton Resort, M Resort, Palms and South Point. MGM Resorts International CEO Jim Murren and Caesars Entertainment CEO Gary Loveman signed the letter.

The lobbying group said a clear definition of "incidental" has never been codified in the Clark County code.

Dotty's, the association claims, may not meet the county's requirements because of its business model.

"One would also assume that 'incidental' does not mean that the huge majority of a tavern's revenue would be derived from the operation of slot machines," the association said.

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.