Gaming Commission imposes stricter requirements on slot parlors like Dotty’s

Nevada Gaming Commissioner Tony Alamo asks Michael Eide and attorney Patty Becker, representing Dotty’s Gaming & Spirits, a series of questions regarding the establishment, Thursday, Aug. 25, 2011. The commission heard arguments by Dotty’s regarding a change to state gaming regulations.

Dotty's Gaming Commission Hearing

Nevada Gaming Commissioner John Moran Jr. asks attorney Patty Becker and Michael Eide, representing Dotty's Gaming & Spirits, a series of questions regarding the establishment, Thursday, Aug. 25, 2011. The commission heard arguments by Dotty's regarding a change to state gaming regulations. Launch slideshow »

The Nevada Gaming Commission on Thursday amended its regulation for licensing small casinos, placing more requirements on establishments like the Dotty’s chain.

The amended regulation will require slot parlors like Dotty’s to build new amenities within two years to maintain their licenses.

Dotty’s caters primarily to women who don’t like traditional bars and taverns.

Under terms of the revised Regulation 3.015, licensees will now be required to have a permanent bar with seating for at least nine customers, a contract or service agreement with a licensed liquor distributor and facilities to serve alcohol by the drink, and a restaurant of at least 2,000 square feet with seating for at least 20 customers. Establishments also must be open at least 12 hours a day, if the company wants to have more than four slot machines. With a restricted license for small operations, companies can have up to 15 slots.

Representatives of Dotty’s, the company that has been linked to the debate, haven’t indicated what their next move will be. When Clark County passed an ordinance listing similar requirements, the company filed a lawsuit.

Dotty’s chief operating officer, Michael Eide, estimated remodeling its 60 properties in the chain could cost the company $6 million.

Eide said rearranging plumbing, electricity and flooring and adding the required amenities would cost about $100,000 per location. Some Dotty’s locations don’t have kitchens and are not staffed for food service.

The final vote was 4-1 in favor of amending the regulation, with commission Chairman Peter Bernhard voting against the measure.

Thursday’s vote concluded several months of debates, public hearings and four drafts of the regulation, one each from Gaming Control Board Chairman Mark Lipparelli, the Nevada Resort Association, the Nevada Tavern Association and Commissioner Tony Alamo.

The two associations pressed for the regulatory change because they felt it was unfair for Dotty’s and several imitators to be licensed to have slot machines but not have to provide the types of amenities non-restricted licensees must offer.

Representatives of Dotty’s and similar establishments countered that the Gaming Commission has approved licenses using the Dotty’s business model for years and that it has only become an issue in the last couple of years because the model has taken customers away from struggling locals casinos hurt by the economy.

Some critics say the Resort Association is using the influence of big gaming establishments to slap down a new and innovative business model.

Dotty’s attorney Patti Becker told commissioners that Dotty’s has been in business since 1995, starting as an untested business model. Initially, the concept didn’t make any money, she said, but owners invested $60 million and built a chain of 50 locations.

Becker said her client was an example of how a company doesn’t have to have scantily clad women to sell a product. Becker also told the all-male commission that men view taverns differently than women, and the Dotty’s business model works because the 40- to 60-year-old women who play there don’t have to worry about being hit on by male customers.

Patrons want a laid-back, cozy atmosphere where they can meet with friends and play slot machines, she said. Dotty’s establishments are adorned with kitschy knick-knacks that its older players enjoy.

Becker showed commissioners enlarged photos of Dotty’s customers and bartenders and compared them with servers at other properties.

Eide said six of the company’s servers are in their 70s.

Becker also referenced Las Vegas Sun gaming reporter Liz Benston’s March 29 story about the Dotty’s environment and the company’s customers.

Representatives of the Resort Association, meanwhile, said they were satisfied with the regulatory changes approved by the commission, even though they weren’t as tough as they would have liked.

Attorney Sean Higgins for the Tavern Association and Todd Bice for the Resort Association said they wanted stricter amenity standards for restricted licensees to be fair to their respective members.

But Bernhard said one of his concerns was that the cost to licensees, particularly those in rural counties, would be so high that it would put those types of taverns out of business.

“We wanted to set up some bright lines to clarify these requirements,” Bice said.

“But those ‘bright lines’ could preclude operations in places like Esmeralda County,” Bernhard countered.

A provision in the revised regulation could solve that problem. Under the regulation, an applicant could seek a waiver from any requirement, and the state Gaming Control Board and the Gaming Commission could rule on waivers on an individual basis.

It could be several months before regulators start seeing any waiver requests.

Lipparelli said there could be as many as 40 license applications that would be affected by a new regulation.



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Discussion 6 comments

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  1. And these regulations have what to do with honest games honestly run?

  2. This ruling appears onerous, in fact making these small casinos operate a restaurant, which is a risky type of business. Given the apparent fact that licenses were granted for places like Dotty's, it seems to me that it would have been a fairer decision to grandfather existing locations, and make the new rules apply only to new applicants.
    This harsh ruling even makes me suspicious that perhaps the regulators are overly influenced by powerful interests out to squelch pesky competition.

  3. Almost every change in our State's history has a "grandfather clause". Though I disagree with this entire decision, I would certainly think this is a place for that Grandfather clause.

    Peeps, we have allowed the big boys the ability to change restaurants and bars to have only a few slots, thus, killing many of them off. We have allowed them to require neighborhood casinos to have rooms, this killing off the little mom and pops that grind away to get the neighborhood business. (Oh, and many of them had Grandfather clauses to exist until change.)

    Kill all know, there would have not been a Horseshoe, or El Cortez or any downtown for that matter. A lot of strip joints and neighborhoods casino's got their starts from little dreams. THIS SUCKS BIG TIME AND REEKS OF STENCH BEYOND BELIEF.

  4. "Dotty's caters primarily to women who don't like traditional bars and taverns."

    So this gaming commission makes a new regulation requiring them to be the opposite of what their average customer wants. Who exactly was being injured in any way by their current business model? No one? Then this one is waaaay into the red on the B$ meter.

    I hope Dotty's hired attorneys who know their way around estoppels.

    "I heartily accept the motto, 'That government is best which governs least'; and I should like to see it acted up to more rapidly and systematically." -- Henry David Thoreau 1849 "On the Duty of Civil Disobedience"

  5. This is the same Gaming Commission that stood by and did nothing when Harrah's Entertainment Inc's massive illegal remodels were exposed for all to see. And the fact that tens of thousands of people were exposed to asbestos, a known carcinogenic, didn't get the Gaming Commission's attention either. In summation, Harrah's Entertainment Inc under the fine leadership of Gary Loveman knowingly, intentionally & willfully illegally remodeled thousands of their hotel rooms, leaving every single room that they touched unsafe for the public to stay in for a period spanning more than a decade and the Gaming Commission did...NOTHING! Lesson learned if you are Harrah's and have the Gaming Commission in your pocket you can & will get away with anything & everything in Nevada. Where are the FEDS? This is called CORRUPTION and needs to end.

  6. The Nevada Gaming Control board thought Dotty's business model was a great idea in 1995. Thanks to the Nevada Resort Association, pushed by Station Casinos, (or is it "New Stations LLC"?), Dotty's will need to spend $6 million to meet the new regulations.

    I totally agree with updating old, out of date regulations. Case in point; When I was managing OTB's in Pittsburgh, buried deep in the pages of the regulations and forgotten about was a sentence forbidding the simulcasting of and betting on Arabian horse races. We needed to make sure that during a race card we knew which races were Arabian and turn off the simulcast. There were reasons in the regulations that were archaic. Rules such as these need to be addressed.

    Gaming Commission Chairman Pete Bernhard, who was the only member to vote against the revisions, had a great quote, "You don't use a sledgehammer to solve this ant of a problem". Thanks, Pete. Stations and other gaming properties were worried about Dotty's cutting into the locals market. Yes, Dotty's has been treated a little differently by the commission. But the reason for this regulation update are for the wrong reasons.

    I understand the squeeze in the economy, the locals market decline, etc. This is when management, marketing, and all of the qualified brain trusts hired by the properties need to do their respective jobs. Create something new and exciting. Concentrate on Customer Service. Know your guest and keep them loyal. The gaming market is no different from retail, guests can spend their money anywhere. What are you going to do to keep them coming back?

    The Taverns now have a level playing field. This is good. The regulations needed to be updated. It will be interesting to see the numbers from Stations and the other properties when Dotty's conforms. I'll wager it will not make much of an impact.