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Colorado governor replaces state’s gaming commission. Could it happen here?

Richard N. Velotta

Richard N. Velotta

VEGAS INC Coverage

I know that vacations are supposed to be about getting away from the office, but most journalists I know can’t ignore a good story, even when they’re supposed to be relaxing.

Last week, I wrote about the Las Vegas water supply and got to see our water melting off the Rockies and into the Colorado River on a trip to Denver.

I also stumbled across an incredible gaming story when I picked up a copy of the Denver Post, which had a Page 1 banner headline that read, “Hick Cans Gaming Board.”

“Hick” is Colorado Gov. Bill Hickenlooper, and the story was about how the governor replaced the entire five-member Colorado Limited Gaming Control Commission with new appointees. The reason for the bold move: In May, the commission had voted to cut the maximum tax on the state’s casinos from 20 percent to 19 percent. The purpose of the tax break was to enable Colorado’s casinos to recover from three straight years of losses and thus encourage them to continue to invest in properties in Central City, Black Hawk and Cripple Creek. The move was somewhat of a surprise because Hickenlooper, a former downtown Denver restaurateur, has been applauded by Republicans as a friend of business—even though he’s a Democrat.

There are several points of interest for Nevadans.

First, one of the reasons Hickenlooper was so irritated about the tax break is that Colorado gaming taxes directly fund the state’s community colleges and historic preservation organizations. In Nevada, gaming tax revenue goes to the general fund. While there probably are many who would like to see gaming dollars directly funding education here, the flexibility gives lawmakers more options.

Another eye-opener for me was the Colorado gaming commission’s ability to change the tax rate. Here, a two-thirds majority of the Legislature is required to increase a tax. It seems that an astonishing amount of power is entrusted to Colorado’s commission. Many also may have been surprised by Colorado’s tax rate, which the Denver media characterized as one of the lowest in the country. It’s a graduated rate that starts at 0.25 percent and now maxes out at 19 percent. Nevada’s graduated rate ceiling is 6.75 percent. New Jersey’s tax is 8 percent, but there’s a requirement to invest 1.25 percent of revenue into the community. South Dakota’s rate is 9 percent, Michigan’s is 19 percent, Missouri’s is 21 percent, New Mexico’s is 26 percent and Illinois’ graduated rate peaks at 50 percent. In Pennsylvania, the tax is 55 percent on slot machines and 16 percent on table games.

Those statistics always gnaw at gaming industry critics who say casinos don’t pay enough.

Maybe the most interesting question about Hickenlooper’s action is this: Could what happened in Colorado happen right here in Nevada?

Brian Duffrin, the secretary of the state Gaming Control Board and the Nevada Gaming Commission, said in his time in the industry he’s never seen anything quite like what happened in Colorado. But he concurred that because both the three-member Control Board and the five-member commission serve at the pleasure of the governor, he could seek their ouster. The Nevada Revised Statutes say any Control Board member could be removed for “misfeasance, malfeasance and nonfeasance in office.” Likewise, any commissioner could be removed by the governor if guilty of “malfeasance or neglect of duty.”

In the case of a Control Board member, removal may be made after the member has been served with a copy of the charges and a public hearing before the governor is held upon the charges if requested by the member charged. For a commissioner, removal could be made at any time without state cause with the concurrence of a majority of the Legislative Commission.

Duffrin noted that the removal language has been on Nevada’s books and not amended since 1981. Considering that Gov. Brian Sandoval once chaired the commission, it’s likely he’d take a close look at any situation before firing everybody. Nevada’s two-tiered regulatory system, studied and replicated by other venues, provides stability, a fact that gives comfort to gaming companies making multimillion-dollar capital investments in our state.

Although state commissioners, who must rule on recommendations from the Control Board, occasionally disagree with the board, they moderate the strict law-enforcement bent of the board. It’s a system that continues to be respected worldwide.

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