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November 27, 2014

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Why Uber has cracked the taxi market in 70 cities — but not Las Vegas

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Sam Morris

A taxi cab drives down the Strip Thursday, April 28, 2011.

Uber is a four-letter word in Las Vegas.

Just a mention of the company’s name draws gasps from Las Vegas leaders and, especially, taxicab companies.

Uber, a San Francisco ridesharing company, uses a smartphone app to connect riders with drivers at the touch of a button.

The company has set up shop or plans to do so in more than 70 cities in the United States since launching in 2009 — from New York City, Los Angeles and Chicago to smaller outposts like Tacoma, Wash., and Ann Arbor, Mich.

Las Vegas is conspicuously absent from the list — the third-largest metro area in the country without a ridesharing service along with Portland, Ore., and St. Louis — leaving tourists and residents who pull up the app wondering why Las Vegas isn’t in on the action.

With more than 26 million taxi rides and $390 million in fares last year, Las Vegas would seem like an attractive target for ridesharing companies. But the unique structure of Nevada’s taxi and limousine industries along with a heavy tourist presence have made Las Vegas a tough market to crack.

Uber and ridesharing competitors like Lyft and Sidecar have exploded into popularity by offering a convenient riding experience that can be managed entirely through a smartphone. The companies have shied away from being labeled as taxi services, framing themselves as technology companies that connect riders to a network of independent drivers.

Nevada’s taxi and limousine regulations are among the strictest in the nation, with guidelines on everything from insurance to minimum fares to driver background checks to vehicle safety. The number of authorized taxis operating on the street is limited by a strict medallion system.

“There’s nothing prohibiting them from operating here. They simply need to go to the taxi authority and make an application like every other provider in the industry has done,” Jonathan Schwartz, director at Yellow Checker Star, said about ridesharing companies. “If they just started operating, it would be illegal.”

Uber officials, who did not return a call seeking comment, have had success launching in other cities with strict controls by sorting out any legal or regulatory issues later. Its presence has prompted recent bans in Virginia and Memphis, Tenn.; a review in California; and lawsuits in Texas, Washington and several other states. But none has seemed to slow the company’s growth.

“Uber comes to town in some of these other cities and basically hires lobbyists and throws a lot of money around. They say, ‘There’s nothing illegal going on here; let’s try and work things out,’” said Ray Mundy, a professor at the University of Missouri, St. Louis who studies the taxi industry.

That strategy won’t work as well in the Las Vegas market, he said, because unlike many other cities, the taxi industry is regulated at the state level by a board of appointed officials insulated from direct lobbying.

Las Vegas’ tourist-driven economy also poses a unique challenge. About 95 percent of taxi rides start at cab stands at the airport or a hotel, leaving a much smaller share for companies like Uber that have excelled in markets where cabs are more often dispatched or hailed.

When, or whether, Uber and its ridesharing peers will move into the Las Vegas market is unclear. Uber made inquiries in 2012 but was deterred by regulations and hasn’t been back.

Ridesharing competitor Lyft has been advertising for Las Vegas drivers on Craigslist. A company spokeswoman said Lyft regularly places ads in cities it’s interested in exploring, but no plans have been made to launch in Las Vegas yet.

Teri Williams, spokeswoman for the Nevada Taxicab Authority, said it’s been “pretty quiet on our front.” Ridesharing cars haven’t been showing up on Las Vegas streets, and the companies behind them haven’t made any inquiries about the formal licensing process, she said.

If ridesharing companies launch in Las Vegas without approval, they could face fines, misdemeanor charges and the impounding of their vehicles.

Uber has spread across the United States

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