Editorial: State has no business in slot pacts

The Nevada Legislature unwisely is allowing itself to be lured into a dispute that casino bosses have with slot machine makers. The gaming industry this week persuaded the judiciary committees in both the Assembly and the Senate to begin drafting legislation that would make it unlawful for a slot machine manufacturer to receive from a casino a license fee, royalty, or percentage of the machine's profits.

As it works now, the slot machine makers have entered into business deals with casinos on some of their most popular machines -- Megabucks and Quartermania, for instance -- that allow them to get part of the win casinos make every month. The slot machine makers know that these games are wildly popular with customers, so they have cut the best deal possible, leasing the machines instead of selling them to casinos.

Some of the biggest hotel-casinos object to the major manufacturers' refusal to sell the machines. Mike Sloan, a vice president at Circus Circus Enterprises and newly elected president of the Nevada Resort Association, is upset that while the slot machine makers get a percentage of the win from the successful slots, they don't have to pay the gross gaming tax that is assessed on the casinos. We can understand Sloan's concern for tax fairness, and we could possibly support a plan that would require slot machine makers to pay taxes if leasing allows them to unfairly piggyback on casinos, but this legislation appears to have other aims that aren't related to tax equity.

It admittedly is difficult to get too excited by the prospects of two profitable industries engaged in a spat over how they can make even more money. The very fact, though, that this is a business dispute between two industries makes it clear that the Legislature has no business in getting involved. Casino lobbyists have failed to demonstrate what compelling interest has been met to require government intervention in telling a business it has no right to lease its product.

More likely what is occurring here is that the casino industry is using the specter of government legislation to extract a better deal from the slot machine makers. This is a situation, however, where the casinos have overplayed their hands. It is wrong to threaten another business with unnecessary government intervention because you haven't gotten your way in a business deal.

Every day in this state business owners enter into contracts with outside vendors, leasing their space to other businesses. Casinos even do this with retail and restaurant space. So there is absolutely no reason why the government should get involved -- unless, of course, the Legislature wants to establish itself as the arbiter for all types of disputes involving leasing arrangements in the private sector.

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