Las Vegas Sun

April 20, 2019

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Brugnara vows to sue state if rejected for Nevada gaming license

San Francisco businessman Luke Brugnara faces an uphill battle today, as the Nevada Gaming Commission considers his application for a gaming license at the shuttered Silver City casino on the Strip's north end.

The state Gaming Control Board, citing numerous concerns with Brugnara's background and business practices, earlier voted unanimously to deny Brugnara a license. That decision can be overturned by the commission today, but only by unanimous vote -- and few local observers expect that to happen.

Brugnara said he's confident the commission will "do what's right" and approve him for a license, but if it doesn't, he's vowing to file suit against state gaming regulators.

"I don't want to go there, but if this doesn't go forward fairly, I will go there," Brugnara said. "No one's challenged them in federal court outside their jurisdiction. Believe me, they don't want to go there. It will be a (expletive) nightmare if they go there, because the truth will prevail, and there's a lot of truth on what they've gotten away with, what they've been engaged in."

But gaming legal experts say Brugnara's chances of getting a commission decision overturned on appeal are practically nil. Unlike most other government agencies, the decisions of Nevada gaming regulators are generally not subject to judicial review.

"(A gaming license) is not a fundamental constitutional right," said Shannon Bybee, executive director of UNLV's International Gaming Institute and member of the state Gaming Control Board in the 1970s. "I would be shocked if he got anyplace with a lawsuit. I can't imagine what the grounds would be."

Brugnara is still furious over the way the control board hearing unfolded earlier this month. During the six-hour hearing, Brugnara was probed on a variety of issues, including allegations that he made death threats against several people, discrepancies in his financial records, and tangles with San Francisco city officials over alleged code violations at his San Francisco office buildings.

But Brugnara continues to insist he is qualified to hold a license in Nevada when stacked up to other licensees in the state.

"If you're going to measure me against Buddha or Gandhi or Jesus Christ, of course I won't measure up," Brugnara said. "I'm a man, I have problems, but it's not to the magnitude where I don't deserve a license. I will make sure everyone is treated with the same standards ... (to do otherwise) violates the constitutional rights of every U.S. citizen."

But both state and federal courts have steadfastly refused to become involved in reviewing a licensing decision -- and state law says the commission has "full and absolute power and authority to deny any application for any cause it deems reasonable." Courts do have the ability to review commission decisions, but generally only on disciplinary actions against existing licensees. Most other new gaming jurisdictions have followed Nevada's lead in making commission decisions irreversible.

The key test case came after former Stardust boss Frank Rosenthal was denied a key employee license in the 1970s. According to Lionel Sawyer & Collins' book Nevada Gaming Law, a state district court initially ruled that parts of the state's Gaming Control Act were unconstitutional and nullified Rosenthal's denial. But the Nevada Supreme Court reversed this decision in 1977.

Attempts to overrule the commission in federal court have also failed. In 1980, the 9th Circuit Court of Appeals refused to overturn an applicant's denial. The applicant, Nathan Jacobson, claimed the commission's decision violated his rights to due process and equal protection, and had demanded $7 million in damages.

"Jacobson's interest in a gaming license is not so fundamental as to warrant constitutional protection apart from its status under state law," the appeals court's decision stated.

Last year, a crack did appear in the commission's absolute waiver from judicial review, when the Nevada Supreme Court ordered the commission to grant a restricted license after a denial. The control board had promised the applicant a license for the location when he received his first licensed, but later backed out of this deal.

But the circumstances are so unique that they don't establish a precedent, said gaming attorney Frank Schreck.

"It's certainly not applicable to this case," Schreck said.

Schreck, one of the most powerful gaming attorneys in the state, originally represented Brugnara in his licensing effort, but the two split last summer. Brugnara said he "cut (Schreck) loose"; Schreck said he quit after telling Brugnara to withdraw because he was unlicensable.

Brugnara believes a cartel of no more than a dozen businessmen controls the Strip, and it is this group that is thwarting his licensing efforts, as they do not want competition. He implied that Desert Inn owner Steve Wynn acted in concert with Schreck to ward off his attempts to develop the Silver City site.

"The last thing (Wynn) wants is a billion-dollar project next to his project (at the Desert Inn)," Brugnara said. "I don't control the politicians like Steve Wynn and his buddy Frank Schreck."

Schreck called this claim "patently absurd," noting that Wynn has been supportive of competing projects on the Strip before.

"None of these individuals (gaming executives) are scared of competition. They want people to build," Schreck said. "Mr. Brugnara earned the denial on his own merit."