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November 21, 2018

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Brugnara drops threat to sue for gaming license

San Francisco businessman Luke Brugnara, denied by Nevada gaming regulators in his efforts to re-open the Strip's Silver City casino, is backing away from earlier threats to sue the Nevada Gaming Commission.

The commission voted unanimously to deny Brugnara a gaming license for the Silver City in March, following the recommendation of the state Gaming Control Board.

Major concerns were poor financial recordkeeping, allegations Brugnara had failed to file tax returns with the Internal Revenue Service from 1992 to 1996, run-ins with San Francisco city regulators over alleged building code violations, and issues from Brugnara's personal life, particularly on allegations that Brugnara had made several death threats to associates and government officials.

Furious over the rejection, Brugnara branded the commission "a bunch of wind-up dolls" under the control of a business cartel controlling the Strip, and claimed he was subject to double standards. He vowed afterwards to challenge the constitutionality of Nevada's gaming laws in federal court.

"We do live in the United States, and Nevada is not a sovereign nation," Brugnara said in March. "If the president of the United States can be held accountable for his actions, the gaming commission can be held accountable."

But now, Brugnara says he won't move forward with a lawsuit. Instead, he said he will re-apply for a Nevada gaming license early next year.

"I don't want to be in an adverse situation out of the gate," Brugnara said. "I don't think I'd achieve the goals I'd want even if a lawsuit was successful ... (because), essentially, we would be adversaries. I would rather just try to suck up my pride a little bit and go through the process again and see if I can conform to their concerns.

"I am not going to let my emotions get involved in this process, and hopefully the outcome will be more favorable next time."

Nevada's top gaming regulator applauded Brugnara's decision.

"My reaction is that this is a responsible way for him to act," said Commission Chairman Brian Sandoval. "The commission and the board had valid concerns, and that shows a lot of responsibility, in that he's trying to work on them and perhaps come back."

Nevada gaming regulators and experts had argued Brugnara would have had little chance of getting the commission's decision overturned in federal court, as both state and federal judges have refused to review licensing decisions in the past. Nevada law states the commission has "full and absolute power and authority to deny any application for any cause it deems reasonable."

"I've always been confident in the decisions of state and federal courts on this issue," Sandoval said. "I think there's very strong precedent that would render a lawsuit of that type ... to probable dismissal."

Brugnara remains convinced, however, that he would have won. He said he discussed the case with Joe Alioto -- a prominent attorney now handling the Oakland Raiders' anti-trust lawsuit against the NFL -- and said Alioto was keenly interested in pursuing the case.

"I just don't want to waste time on trying to create negativity and problems in my own life," Brugnara said. "I'm not litigious. I don't go out of my way to sue people."

Brugnara said he sold one of his San Francisco properties to shore up his company's balance sheet, answering regulators' concerns about the financial condition of his companies. He also said he's turned over day-to-day management of his San Francisco office buildings to Colliers International, and has hired a major accounting firm to assist him with recordkeeping.

"Everything we can do to tighten up, we're doing," Brugnara said.

Nevada gaming regulations require a denied applicant to wait one year before re-applying for a license.

"I can't recall anyone who was denied for a license and came back later to be licensed," said Shannon Bybee, executive director of UNLV's International Gaming Institute and former member of the state Gaming Control Board. "It would be unusual. He'd want to have a good gaming lawyer for this."

But there are signals the commission wouldn't simply rule out such a possibility. During Brugnara's hearing, Commissioner Augie Gurrola urged Brugnara to withdraw his application rather than face a vote of denial, but Brugnara refused.

"You don't have to let someone withdraw," Bybee said. "If you're really concerned about somebody, you don't let them withdraw, you deny them."

Sandoval said that insistence on a vote won't be used against Brugnara in a second hearing.

"Personally speaking, I think the issues of concern were very clear, and those would be the issues I'd be looking at again," Sandoval said. "The mere fact he asked for a vote (on his license application, rather than withdrawing) should not make it harder on him.

"We know why he was denied. If he addressed those concerns to our satisfaction, perhaps he could put himself in a position where he'd be suitable for licensure."

Brugnara has discussed building a San Francisco-themed resort at the site of the Silver City, shuttered after Brugnara bought it in 1999. Though Brugnara insists he still wants to operate a casino at the site, he isn't ruling out the possibility he will sell the property.

"Every property on the Strip is for sale at the right price," Brugnara said. "Everything I own is for sale, but the likelihood of finding a buyer at the price I want is highly unlikely."

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