Caesars arena initiative suffers a setback in court

By Anjeanette Damon

Tuesday, June 19, 2012 | 7:40 p.m.

The Nevada Supreme Court dealt a setback today to Caesars Entertainment’s ballot initiative to create a special taxing district for its proposed sports arena on the Las Vegas Strip.

But whether the setback is fatal to the ballot question is a matter for even more legal wrangling.

The court refused to kick the question off the 2012 ballot. But, it also found the initiative petition’s description of effect — a 200-word summary of the proposal — was misleading and kicked it back to the lower court to fix.

The problem: The description of effect has nothing to do with the ballot question and everything to do with the petition signed by voters to get the question on the ballot in the first place.

The opponents of the measure — MGM Resorts and Boyd Gaming — will likely argue the question now needs to be tossed off the ballot because new signatures would have to be gathered after the lower court fixes the description of effect.

But, Caesars might argue, the Supreme Court justices declined to kick it off themselves.

In short, the decision ensures the continuation of the legal battle.

In its decision, the court found the question is so narrowly tailored that it would allow only Caesars to take advantage of a special tax district to build its arena. The description of effect, however, didn’t make that clear to voters. And at least three other developers have proposed arenas in the Las Vegas Valley.

“Due to the description’s stringent and complex qualifications, most voters would not comprehend the true effect of the initiative — establishing a tax district in order to build an arena at a specific location on the Las Vegas Strip,” the court wrote in its opinion.

“Because it fails to reveal the ramifications to the competing arena proposals and fails to inform voters of the precise location of the proposed arena, we conclude that the initiative’s description of effect is deceptive and materially misleading.”

The Caesars initiative would compel the County Commission to impose a 0.9 percent increase in the sales tax within a three-mile radius of the proposed arena site behind the Imperial Palace.

The court declined to decide the wider constitutional issue of whether a special taxing district can be created to begin with. Many observers had hoped the court would weigh in on that issue, which has future ramifications for state budgets.