Too much success catches up to Dotty’s

Nevada gaming regulators were concerned about the potential success of the original four Dotty’s taverns in Las Vegas when they licensed the businesses in December 1995.

“I hope your concept works out,” then-Gaming Control Board Chairman Bill Bible told Dotty’s founder Craig Estey. “I’m personally a little skeptical. But you certainly have the opportunity to try.”

Then-Nevada Gaming Commission Chairman Bill Curran also expressed guarded optimism.

“We wish you good luck,” Curran said. “There is always room for somebody that has a better mousetrap.”

Dotty’s has since snagged a lot of mice.

The company operates 64 taverns in Nevada, including 22 in unincorporated Clark County. Dotty’s employs 500 workers and uses 1,251 slot machines statewide. There are plans to open three new Dotty’s this year.

A voter-enacted ban on smoking where food is cooked and the tanking Southern Nevada economy combined to close dozens of taverns and bars in Las Vegas.

Dotty’s swooped in, acquired shuttered locations and opened others.

Dotty’s doesn’t operate kitchens, so smoking is allowed. The locations have prepackaged food, minimal beverage options, and focus heavily on gaming.

The privately held company doesn’t reveal revenues and cash flow. Most gaming observers, however, believe the business model is an unmatched financial success.

But can Dotty’s really be considered a tavern?

The Clark County Business License Department audited several Dotty’s last year and found gaming revenues accounted for 90 percent or more of each site’s cash flow.

To County Commissioner Steve Sisolak, the figure exceeded the undetermined percentage in which gaming revenues are deemed “incidental” to the primary business. Sisolak and others consider Dotty’s glorified slot machine parlors.

That’s the crux to be addressed by Clark County commissioners March 15. A hearing covering proposed changes to the tavern ordinance should be well attended.

Dotty’s will invest whatever it takes to ensure its course of business isn’t altered.

Potential law changes, such as lengthening the distance between taverns, redefining the tavern-restaurant designation or requiring a certain number of bartop slot machines, could halt Dotty’s growth.

Other changes could mean Dotty’s will gain competition. Rival tavern owners want to copy the Dotty’s model.

Last week, county regulators introduced four proposals. County commissioners drafted two. The Nevada Resort Association offered its own proposal. A group of tavern operators contributed a rewritten ordinance.

The Government Center was filled with influential attorneys and consultants, casino company and slot machine route operation executives, and rival tavern operators. All have a vested interest in the Dotty’s outcome.

Curran, an attorney, now represents several taverns.

Business license director Jacqueline Holloway is gathering the proposed changes. She expects more changes to arrive leading up to the hearing.

Dotty’s isn’t going down without a fight.

The company has hired experienced zoning attorney Chris Kaempfer and politically connected lawyer Jay Brown. Dotty’s also has ex-gaming regulator Patricia Becker as a consultant.

After Dotty’s was debated at a Clark County meeting in December, the company asked employees to encourage their customers to write letters in support of Dotty’s to the Review-Journal.

A page of 10 bullet points on what to include in the letters, such as Dotty’s being easily accessible, safe and secure, and their “home away from home” was provided. Comments from patrons reflecting the company’s message points arrived in my e-mail this week.

The resort association, representing Station Casinos and Boyd Gaming Corp., is concerned Dotty’s isn’t paying its fair share of gaming taxes.

Rival tavern operators lost patrons to Dotty’s, even after the owners spent thousands of dollars in renovation costs to make their facilities comply with the nonsmoking law.

The public hearing’s Ides of March date shouldn’t be lost on anyone. The daggers will come out.

Howard Stutz’s Inside Gaming column appears Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. He blogs at lvrj.com/blogs/stutz.