Panelists suggest Dotty’s may be breaching rules

At least three members of the Nevada Gaming Commission believe the gambling revenues produced by Dotty’s Gaming & Spirits are not incidental to a tavern operator’s primary business and that the company may be violating state regulations.

What needs to be done to correct the matter is subject to debate.

Dotty’s, a chain of 64 locations statewide, is at the center of the issue because the business qualifies as tavern under current Nevada and Clark County regulations and ordinances.

However, the Dotty’s business model focuses heavily on gaming. Audits by the county business license department at several Dotty’s locations found gaming revenues accounted for 90 percent of the businesses’ cash flow.

Dotty’s has come under scrutiny by Clark County commissioners, the Nevada Resort Association and rival tavern operators who believe the business is skirting state and local gaming rules.

During the March 24 Nevada Gaming Commission hearing, two regulators voted against licensing three new Dotty’s locations in Las Vegas, North Las Vegas and Reno.

A third commissioner joined two other panel members in approving the licenses by a 3-2 vote, but said he was uncomfortable doing so.

"I don’t believe it is a tavern," Commissioner John Moran Jr. said. "I don’t believe it is anything other than a slot arcade."

Moran, Las Vegas attorney, said gaming was not incidental to Dotty’s primary business.

"I still am not comfortable with perpetuating something that I don’t think is in line with the law," Moran said. "Are slot arcades going to in fact be something that is going to comply with what the policy and gaming policies have been concerning those type of establishments?"

Commission member Tony Alamo also voted against licensing the three new locations after visiting several operating Dotty’s taverns. Alamo, a Las Vegas physician, said he wouldn’t support the new operations because he believes the gaming regulations need to be changed.

"What do I think Dotty’s did? They ‘may,’ in quotations, they may have followed the letter of the law, but I don’t think they followed the intent of the law," Alamo said. "I just didn’t feel like it was their primary business, a bar, a tavern or a saloon. It just isn’t."

Commissioner Randolph Townsend, a former Nevada state senator, supported the licensing. However, he told Dotty’s owner Craig Estey the business was different from other restricted gaming licensees, which are allowed up to 15 slot machines.

Townsend said he didn’t believe the average customer would go into a grocery store, convenience store or other nonrestricted locations just to play slot machines.

"This commission has a regulatory responsibility to look at the regs and find out if they are giving the kind of guidance to applicants, businesses in general, what they can follow," Townsend said.

Under the Dotty’s business model, the locations don’t operate kitchens so smoking is allowed. Dotty’s offers customers prepackaged food and minimal beverage options, including beer . None of the Dotty’s locations have bar-top slot machines.

Clark County Commissioners will hold a public hearing Tuesday to take action on four proposed revisions to the local ordinance that covers tavern operations. Clark County Commissioners Steve Sisolak and Chris Giunchigliani, the resort association and a group of tavern owners submitted the four different proposals.

Whatever happens Tuesday may still land in the lap of Nevada gaming regulators, who heard more than two hours of testimony on the regulation during a well-attended workshop session.

The Nevada Resort Association offered proposed changes to the regulation that stop future Dotty’s-type locations from being built and would require existing Dotty’s to add a bar with bar-top slot machines.

Moran, Alamo and Townsend said the control board and commission need to take another look at the regulation because the recession and a voter-enacted ban on smoking where food is served has changed the playing field for tavern operators.

Despite previous approvals for Dotty’s, the majority of the gaming commission said times have changed.

"This commission is not a rubber stamp," Alamo said.

Townsend said he wouldn’t support any new restricted gaming applicants until hearings on the regulation take place.

"I want this very clear. It would be my intention to not authorize any additional restricted licensees who may come under the question of business as primary and gaming incidental," Townsend said.

Dotty’s consultant Patty Becker, a former gaming regulator, told the commission any changes in the law should target more than just her client.

"If you want to change the regulation, and if you want to change 50 years of history, and at least with this company 15 years of approval, you have the ability to do that," Becker said. "But I believe the correct way to do it would be to promulgate a regulation that then applies to all bars or taverns or restricted locations."

Contact reporter Howard Stutz at hstutz@reviewjournal.com or 702-477-3871.