by Dana Gentry, Nevada Current
When Gov. Steve Sisolak named retired Judge Jennifer Togliatti and then-State Sen. Ben Kieckhefer to the Nevada Gaming Commission in November 2021, it solidified the governor’s grand slam of appointments to both the five-member Commission and the three-member Gaming Control Board, arguably the most significant regulatory bodies in the state.
While Nevada law allows the chief executive sole authority to make the appointments, it does give direction as to who should hold the seats overseeing the state’s primary industry.
“It is the intention of the Legislature that the Commission shall be composed of the most qualified persons available, preferably no two of whom shall be of the same profession or major field of industry,” says the law.
Three of Sisolak’s appointees to the commission are attorneys, one is a retired judge, and the fifth is director of client relations for a law firm. Previous Nevada governors, starting with Grant Sawyer in 1959 when the Gaming Commission was created, had more success diversifying their appointments.
“The Governor and his team carefully consider the requirements on NRS and the qualifications and skills of applicants when making these critical appointments,” Sisolak’s spokeswoman Meghin Delaney wrote via email. “Current commissioners are no exception.”
Delaney would not say whether the governor considered individuals from other professions or had trouble finding qualified candidates outside the legal profession.
“Having all or substantially all of the Commissioners from the same profession risks that decisions on licensing and regulation will be myopic instead of synoptic,” says Anthony Cabot, Distinguished Fellow of Gaming Law at UNLV Boyd School of Law.
“The preference for the restriction on having no two persons from the same profession or major industry is to maintain a diverse perspective on the issues before the Commission,” says Cabot. “The idea is that a lawyer can provide expertise on the law, an accountant on auditing and internal controls, a businessperson on commerce, and a public member on societal impacts. You can make similar arguments for the inclusion of bankers, healthcare professionals, computer scientists, academics, law enforcement, and others.”
Former Nevada Gov. Bob List, who served from 1979 to 1982, says he had no trouble finding qualified appointees to the commission from a variety of professions.
“I had quite a great mix of people,” List said during a phone interview. “I can’t second guess him (Sisolak) but I know that we had no trouble diversifying.”
Among List’s appointees were a rancher and the owner of a truck service dealership.
List notes he “inherited Harry Reid,” perhaps the most famous gaming commissioner in state history, from Gov. Mike O’Callaghan.
“They’re appointed for terms. You’re not supposed to replace them. We always respected the term,” he says.
But three months into List’s term came news of a wiretap capturing Kansas City mob affiliate and Tropicana executive Joe Agosto saying he had “a clean face in my pocket,” believed to be a reference to Reid.
“Harry made an appointment, came up, and we sat down at the mansion. He offered me his resignation and we had a long talk. I became comfortable that he was not connected to the mob. And by then I was under a lot of pressure to get rid of him by my Republican friends,” List remembers. “When I heard him out, I decided that he was the victim of a lying gangster who mischaracterized Harry to make himself look good.”
“I said, ‘Harry, I will not take your resignation. If I were to do so, the entire world would believe that you are guilty and left thinking our industry and our regulatory system was crooked.’ And so he left, still a commissioner.”
List says he “took a lot more political heat. But I stood by him.”
The FBI, in a rare move, eventually put out a statement exonerating Reid.
“That same day he called me and said, ‘Now I offer my resignation.’ I said, ‘Now I’ll take it, and I did,” List remembers.
List says preserving the integrity of Nevada’s gaming industry through the episode was his primary concern. He says in the process he salvaged Reid’s career.
“If the world thought the allegations were true, it would have been the end of his career, and I told him that he would have never become what he did in terms of his power in America,” he says, adding the incident forged a deep and lasting friendship.
Preserving the integrity of Nevada’s gaming industry is more challenging as complex private equity transactions and remote technology stake a claim on the action, say some experts, perhaps requiring a new level of sophistication.
Gaming expert Richard Schuetz says Nevada historically sought out individuals inexperienced in gaming to regulate it.
“The reason for this is because of the perception (and reality) that the industry was mobbed up. By having lay commissioners, one could not accuse Nevada of having the fox guard the henhouse,” he says. “This whole notion is an antique vestige of a bygone era, but we are still slaves to it.”
The result, he says, is “our commissioners do not have a hint. This is especially troubling with the sophistication of payments systems, computer technology, etc., in the management, compliance, and delivery of gaming products.”
Togliatti, the first woman to chair the Gaming Commission, says there shouldn’t be “a limited focus on what the commissioner currently does as a profession, but what they have done in the history of their professions and, of equal importance, how they have conducted themselves in those professions.”
She says diversity is important “with the caveat that I do not think that multiple members of the commission having a J.D. necessarily means that there is not diversity of profession on the commission.” Togliatti notes she, like others, has practiced in a variety of legal disciplines.
Gaming Commissioner Rosa Solis-Rainey acknowledges that having individuals from different professions benefits regulatory decisions.
“That said, while the statute expresses a preference to have diversity in members’ profession, that preference is preceded by the unequivocal desire that the Commission be made up of the ‘most qualified persons available,’” she says, adding before she was a lawyer she worked for a large gaming company in internal audit and regulatory compliance.
Becky Harris, a former state senator appointed by Gov. Brian Sandoval as the first woman to chair the Gaming Control Board, reads the statute from the perspectives of both legislator and regulator. She says the seminal direction is the commission “shall be composed of the most qualified persons…”
“The Legislature has just simply made a preference that no two people should be of the same profession or major field of industry,” says Harris, who is now a Distinguished Fellow in Gaming and Leadership with the International Gaming Institute at UNLV. She is also an advisor for an esports betting company.
Harris served just a year before Sisolak appointed Sandra Douglass Morgan to replace her.
Gibson, who worked for four years as a Deputy Attorney General with the Control Board, agrees with Harris. He says the “most important policy goal in regard to composition of the NGC, beyond the obvious prohibition against direct pecuniary conflicts, has always been that it ‘be composed of the most qualified persons available…’”
But how can Nevadans, intensely reliant on gambling industry jobs and the taxes casinos generate, rest assured the opaque process of appointing regulators produces “the most qualified persons available”?
“For an adjudicative role as exercised by the Nevada Gaming Commission, in my opinion, the appointed agency members should be full-time (to avoid conflicts), have a substantial understanding of the gaming industry, and operate under the same guidelines as judges in maintaining independence,” Cabot said via email. “For example, they should have set terms, not be subject to termination without cause and due process, and not engage in communications outside the public meetings with politicians or other parties on pending matters.”
“The most essential attributes of an effective gaming regulatory agency are competence and independence. The agency should make decisions based on its statutory obligations in line with stated public policy. Political considerations should not play a role,” Cabot says.
Schuetz, pointing to Harris as an example, concurs.
“She got less than one year in as a chairman, which is basically a getting-your-feet-wet training year,” he says. “Well, she basically gets her feet wet and Sisolak tells her to hit the road for he wants a Democrat in the spot. This should have nothing to do with political party and everything to do with competence.”
Cabot, who suggested in a 2019 article that perhaps Nevada should reconsider its approach to regulation, says no one system is perfect.
“The key would be to appoint the best qualified persons without regard to strictly political considerations,” he says. “Some states, like Pennsylvania, have decided that having its members appointed by different entities (legislative and executive) assures that the governor does not have a disproportionate influence on the agency’s decision-making.
Louisiana lawmakers, who must confirm the governor’s gaming regulator appointments, rejected two in 2020.
In Oregon, the state Senate confirms gubernatorial appointees to the state’s five-member Lottery Commission, which also oversees sports betting.
In Tennessee, the Governor, Lt. Governor and Speaker of the House each appoint three members to the Tennessee Sports Wagering Advisory Council.
“Another option is requiring all appointees to go through a legislative confirmation process,” says Cabot. “A third option is to have nominating panels that narrow the applicant pools for agency appointments.”
Nevada State Sen. Dina Neal says she’s unaware of any efforts to add legislative confirmation to Gaming Commission appointments.
“In terms of good government there’s never anything wrong with having oversight,” Neal says. “There’s never anything wrong with having it go through a second stage or there be shared authority.”
Clark County Commissioner Tick Segerblom, a former state senator, says he’s also never heard of efforts to impose any oversight. “We should do that for lots of appointments.”
No stake in the game
Nevada law also mandates “no person actively engaged or having a direct pecuniary interest in gaming activities shall be a member of the Commission.”
If a gaming commissioner earns a living from a firm representing gaming clients, is that a “direct” pecuniary interest?
“While that provision would disqualify someone with a direct stake in a licensed establishment, I do not believe it automatically disqualifies lawyers or any other vendor that might have routine business dealings with a gaming licensee from possible service on the Commission,” says Solis-Rainey, who says her firm does not represent clients before gaming regulators.
Those with a direct pecuniary interest are the board of directors, employees, and some shareholders, says Harris.
“If you had a 5% interest or more, that would be a pecuniary interest because then you’re deemed to have an ability to influence the gaming company,” she says.
Kieckhefer, while not an attorney, works for McDonald Carano, a law firm whose representation includes the gaming interests of the Carano family, which owns a controlling interest in Caesars Entertainment.
“I don’t represent gaming companies in any capacity, and my job at the firm does not involve any kind of gaming regulatory work,” says Kieckhefer.
He says the Chinese Wall erected between him and the firm’s gaming clients existed before his appointment to the Gaming Commission, and that McDonald Carano has “taken additional steps to ensure everyone is aware that I am to be walled off from any gaming regulatory work. As such, I don’t have a direct pecuniary interest in gaming. However, out of an abundance of caution, I recuse myself on matters before the gaming commission that are handled by the firm because of this relationship.”
The former lawmaker says he has a one-legislative session cooling off period before he can register as a lobbyist for the firm.
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