The Senate Committee on Judiciary was called to order by Chairman Mark A. James, at 9 a.m., on Friday, May 7, 1999, in Room 2149 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. All exhibits are available and on file at the Research Library of the Legislative Counsel Bureau.

COMMITTEE MEMBERS PRESENT:

Senator Mark A. James, Chairman

Senator Jon C. Porter, Vice Chairman

Senator Mike McGinness

Senator Maurice Washington

Senator Dina Titus

Senator Valerie Wiener

Senator Terry Care

GUEST LEGISLATORS PRESENT:

Assemblyman David E. Goldwater, Clark County Assembly District No. 10

STAFF MEMBERS PRESENT:

Jo Greenslate, Committee Secretary

OTHERS PRESENT:

Robert D. Faiss, Lobbyist, Nevada Resort Association, introduced Ellen Whittemore, of Counsel, Lionel Sawyer and Collins, and advised Ms. Whittemore is a former supervising Deputy Attorney General for the Gaming Division, Office of the Attorney General, and has expertise in the area covered by A.B. 583. He also mentioned Ms. Whittemore is the prime author of Nevada Gaming Commission Regulation 14, which governs the licensing and operation of gaming devices.

Ms. Whittemore distributed a handout titled "Proposed amendments to A.B. 583" (Exhibit C), and noted the first page contains the proposed amendatory language, and the second page describes how section 1 of the bill would read if the amendments were adopted and the bill was passed. Ms. Whittemore stated the amendments clarify the provisions regarding malfunctions, clarify that this bill is not intended to limit a licensee’s defense in a patron-dispute proceeding, or to create a separate cause of action from the patron-dispute proceedings that are currently in the Nevada act. Further, Ms. Whittemore remarked this bill codifies existing law and practice in Nevada in regards to gaming-device malfunctions. She indicated Nevada law has always required that a random selection process determine whether a patron has won or lost his wager in a gaming device. According to Ms. Whittemore, the random selection process is extensively scrutinized by the State Gaming Control Board and continually monitored by that agency. She said the gaming device’s random number generator, a computer program approved by the board, determines whether the patron has won or lost his wager. If the random number generator generates a win, it directs the gaming device to put the winning combination on the line, and activates the bells and whistles. However, Ms. Whittemore advised the bells and whistles and other entertainment features of a gaming device are merely that, for entertainment only. She maintained it is not the bells, the whistles, or even the three "7s" on the pay line that decide if a wager has been won. The random selection process determines the win and starts the bells and whistles.

Ms. Whittemore stated sometimes, due to a malfunction within the machine or a malfunction in associated equipment such as a progressive meter, the bells and whistles go off even though the random number generator has not randomly determined that patron has won his wager. Additionally, sometimes the random number generator has randomly determined that a jackpot has been won, but an incorrect amount is displayed by the gaming device. Ms. Whittemore emphasized these types of occurrences do not change the fact the patron did not win the wager. Further, she explained when a licensee offers a gaming device for play, and a patron plays that machine, the licensee and patron are entering into a contract. In return for the patron playing the device, the licensee agrees to pay a certain amount of money if the device’s random number generator randomly selects that particular wager as a winning wager. Ms. Whittemore reiterated this bill simply codifies the existing State Gaming Control Board historical interpretation that the contract is void between the licensee and the patron if the machine malfunctions or otherwise displays an inaccurate representation of the game outcome to the patron.

Continuing, Ms. Whittemore stated although the bill merely restates existing regulatory interpretation, it is necessary in order to establish certainty for the licensees, the patrons, the board, and the judiciary. She remarked it is important that judges know that if a gaming-device malfunctions, the remedy is not to ignore the regulated random selection process, but to refund the patron the money he wagered when the machine malfunctioned. Additionally, Ms. Whittemore indicated the provision is designed to deter frivolous litigation. She said in 1997 there were 747 patron complaints filed with the State Gaming Control Board regarding gaming-device malfunctions. In 1998, the number rose to 809 complaints. Ms. Whittemore advised that while most of those complaints are resolved in favor of the gaming licensee, frivolous and expensive litigation is encouraged because there is no "written law" establishing that malfunctions void the play. She also asserted casino licensees and manufacturers must defend these claims by patrons’ attorneys who have little knowledge of the contractual nature of the agreement between the licensee and the patron. According to Ms. Whittemore, the bill, as amended, serves to reiterate the integrity of the random selection process used by gaming-devices to determine win or loss. In conclusion, Ms. Whittemore said the Nevada Resort Association urges the committee’s support of A.B. 583, as amended.

Senator Care inquired whether Ms. Whittemore was addressing slot machines exclusively. Ms. Whittemore replied gaming devices include slot machines and roulette wheels. However, she indicated the bill primarily pertains to slot machines, video poker games and similar devices. Senator Care clarified that Ms. Whittemore had described a malfunction as sometimes being when the wager hits a jackpot, but the wrong amount of the win is displayed. Ms. Whittemore answered affirmatively. Senator Care asked why the patron would not in that case get something other than the rebate. Ms. Whittemore responded the patron would, in that case, get the amount they should have won rather than the amount displayed. Chairman James pointed out the bill does not say that. Ms. Whittemore concurred with Chairman James’ observation, and stated she would amend the language to address that situation.

Senator Washington inquired whether A.B. 583 was conceived to address the case of a gentleman who won a jackpot and was refused payment due to the fact the machine had malfunctioned, and he took the case to court. Ms. Whittemore replied there have been a number of patron-dispute cases over the years, and the decisions have consistently held that if the machine malfunctions, the patron has not won the jackpot. She reiterated the random number generator decides whether the wager has won a jackpot or not. Further, Ms. Whittemore asserted the bill is not as a result of any specific litigation. Senator Washington pointed out if a patron is playing a machine, three "7s" show up on the display indicating he has won a certain amount, and he then finds out he has not won, that is misleading. Ms. Whittemore responded currently the State Gaming Control Board requires, as a condition of approval of gaming devices, that each gaming device contain a notice. The notice indicates that if the machine malfunctions, play is voided. She maintained a patron who enters into a contract with a licensee to play that gaming device knows when he puts the money in that if there is a malfunction, that malfunction would void the play. Additionally, Ms. Whittemore restated if three "7s" come up, that is not what decides whether the patron won; the three "7s" will come up if the random number generator says that the patron has won.

Senator Washington said he understood what Ms. Whittemore was saying, but as an average citizen playing one of these devices, based on the display coming up with three "7s," he would be of the opinion he should have won. Ms. Whittemore conceded a player would clearly be disappointed if he thought he had won because the machine incorrectly displayed the winning symbols. Responding to another question from Senator Washington, Ms. Whittemore stated there is an appeal process to the board, the district court, and ultimately to the Nevada Supreme Court.

Senator McGinness mentioned he is a native Nevadan and has never observed the notice on gaming machines indicating play would be voided if the machine malfunctioned. He asked if the new, externally-visible notice would advise players to ignore any bells or whistles. Senator McGinness expressed his opinion that casinos need to be up-front with patrons. He pointed out, in his opinion, people will be deterred from coming from out of state to play gaming machines when they may end up in court to collect money they believed they had won. Ms. Whittemore responded the number of people disputing their wins are minimal compared to the number of times people wager on gaming devices. She commented most of the time gaming machines are not malfunctioning, and this bill governs those rare circumstances when for whatever reason either the machine itself internally malfunctions or something else causes the malfunction. An example given by Ms. Whittemore was a power surge that causes the machine to turn off for a moment, and as a part of the regeneration process, three "7s" appear on the pay line causing the patron to believe he has won when, in fact, he has not. She pointed out A.B. 583 puts into law the requirement of placing notices on each machine.

Senator McGinness expressed his opinion that most people when sitting down at a slot machine, do not have their attorney’s business card in their pocket waiting for a potential dispute. Ms. Whittemore remarked the appeal process is that if a patron is of the belief he has won a jackpot and the casino says he has not, if the matter is less than $500, the patron is told he has the opportunity to call the State Gaming Control Board. If more than $500 is in dispute, Ms. Whittemore stated the licensee must inform the board. An agent of the board then comes out, opens the machine, runs the computer program and determines whether the licensee is right or the patron is right. At that point, Ms. Whittemore indicated if the board agent substantiates the position of the licensee, the patron is informed of his right to file an appeal with the State Gaming Control Board. He has a right to a hearing before a hearing examiner, then the State Gaming Control Board itself reviews the decision of the hearing examiner. If the patron is still not satisfied with the decision, the patron has the ability to go to district court.

Senator Wiener inquired whether if someone has a problem with a machine and challenges it in a timely fashion, that machine would be pulled out of play immediately to prevent subsequent play from voiding the investigation. Ms. Whittemore answered affirmatively, and mentioned that each machine approved subsequent to 1989 has the capability of maintaining a record of what the play has been and what has happened. Senator Wiener asked if the record is computerized, it would also be affected by a power surge. Ms. Whittemore replied that is a possibility, but she is unaware of any instances of that happening. Senator Wiener queried whether the random number generator could also be affected by a power surge. Ms. Whittemore stated the board would be able to determine if that was the case when they opened the machine. She said they would also be able to run tests to ensure the random number generator was operating in the manner in which it was intended to operate. Ms. Whittemore mentioned there are other things that can happen to cause a machine malfunction other than power surges, such as slippage of a number of say a "5" to a "7," to give the appearance of having a "777."

Senator Care asked if they were looking at the case in which there was obviously a malfunction and the patron says, "Too bad, the machine says you have to pay," as opposed to a genuine issue of material fact. He asked if it was always obvious that there has been a malfunction. Ms. Whittemore answered it is not always obvious there has been a malfunction. Further she advised this bill contemplates there would still have to be a decision by the State Gaming Control Board and a reviewing court that there had been a malfunction or some other event had caused the patron to believe he had won, when he had not. Ms. Whittemore reiterated this bill codifies the existing standard which is based on contract law that if there is a mistake in the contract, the contract is void.

Senator Wiener referred to the statistics given earlier by Ms. Whittemore of 747 frivolous complaints in 1997, and 809 frivolous complaints in 1998, and asked if there were other complaints filed that were not frivolous. Ms. Whittemore clarified there were a total of 747 dispute cases filed with the State Gaming Control Board regarding slot machines, and a total of 809 in 1998. Most of those were frivolous, but not all.

Chairman James expressed concern regarding Ms. Whittemore’s testimony about cases in which the internal mechanism did not select a winning combination, but the display or whistles and bells indicated it had. He asked if conversely, it was not possible for the internal mechanism to select a winning combination, but not display to the wager he had won. Ms. Whittemore replied there would be absolutely no way for the patron to know that. Chairman James confirmed he understood that, and suggested perhaps the law should remain the way it currently is. Half the time it would be a mistake for the house, and half the time it would be a mistake for the customer. Ms. Whittemore remarked that is what this bill does. She emphasized the bill does not establish a new standard. The State Gaming Control Board has consistently ruled that if there were a malfunction in a gaming device, that would void the wager that was made, the contract between the licensee and the patron, and the patron would be entitled at most to a refund of his wager. Ms. Whittemore pointed out that in the circumstance raised by Chairman James, even though the patron would not know he had won, when the State Gaming Control Board and slot department in a casino ran through their percentages and holds, they would recognize there was a problem with that particular machine, such as it was holding too much and not paying out. She said there is a requirement that machines pay back a certain percentage, and if a machine is not meeting that percentage, the board would assume it needed to be repaired. Chairman James inquired what the remedy would be. Ms. Whittemore answered she did not know how they would have a remedy because the patron would not know that he should have won. Chairman James stated the remedy would be if a mistake was against the house, the house would have to abide it; if a mistake was made against the customer, the customer would have to abide it. He pointed out it would come out even eventually.

Mr. Faiss called attention to the fact Ms. Whittemore was testifying on a process that is regulated by Dennis Neilander who was at the meeting to testify. He suggested perhaps questions regarding that process should be addressed to Mr. Neilander. Additionally Mr. Faiss assured the committee that Nevada has a good system for handling disputes. He said when there is a dispute involving over $500, the casino notifies the State Gaming Control Board, agents are dispatched, and they are very passionate in their defense of the player to ensure the player’s rights are protected. Mr. Faiss referred to a handout that is a copy of an article titled "Wagers are Contracts" from the May 1999 issue of Casino Journal (Exhibit D). He noted the article is about A.B. 583, and the opening paragraph states:

Mr. Faiss reiterated that Mr. Neilander would be in a better position to explain how the state does things, because he is one of the people who makes policy decisions. Chairman James expressed his concern that the presence of the bill and the testimony calls into question the integrity of the machines and indicates that in some cases they malfunction. He continued the machines malfunction by showing there has been a win when there has not been a win, and even though there is an as yet unwritten law in Nevada that says a malfunction voids all plays, people sue anyway. In Chairman James’ opinion, if there is a malfunction in the favor of the player, there must be other malfunctions in favor of the house. He noted that in most contracts, both parties have equal access to the facts. In this case, the house can investigate the facts itself, but the player cannot. Chairman James pointed out it is not really a contract; it is a contract where one party has all the facts, and the other party does not have the facts. Ms. Whittemore remarked Chairman James made an excellent point. However, she advised that consistently the judiciary, not only in Nevada but in other states dealing with lottery claims, have said that a wager is a contract between the licensee and the patron. If a patron is of the opinion a machine is not functioning properly, he has the ability to call the State Gaming Control Board who will come out and determine that. She further stated it is in a casino’s interest to pay patrons to encourage more people to return.

Senator Washington referred to Exhibit D and the case of Coleman v. State of Michigan mentioned in the article. In that case, Coleman was erroneously notified she had won $200,000 in the state lottery, when the winning number was announced as including the number "9." The number should have been "6," and she was told she did not win after all. Ms. Coleman sued but lost because the court ruled the actual result, not the incorrect announcement, controlled the outcome of the drawing. Senator Washington stated, in his opinion, she should have received the winnings because it was not her fault the numbers were transposed. Ms. Whittemore remarked it is a part of human nature to favor a person winning once he has been told that he won. However, she added the theories of contract law and the random number generator must be followed in reality. Senator Washington asserted Ms. Whittemore was saying under the random contract law, the error is always in favor of the house. Ms. Whittemore commented the malfunction affects the contract between the licensee and the patron, and if the machine malfunctions, the patron thinks he has won something but has not. She stated there are a multitude of situations, and she reiterated what this bill does is nothing more than codify the existing law and leaves it with the State Gaming Control Board.

Dennis K. Neilander, Board Member, State Gaming Control Board, testified this is a matter currently governed by common law. There is a whole body of case law that over the years has determined that contract law applies to these situations. Therefore, according to Mr. Neilander, when the patron enters into the wagering contract, the patron has agreed at the time he makes the wager, if there is a malfunction, it will void the play. Senator Washington remarked he was not disputing the contract or the law, he was just indicating the perception is that the error is always in favor of the house.

Chairman James expressed his opinion the bill needs to be drafted to say if there is a malfunction, it does not void the entire jackpot. The patron should still receive the amount he was supposed to receive, but not the amount the display erroneously indicated he had won. Additionally, Chairman James suggested the bill language should address the malfunction of the win indicators. Chairman James recommended changing the wording to "If a malfunction of the device or associated equipment or any other event causes the device to display an inaccurate representation of the game outcome." He added that would leave the window open if it really were a win and something extraneous malfunctioned. Ms. Whittemore stated she would review the language and prepare further amendments to A.B. 583 for the committee’s consideration.

Chairman James mentioned an amendment to section 2 of A.B. 583 that would apply the gaming policy of the state to establishments that hold restricted and nonrestricted licenses. He explained the amendment would make it clear that the quality-of-life issues in surrounding areas apply to restricted, as well as nonrestricted licensees.

There being no further testimony on the bill, Chairman James closed the hearing on A.B. 583. He then opened the hearing on A.B. 666.

Assemblyman David E. Goldwater, Clark County Assembly District No. 10, remarked A.B. 666 has to do with rebating, the process of giving money back to a player when he bets. He said John Sullivan who represents Las Vegas Dissemination Company (LVDC) is an expert and would speak about the bill. Afterward, Assemblyman Goldwater stated he would clarify some issues regarding the process the bill has taken.

John Sullivan, Vice President and General Counsel, Las Vegas Dissemination Company, testified the law that A.B. 666 deals with was created as part of the comprehensive Senate Bill (S.B.) 318 of the Sixty-ninth Session.

Mr. Sullivan remarked S.B. 318 of the Sixty-ninth Session dealt with everything from residential casinos to pari-mutuel wagering. He advised the portion that dealt with pari-mutuel wagering came about because of a conflict the Nevada casinos were having with the California racing industry. Mr. Sullivan further stated the California racing industry understood that Nevada was giving rebates to customers and said they wanted more money for their product due to rebating practices. He noted S.B. 318 of the Sixty-ninth Session, as written, contains a comprehensive prohibition on all rebates. Mr. Sullivan explained offering rebates is a common practice in the industry in almost all forms of gaming. He said the practice is mostly offered to premier customers, those betting from the low- to high-million dollar range, but some casinos offer rebates to all players. Mr. Sullivan remarked the practice of rebating in the pari-mutuel industry is relatively commonplace. He advised before passage of S.B. 318 of the Sixty-ninth Session, Nevada was very successful at attracting customers with its rebate program.

Mr. Sullivan indicated in April 1998, when rebating was still in place, $60 million went through the Nevada off-track pari-mutuel wagering facility. Conversely, in April 1999, the amount dropped to $41 million. Mr. Sullivan commented the concern that addressed California had a global impact. He further advised his company performed an analysis on the first 4 months of 1999, that illustrated of the $60 million in reduced revenue over that period of time, one-quarter is attributable to California. Therefore, the bulk of the missing revenue is missing from other racetracks. Mr. Sullivan stated when this bill was brought forward, it was with the intent of improving the entire industry. He told of a proposed amendment to be discussed later in the meeting which would "kill" the business side of A.B. 666. Chairman James pointed out it is not the states that prohibit rebates, but the racetracks. Mr. Sullivan remarked the state of California passed a regulation prohibiting customer rebates by off-track betting facilities. Continuing, he said the California Thoroughbred Owners Association refused to grant approval for the Santa Anita racetrack meet even though a long-term contract was in place. The Santa Anita racetrack was willing to honor the contract; the California Thoroughbred Owners Association stated it would not approve rebates because it wanted more money. Mr. Sullivan explained the contracts from the racetracks already included language that mimicked the California law by saying they would not allow rebates. He advised the original amendment dealt with states; the new amendment calls for an affirmative letter from the racetrack stating rebating is acceptable. Mr. Sullivan maintained the letters would never come, so from a business standpoint, this bill with the proposed amendment will never create a benefit for the state.

Assemblyman Goldwater stated this bill was introduced on the Assembly side, was reviewed by the pari-mutuel wagering industry which found it acceptable, but came up against opposition on the Senate side of the Legislature. He concurred with Mr. Sullivan’s assessment that the proposed amendment is de facto, kills the bill, and probably would not be concurred in on the Assembly side. Assemblyman Goldwater remarked representatives of the Nevada Resort Association have agreed to work with Assemblyman Goldwater to draft acceptable legislation. He indicated if the committee sees fit to process the bill without the proposed amendment that would be acceptable. If the committee passes the bill with the amendment, that would not be the intent of the sponsor, and if the committee decides not to process the bill at all, that would be a fact of life.

Mr. Faiss introduced the other individuals at the witness table: Ms. Whittemore and Vincent Magliulo, Assistant Vice President, Race, Sports, and Keno Operations, Caesars Palace and Desert Inn. He reported Mr. Magliulo is also a member of the Nevada Pari-Mutuel Association rate committee, a seven-member group that negotiates, on behalf of the entire Nevada gaming industry, the pari-mutuel contracts with racetracks. Mr. Faiss testified that as Chairman James had pointed out, 2 years ago Nevada race books faced a severe problem caused by the rebate practices of a few operators on pari-mutuel races. He stated that impact was so severe the Nevada Resort Association, represented by Ms. Whittemore, the Nevada Pari-Mutuel Association, and the Nevada State Gaming Control Board, joined in support of amendments before this committee to ban pari-mutuel rebates. Mr. Faiss remarked the language this committee adopted 2 years ago is found in Nevada Revised Statutes (NRS) 464.075, which is the section A.B. 666 proposes to modify. He recalled the problem in 1997 concerned the amount of money Nevada pari-mutuel licensees paid to California racetracks to merge their wagering pools with those of the tracks. Mr. Faiss clarified if an individual makes a bet in a Nevada book, it goes directly into the pari-mutuel pool of the track outside the state. He continued the fee amounts were the result of negotiation by Mr. Magliulo and other members of the rate committee and approved by the state gaming authorities. Additionally, he said the amounts negotiated represented the maximum that Nevada race books, in their business judgment, felt they could pay.

Continuing, Mr. Faiss stated, as this committee was told 2 years ago, the rebate activity by a few operators became so pronounced that California racetracks "drew the line." He reported that representatives of California racetracks maintained if Nevada race books were making so much that they could afford lavish discounts, they could pay more to the California tracks. Mr. Faiss further stated when California’s increased fee demand was rejected by Nevada, the California tracks denied Nevada’s race books access to their races. To resolve this crisis, the Legislature followed this committee’s lead in prohibiting rebates on pari-mutuel wagers. Mr. Faiss commented that resulted in an end to the California racetrack boycott, and there has been peace on that front ever since. He continued, saying this committee’s amendment required the Nevada Gaming Commission to adopt regulations, which has taken 2 years to accomplish. Additionally, Mr. Faiss remarked the provisions that restrict rebates in concert with the law adopted in 1997 proved to be the most difficult in which to achieve consensus and were the last to be adopted. He maintained the Nevada Resort Association views these regulations as another example of the leadership of Nevada’s gaming control system and suggests there would be no harm in allowing those regulations time in which to be tested. However, Mr. Faiss suggested if the committee deems it appropriate to relax the prohibition against pari-mutuel rebates, the present language of A.B. 666 does not provide sufficient protection against a repeat of the conditions that led to the California racetrack boycott.

Mr. Faiss referred to the amendment proposed by the Nevada Resort Association (Exihbit E) and said it was in two parts. The first page contains the actual amendment; the second page incorporates the amendment into A.B. 666. The amendment language is, "or occurs at a track that has not consented to such an acceptance, agreement, increase or incentive." Mr. Faiss asserted it is not sufficient protection to say that the state outlaws rebates, because it is not the state with which the negotiating committee negotiates. He explained the committee negotiates with the tracks, and unless protection against boycotts is present from the outset ensuring the track has no disagreement, a boycott such as the California boycott of 1997 is a possibility. Chairman James referred to Mr. Sullivan’s point that it is a de facto prohibition altogether on rebates because the tracks will never sign such a letter. Mr. Faiss deferred to Mr. Magliulo to address that point.

Vincent Magliulo, Assistant Vice President, Race, Sports, and Keno Operations, Caesars Palace and Desert Inn, stated he was at the hearing representing Nevada Pari-Mutuel Association. He said it is difficult to negotiate with a racetrack unless "all the cards are on the table." Mr. Magliulo concurred with Mr. Faiss in that if rebates were to be a part of a particular racing meet, the track needs to know that up front. He also understands Mr. Sullivan’s comments, and stated the association has worked closely with LVDC since 1991, the inception of pari-mutuel wagering, and the comingling of pools to provide this amenity for patrons. This practice has contributed to considerable wagering and subsequent revenue to the state. However, Mr. Magliulo asserted without assurance from the track these costs would not escalate with no end in sight, pari-mutuel wagering could become a losing proposition. He further remarked, if they were to give rebates without track approval, tracks would inevitably revert to boycotting Nevada pari-mutuel wagering. Regarding Mr. Sullivan’s comment that rebates occur in other areas of casinos, Mr. Magliulo stated that is true. However, the biggest difference with regard to the pari-mutuel aspect is a collective agreement among 64 licensees and entities within Nevada that when a person is wagering in a casino or on slot machines, that is strictly a gaming opportunity between the patron and the licensee.

Senator Titus inquired whether the language of the amendment could be changed to match the language of the bill so that instead of saying, "the track that has not consented . . . ," it would state, "the track that has prohibited . . . ." Mr. Faiss remarked the bill drafters recognized the spirit in which Assemblyman Goldwater sought to deal with this matter, and the need for something on record stating the track consents or does not object. He continued the fact that the track has not said anything about rebates up to that point does not prevent it from saying, "In your case, you are giving rebates; you can afford to pay us more money." Mr. Faiss clarified that unless in the beginning they have an assurance rebates do not cause a problem, there is a possibility rebates will cause a problem.

Senator Care asked for some numbers regarding the amount of money Mr. Faiss was talking about in terms of rebates. Mr. Magliulo answered it is a product of handle. A person would be granted a rebate based on his total "handle," the amount of his wager. He gave the example of a $10,000 wager for a particular day. The arrangement with a particular casino would be to have a percentage of that returned to the patron. Mr. Magliulo clarified the patron would receive that amount whether he won or lost his wagers.

Chairman James mentioned it was brought to his attention the prohibition put into effect last session gives an unfair advantage to larger casinos because the rebate is a percentage of the wager, and therefore prohibits cash rebates. However, it does not prohibit noncash rebates such as food and beverages. Therefore, the larger casinos have the advantage of being able to offer more attractive amenities in lieu of a cash rebate. Mr. Magliulo remarked that was an interesting point, but there are two aspects to that. He said when pari-mutuel wagering was adopted in Nevada in 1991, it actually put all participants on equal footing. Prior to that track odds could only be paid up to the first $20 wagered. Another point made by Mr. Magliulo was a caution that if that sentiment is being expressed, smaller operators would shudder at the thought of larger operators offering cash rebates.

Senator Wiener inquired if those rebates are done in kind or in casino product, such as a room or beverage, and so forth, would those be considered a tax write-off for promotional expense. Mr. Magliulo answered affirmatively.

Mr. Neilander clarified that "comps" are not deductible from gross revenue, and rebates are also not deductible from gross revenue. Chairman James asked if Senator Wiener was talking about gaming tax or income tax. Senator Wiener replied she was talking about income tax. Mr. Neilander restated rebates would not be deductible from income tax.

There being no further testimony on the bill, Chairman James closed the hearing on A.B. 666. He then opened the work session, and referred to the work session document (Exhibit F).

The Chairman mentioned the first bill on the work session agenda was A.B. 231.

Senator Washington requested clarification the new language in section 1 of the bill means the court cannot waive arrearages until after the Welfare Division has had an opportunity to engage in the matter. Allison Combs, Committee Policy Analyst, Research Division, Legislative Counsel Bureau, clarified that was correct. Senator Washington inquired whether that meant the division would have to sign off the arrearages prior to the court waiving them. Ms. Combs explained, in her understanding, there would be a hearing at which the Welfare Division would present its opinion on the matter, and then the court would make its determination.

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The next bill addressed by Chairman James was A.B. 267.

The Chairman noted the proposed amendment to the bill is under tab A of the work session document (Exhibit F). He asked Brad Wilkinson, Committee Counsel, Legal Division, Legislative Counsel Bureau, to explain the amendment. Mr. Wilkinson agreed to do that and mentioned Ms. Combs had included an explanation in Exhibit F that tells what the amendment does by concept.

Mr. Wilkinson advised sections 1 through 6, as noted in Exhibit F, sections 11, 12, part of 14, 19, 21, 22, 24, and 25, all add back in the definitions of "reasonable cause to believe" and "as soon as reasonably practicable," with a reasonable person standard that were in the original draft of the bill. He remarked the Legal Division retained in section 13 of the bill the requirement there be a judgement of conviction against a person who was involved in the offense against the child. However, Mr. Wilkinson remarked the division has provided for the tolling of the statute of limitations for prosecution of that person for failure to report one of the crimes. He said that is contained in section 13, subsection 2. Additionally Mr. Wilkinson indicated the division added in definitions to facilitate distinguishing what constitutes a conviction and what constitutes the entering of a judgment of conviction by the court. In section 14 of the bill, Mr. Wilkinson stated the division added back into the original draft the exemption from reporting crimes against a child for family members. He noted that is contained in subsection 2 of section 14.

Continuing, Mr. Wilkinson explained also in section 14, subsection 6, the division added an exemption for people who are acting in their professional or occupational capacity under chapter 432B of NRS. He advised this would eliminate conflicts between the provisions of chapter 432B of NRS and this new reporting statute. Chairman James inquired whether that was where the privileges were added back into the bill. Mr. Wilkinson replied the privileges remain the same as they did in the assembly bill. Section 15 adds back in the provision reinstating immunity against civil or criminal liability for reporting of crimes. Mr. Wilkinson remarked section 16 clarifies reports that would constitute a report under chapter 432B of NRS can be acted upon in the same manner as reports under chapter 432B of NRS. He concluded by saying the remainder of the bill simply makes all the other reporting statutes consistent with this new reporting statute as it was in the original draft of the bill.

Senator Titus asked if the original sponsor of the bill agreed to the amendments. Chairman James answered the sponsor was present during the original hearing on the bill and indicated he knew there would be changes along the lines of the amendment.

Senator Washington addressed the 24-hour notice included in section 3. He inquired whether the age of the child having information regarding a crime would be a factor in the 24-hour notice requirement. Mr. Wilkinson answered the 24-hour limit would not apply to a child under the age of 16 years.

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Chairman James stated the next bill to be addressed was A.B. 467.

The Chairman indicated A.B. 467 regards confidentiality provisions. He mentioned there are two proposed amendments to the bill contained in Exhibit F. The first is an amendment from Senator Care that changes "may" to "shall," in section 1, subsection 2 of the bill. Another amendment by Senator Wiener regards information contained in medical records. He advised the amendment would amend section 1, subsection 1, paragraph (b), to say, " . . . information is irrelevant for the commission to consider in determining whether to grant a license . . . ," instead of " . . . information the commission did not consider . . . ."

The Chairman referred to his amendment to A.B. 616 contained in Exhibit F, and stated it establishes the intent by clarifying the presumption under subsection 4, regarding the person’s intent to sell items shall be a rebuttable presumption. Senator Titus asked how the bill drafters came up with "26" units of the items. Chairman James replied he assumed the bill drafters came up with that number because it is two more than a case of the same product.

Ms. Combs indicated John Morrow’s amendment was on page 4 of Exhibit F, and Madelyn Shipman’s amendment was under tab B of Exhibit F. Ms. Combs advised that Ms. Shipman’s amendment would take out the language under section 1 regarding whether or not the defendant may claim the affirmative defense and replace it with a new section stating, "For purposes of this section, a defendant is not considered to be unable to provide child support or spousal support if the defendant was . . . ." She continued, saying it then goes back to the two paragraphs, (a) and (b), that were in the original section 1 of the bill dealing with voluntary underemployment and other circumstances under which the defendant would be unable to pay. Chairman James stated the committee would address the bill at a future meeting. No action was taken on A.B. 617.

Chairman James next addressed A.B. 621.

Ms. Combs stated the committee requested a letter from the Federal Bureau of Investigation, and that is included under tab C of Exhibit F. The letter indicates the "record of public safety" is separate and apart from a "record of criminal history," and therefore would not be included in the compact information in Senate Bill (S.B.) 484, passed out of this committee.

Ms. Combs said the other proposed amendments, made mainly for discussion purposes, raise the penalty for unlawful reporting which is a misdemeanor. She stated there was some question as to whether that is consistent with the high-technology crime legislation. Continuing, Ms. Combs reported under the high-technology crime legislation, it is also a misdemeanor, although under some circumstances it can be a Category D felony. She noted there does not appear to be inconsistencies between the two pieces of legislation. With regard to the protection of confidentiality, Ms. Combs advised the committee might want to consider an amendment regarding records of public safety. The issue is whether or not those records should be limited to dissemination only within Nevada. She added there is an issue nationally that some information within that record of public safety is needed for missing persons or the related issue of unidentified deceased persons. Finally, Ms. Combs mentioned the reference to a concealed firearm. She said there was a question as to whether or not that was an appropriate reference, and in light of the other statutes, "concealed firearm" appears to be the correct phrase to use.

Chairman James recommended proposing an amendment regarding the confidentiality issue. He called for a motion that would direct Mr. Wilkinson to draft an amendment and return with it to the next work session of the committee.

Senator Washington recalled working on several bills during session dealing with the criminal repository in several different committees. He asserted there is an alarming trend of disseminating information to the repository, and he is concerned about maintaining confidentiality. Senator Washington pointed out the acquisition of personal information by government agencies may not affect this generation, but may be troublesome to the next generation. Chairman James remarked he has the same concern, and hopefully the amendment will address that concern.

The next bill addressed by Chairman James was A.B. 624.

The Chairman explained when a judgment is received, the winner must decide who receives the attorney’s fees. The winning attorney would make a motion under NRS 18.010, and that motion for attorney’s fees would not change the 30-day time limit to appeal.

*****

Chairman James next addressed A.B. 644.

Chairman James noted that this committee did not hear the senate bill that was introduced, and subsequent to that, tax-liability issues were worked out that did not have to do with the contract issues.

There being no further business to come before the committee, Chairman James adjourned the meeting at 10:55 a.m.

RESPECTFULLY SUBMITTED:

Jo Greenslate,

Committee Secretary

APPROVED BY:

Senator Mark A. James, Chairman

DATE: