As his company stepped up its legal and public relations battle against the city's condemnation of the Old Reno Casino, John Farahi of Atlantis Casino Resort last week argued that the city's action threatens the flow of capital into Reno's gaming industry.
Here's the argument of Farahi, who is general manager of The Atlantis and co-chairman of its parent company: The city's zoning laws require new gaming properties outside the downtown area to include amenities ranging from hotel rooms to landscaped parking lots and trees along the street.
When the city condemned the Old Reno Casino, however, the condemnation action freed the casino's license to be moved elsewhere in the city possibly to the corner of Longley and South Virginia.
And because the license was freed up by a condemnation action, the new casino won't be subject to the same requirements as a newly constructed property.
That cost advantage provided by the city's action, Farahi said, makes some investors wonder about the wisdom of putting their money into Reno.
After all, they've been telling Farahi, why should they invest in Reno if a competitor is allowed to play by different and lessexpensive rules? That uncertainty only adds to the concerns of investors who already are unnerved about the effects of Indian gaming on northern Nevada.
"That (the condemnation) is sending a wrong signal to the investment community," Farahi said.
"It erodes confidence."
As one of the two publicly traded pure plays on Reno gaming The Sands Regent is the other the Monarch Casino & Resort Inc.
that operates The Atlantis is particularly sensitive to investors' perceptions of Reno.
The uncertainty about the Reno market hits particularly close to home for Monarch, which has approved plans on the books to expand its facilities into the property now used as a parking lot on the other side of Virginia Street from its existing hotel and casino.
Farahi is adamant that his company's opposition to the movement of the Old Reno Casino license isn't driven by fears of competition in the lucrative south Reno market.
The Atlantis runs about 90 percent occupancy in its hotel rooms, he said, and the area around the convention center clearly could use more hotel rooms.
Farahi said increased gaming in south Reno, meanwhile, would help create a critical mass of establishments to draw consumers who like to go from one property to another.
A stand-alone casino without hotel rooms such as that allowed under the Old Reno Casino license wouldn't help the region's tourism industry, Farahi contended.
"A slots joint is a locals joint that recycles local dollars," he said.
(To get a sense of the economics of the hotel-casino business, take a look at Monarch's financials for the first quarter of this year.
The company said $17.7 million of its revenues came from gaming, $8.2 million came from food and beverage operations and $4.7 million came from its hotel.) A legal action filed by Monarch last week echoes claims in a filing the company made in April, which also is pending.
Those filings say: Harvey Whittemore, a well-known lobbyist, made a deal to buy the Old Reno Casino at 44 W.
Commercial Row, but the deal is contingent on the city's condemnation of the property.
The casino license becomes available to be transferred to another location only if the property is condemned not if it's merely sold.
Whittemore asked the City Council to condemn the property, and the council agreed to a $1 price.
The centerpiece of Monarch's claim is its contention that the city didn't have a public purpose in mind for the Old Reno Casino property when it condemned it.
"It creates the impression that the city's power of eminent domain is up for sale," said Jeremy Nork of the law firm Hale Lane, which is representing The Atlantis' parent company.
The city's attorney office declined to comment on Monarch's contentions, noting that it routinely doesn't discuss active cases.
