State v. Rosenthal

• Citation: 93 Nev. 36,559 P.2d 830
• Decision Date: 03 February 1977
• Docket Number: No. 9301,9301
• Parties: STATE of Nevada, and State of Nevada Gaming Commission, Appellants, v. Frank ROSENTHAL, Respondent.
• Court: Supreme Court of Nevada

Page 830

559 P.2d 830

93 Nev. 36

STATE of Nevada, and State of Nevada Gaming Commission, Appellants, v. Frank ROSENTHAL, Respondent.

No. 9301.

Supreme Court of Nevada.

Feb. 3, 1977.

Rehearing Denied March 9, 1977.

Robert List, Atty. Gen., A. J. Hicks and Marcus H. Sloan, III, Deputy Attys. Gen., Carson City, for appellants.

Oscar B. Goodman, Las Vegas, Erwin N. Griswold and Linda K. Smith, Washington, D.C., for respondent.

Frank W. Daykin, Legislative Counsel, Carson City, Beckley, Singleton, DeLanoy, Jemison & Reid, Las Vegas, for Scott Corp.; Vargas, Bartlett & Dixon, Las Vegas, for First National Bank; McDonald, Carano, Wilson, Bergin & Bible, Reno, for M.G.M., amicus curiae.

OPINION

THOMPSON, Justice:

This matter comes to us on direct appeal from a judgment of the Eighth Judicial District Court. That judgment declared certain licensing provisions of the Nevada Gaming Control Act unconstitutional for want of standards. It also found that the hearings before the Gaming Control Board and the Gaming Commission on Frank Rosenthal's application for a gaming license were conducted in such fashion as to violate federal constitutional proscriptions. Finally, the district court nullified the decision of the Gaming Commission that Frank Rosenthal is a person whose licensing would reflect or tend to reflect discredit upon the State of Nevada. For reasons hereafter stated we reverse that judgment in all respects and reinstate the decision of the Gaming Commission.

On January 23 and 24, 1975, the Gaming Commission held an investigative hearing to determine whether Frank Rosenthal was a key employee exercising significant influence over decisions of Argent Corporation a holding company, which then owned three major hotel-casinos in Clark County. Rosenthal was executive consultant to the Chairman of the Board of Argent Corporation. It is clear that he significantly influenced policy decisions concerning the conduct of gaming in the three hotel-casinos. Consequently, the Commission directed him to submit an application for a gaming license as key employee. The application submitted by him described his duties 'to consult with and to recommend to the Chairman; to advise, to administrate, delegate and supervise Corporate standards, procedures and policies.'

The application first was considered by the Gaming Control Board at a hearing on January 14, 1976. The members of that Board voted unanimously to recommend to the Nevada Gaming Commission denial of the application.

On January 22, 1976, the Gaming Commission heard the matter and voted unanimously to deny the application for license. The Commission found: 'The applicant is a person whose licensing by the State would reflect or tend to reflect discredit upon the State of Nevada by reason of: A) A North Carolina court finding of guilt for conspiracy to bribe an amateur athlete; B) Testimony of Mickey Bruce in Senate subcommittee hearings that applicant attempted to bride him to throw outcome of 1960 Oregon-Michigan football game; (C) Statements by police officers Dardis and Clode to Senate subcommittee and to Florida Racing Commission that applicant admitted he was corrupting public officials in return for protection; D) The applicant's being barred from race tracks and pari-mutual operations in the State of Florida.'

On February 17, 1976, Rosenthal filed a petition for judicial review of the decision of the Commission. He premised his petition upon NRS 463.315, alleging that the decision of the Commission violated constitutional provisions, was in excess of its jurisdiction, made upon unlawful procedures, was unsupported by any evidence, and was arbitrary and capricious and otherwise not in accordance with law. The petition did not assert that the licensing provisions of the Gaming Control Act were unconstitutional for want of standards. The district court, sua sponte, declared NRS 463.140 and 463.220 unconstitutional, and nullified the decision of the Gaming Commission.

1. It is established beyond question that gaming is a matter of privilege conferred by the State rather than a matter of right. The legislature has so declared. 'Any license issued pursuant to this chapter shall be deemed to be a revocable privilege and no holder thereof shall be deemed to have acquired any vested rights therein or thereunder.' NRS 463.130(2). In 1931 this court wrote: 'We think the distinction drawn between a business of the latter character (liquor) and useful trades, occupations, or businesses is substantial and necessary for the proper exercise of the police power of the state. Gaming as a calling or business is in the same class as the selling of intoxicating liquors in respect to deleterious tendency. The state may regulate or suppress it without interfering with any of those inherent rights of citizenship which it is the object of government to protect and secure.' State ex rel. Grimes v. Board, 53 Nev. 364, 372, 373, 1 P.2d 570, 572 (1931). Accord: Dunn v. Tax Commission, 67 Nev. 173, 187, 216 P.2d 985 (1950).

The licensing and control of gaming requires special knowledge and experience. Nev. Tax Com. v. Hicks, 73 Nev. 115, 119, 310 P.2d 852 (1957); Dunn v. Tax Commission, supra. In Hicks, this court observed 'the risks to which the public is subjected by the legalizing of this otherwise unlawful activity are met solely by the manner in which licensing and control are carried out. The administrative responsibility is great.' Id. at 120, 310 P.2d at 854.

The legislature has been sensitive to these basic concepts. Members of the Gaming Control Board and Gaming Commission must have special qualifications suited to the important duties with which they are charged. NRS 463.023; 463.040. Their powers are comprehensive. NRS 463.130--144. Court intrusion is limited. As we noted in Gaming Control Bd. v. Dist. Ct., 82 Nev. 38, 409 P.2d 974 (1966): 'Any effort to obstruct the orderly administrative process provided by the Gaming Control Act casts serious doubt upon the ability of Nevada to control the privileged enterprise of gaming. Control does not exist if regulatory procedures are not allowed to operate. Courts owe fidelity to the legislative purpose . . ..' Id. at 40, 409 P.2d at 975. Indeed, judicial review is confined to a final decision or order of the Commission and then only in specified instances.

With these basic principles in mind we turn to consider the issues of this appeal.

2. In the district court the State and the Gaming Commission moved to dismiss the petition for review for want of jurisdiction. We particularly note that the petition did not challenge the constitutionality of the licensing statutes. Had such challenge been made, a court would have to resolve it. Jurisdiction to decide that issue would exist since the courts are charged with the duty to decide such a question.

The petition for review was presented pursuant to NRS 463.315. That statute provides that 'Any person aggrieved by a final decision or order of the commission made after hearing or rehearing by the commission pursuant to NRS 463.312 . . . may obtain a judicial review thereof in the district court . . ..' An examination of NRS 463.312 reveals its application only to disciplinary or other action against a license. It does not contemplate court review of the denial of a gaming license application. The sole responsibility for licensing is vested exclusively in the commission. NRS 463.220(6) so provides. 'The commission shall have full and absolute power and authority to deny any application (for a license) for any cause deemed reasonable by such commission . . ..' In Nev. Tax Com. v. Hicks, 73 Nev. 115, 121, 310 P.2d 852, 855 (1957), the court wrote: 'It is not the province of the courts to decide what shall constitute suitability to engage in gambling in this state.' In this regard the law has not changed since Hicks.

The legislature carefully has distinguished between persons who have been licensed and those who never have been licensed. In the former case judicial review of disciplinary action is provided; in the latter instance, it is not. This is a reasonable distinction since licensees possess property interests which those who have never been licensed do not have. The district court should have granted the motion to dismiss filed by the State and the Commission. Instead, that court declared the licensing provisions of the Gaming Control Act unconstitutional for want of standards, notwithstanding the absence of an allegation in the petition placing that question in issue. We proceed, therefore, to resolve that question.

3. The sections declared unconstitutional are NRS 463.140 and 463.220. In discussing this issue we do not decide whether licensing standards for the privilege enterprise of gaming must be expressed legislatively. ¹ However, the legislature has expressed standards which have been implemented administratively. When one considers the interrelationship of the statutory standards, United States v. Polizzi, 500 F.2d 856 (9th Cir. 1974), and the regulations adopted administratively, any contention that there is an absence of appropriate standards must fail.

The basic standard is stated in NRS 463.130. Gaming shall be licensed and controlled 'so as to protect the public health, safety, morals, good order and general welfare of the inhabitants of the State of Nevada, and to preserve the competitive economy and the policies of free competition of the State of Nevada.' The statutes which were ruled unconstitutional by the court below simply state that gaming licenses shall be administered 'for the protection of the public and in the public interest in accordance with the policy of this state,' NRS 463.140, and that the Gaming Commission has full power to deny any application 'for any cause deemed reasonable,' NRS 463.220.

Administrative regulations have been adopted by the Commission pursuant to legislative authorization. NRS 463.150(1). Relevant to this case...