State v. Glusman
651 P.2d 639, 98 Nev. 412, 1982 Nev. LEXIS 490 (1982)
Rule of Law:
The state may require non-gaming businesses located on the premises of a gaming establishment to undergo a determination of suitability, but it constitutes an excessive use of police power to require such non-gaming applicants to pay the costs of the state's investigation.
Facts:
- Frederick J. Glusman was an officer and sole shareholder of International Dress Shop, Inc., which operated retail clothing stores called Fredde's Dress Shops.
- The shops were located on the premises of the Las Vegas Hilton and Stardust hotels, which are licensed gaming establishments.
- Glusman operated these shops under leases dating back to 1968 and 1977.
- Acting on a recommendation from the Gaming Control Board, the Nevada Gaming Commission issued an order directing Glusman to apply for a determination of suitability to be associated with a gaming enterprise.
- The order was based on a statute allowing the Commission to require suitability determinations for any business doing business on the premises of a licensed gaming establishment.
- Glusman refused to cooperate with the order, believing the statute to be unconstitutional.
Procedural Posture:
- Glusman filed a complaint for declaratory and injunctive relief in the state district court.
- The district court granted a preliminary injunction preventing the State from enforcing the statute (Case No. 12946).
- The State appealed the preliminary injunction to the Supreme Court of Nevada.
- While the first appeal was pending, the district court heard the case on the merits.
- The district court ruled in favor of the State, declaring the statute constitutional and dissolving the injunction.
- Glusman appealed the district court's final ruling to the Supreme Court of Nevada (Case No. 13217).
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Issue:
Does the Nevada Gaming Commission have the constitutional authority to require a non-gaming business operating on casino premises to undergo a suitability determination, and can it compel that business to pay the associated investigative costs?
Opinions:
Majority - Justice Steffen
Yes, regarding the suitability requirement, but no, regarding the payment of costs. The Court affirmed that the state's police power allows it to strictly regulate the gaming industry, including checking the background of non-gaming businesses that share space with casinos (like a dress shop inside a hotel). The Court found that the statute was not vague because other regulations defined "suitability," nor did it violate privacy or contract rights given the state's compelling interest in maintaining public trust in gaming. However, the Court ruled that requiring a non-gaming business to pay the state's investigative costs—which could be substantial—was unreasonable and fundamentally unfair. While the state can check if a dress shop owner is honest, forcing that owner to underwrite the cost of the investigation could cause "financial decimation," which is an excessive use of police power.
Analysis:
This case is significant because it defines the outer limits of the Nevada Gaming Commission's expansive regulatory powers. While the court reaffirmed the "quicksilver" nature of gaming and the need for strict control over anyone associated with the premises—even non-gaming tenants—it drew a line at financial burdens. The decision establishes that while the state's police power justifies intrusive background checks for the sake of public welfare, it does not justify imposing potential financial ruin on non-gaming entities via investigative fees. This creates a distinction between the authority to investigate (which is absolute) and the power to assess costs (which must be reasonable and not discriminatory toward non-gaming entities).
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