July 14, 2004

Las Vegas Law Firm Slot Machine Contract
Might Cost the State More Than Expected

By Mike Hailey
Capitol Inside Editor

The state may be looking at a bigger bill than initially expected from its decision to hire a Las Vegas law firm to draft video lottery legislation for the special session that was held this past spring.

The contract with the law firm of Lionel, Sawyer & Collins, which the Attorney General's office approved and the Lottery Commission is paying, was originally set at $250,000. But after submitting a bill for about $176,000 in April, the law firm has sent the state two more bills totaling $185,293. That would ostensibly push the price tag to more than $361,000 - or $111,000 above the initial quarter-million dollar amount announced earlier by the state.

The contract with Lionel, Sawyer & Collins, which represents some of Nevada's largest casino operators, will be the subject of a second hearing by the House Licensing and Administrative Procedures Committee on Wednesday.

The panel's first hearing in June ended with the chairman of the committee - State Rep. Kino Flores, a Mission Democrat - accusing the Lottery Commission and Attorney General's office of spending state funds illegally when they approved the contract with the Vegas firm in December 2003. The House panel, a mixture of Democrats and Republicans, used the first hearing in early June as an opportunity to grill officials from the two agencies on a number of questions including whether the deal with LSC might be a way for some of the firm's clients to get their foot in the door for casino gambling in Texas.

Several major casino interests were on hand during the special session to promote the economic advantages of full-service casinos. Representatives at the Capitol for racetracks and Indian tribes that would have been given exclusive rights to VLT's said the casino companies were working to kill the video lottery effort behind the scenes.

Sources say the second bill from the Las Vegas lawyers included about $82,000 that it needed to pay subcontractors whose work reportedly included research for projections and other data that was incorporated into a constitutional amendment to legalize video slot machines in Texas. The balance would be used reportedly for legal fees, travel and other expenses incurred in the firm's work for the state.

State Senator Jane Nelson, the first official to shed light on the state's deal with the Vegas firm, has requested a state auditor's investigation into the contract and circumstances surrounding it. Nelson, a Flower Mound Republican, is seeking the probe in her role as vice chair of the Sunset Advisory Committee. That report is expected to be made public today.

Flores has a keen interest in the deal as the sponsor of a VLT bill that Governor Rick Perry threatened to veto in 2003. Perry switched his position publicly on video lottery gambling shortly before the special session began in April - several months after Lionel Sawyer and Collins began working on the legislation for the state. The governor's office has denied being behind the deal with the law firm except to acknowledge that Chief of Staff Mike Toomey did pass along the name of one of the subcontractors hired for the project.