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MGM to Work With Minority Contractors in All Future Bids

14 June 2000

One of the most overlooked aspects of the new casinos in Detroit is the reality that casinos are constantly under construction. New improvements, and in Detroit's case, new permanent facilities are in the works. On average, a casino property has a "shelf life" of approximately only five years before it is totally rebuilt and refurbished. These constant construction projects bring a wealth of good paying construction jobs, which provides one of the greatest sources of the economic benefits casinos bring to a community.

For each of the three Detroit casinos, Detroit Mayor Dennis Archer and the members of the Detroit City Council included contractual provisions in the development agreements designed to ensure that minority based businesses, women-owned businesses, small business concerns, and Detroit-based businesses are used to a significant degree in all of the casino contracts with suppliers and with construction contractors. These protections, which were critical to the Detroit leaders, were intended to assure that the social and economic benefits that casinos bring to the communities they enter are shared by all people, regardless of race.

In Las Vegas, similar provisions are not mandated for casino developers. In the hustle and bustle of rapid-fire construction like MGM has done in Las Vegas in recent years, it is easy to overlook these matters to get a job done rapidly.

A couple weeks ago, much to its surprise, MGM Grand found itself subject to criticism at a Nevada Gaming Control Board meeting convened to discuss MGM's proposed acquisition of Steve Wynn's Mirage Resorts. Gene Collins, the president of the Las Vegas Chapter of the NAACP, expressed concern over MGM's lack of use of minority contractors in its projects compared to Mirage's track record. Almost immediately, MGM Grand Chairman Terri Lanni invited Mr. Collins to meet with him noting that he had not "focused" on minority purchasing in construction contracts, but promising to pull the numbers so that they could have a meaningful discussion.

After meeting on Wednesday of that week, MGM Grand announced that it has promised gaming regulators and black leaders that going forward it will demand that its general contractors include a minority component in all future bids. In letters to the Nevada Gaming Commission, the Gaming Control Board and the NAACP, Mr. Lanni wrote that MGM Grand would not accept a contractor's bid without a minority component. "To my knowledge, this marks the first initiative of this sort in the history of gaming in Nevada," he wrote. He also announced that MGM will sponsor an "opportunity fair" for black and other minority-owned suppliers and vendors.

Nevada NAACP President Gene Collins responded by expressing shock over the numbers supplied at the meeting and called upon MGM to make specific commitments toward spending on black-owned businesses. Noting that in Detroit MGM committed to spend $50 million on minority business development, he asked for a commitment of $100 million in Las Vegas.

MGM and the NAACP plan to continue the dialogue with another meeting scheduled for June 20. Hopefully, more commitments will be made to help MGM to focus on its minority business practices in all of its operations. In Detroit, our political leaders and their staffs went the extra mile to assure that this "focus" would not be lost. As a result, our community has become a role model for the gaming industry. Everyone involved in our community needs to make sure that the promise of these commitments becomes a reality to be proud of for many years to come.

David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com
David Waddell
David Waddell is an attorney for Regulatory Management Counselors, P.C. (RMC), which assists businesses in navigating the legislative, regulatory and licensing systems governing Michigan’s commercial and tribal casino industries. He is the co-author of The State of Michigan Gaming Law Legal Resource Book and one of the founders of The Michigan Gaming Newsletter.

David Waddell Websites:

www.michigangaming.com