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Dec 18, 2014 6:45 PM

Amid scrutiny, Vegas hotelier wins gambling license

The Associated Press

LAS VEGAS (AP) A contrite Sam Nazarian who revamped the Sahara hotel and casino on the Strip, won a gambling license from Nevada's regulators Thursday but not without limits and a promise that the nightlife magnate would remain under heavy scrutiny.

Nazarian's license expires in a year, bars him from being involved in casino operations and requires him to set up a fund with $50,000 at all times to cover the state's ongoing investigations into him. He must also submit to random drug tests at least every three months, among other conditions, including having no associations with any unsavory people of disrepute.

"Not only will I not embarrass, but I'll make you proud," Nazarian told commissioners Thursday, who said during his hearing that he had done some soul-searching in the weeks after his first interrogation earlier this month, realizing that "I need to take some time for myself after 39 years."

He said Thursday he had sought the medical help of a Las Vegas doctor to determine if he has a substance abuse problem.

That came on the heels of an announcement that week that, in light of the license investigation, he would step aside from having any involvement in the day-to-day operations of the SLS Las Vegas, ceding that oversight to the hotel-casino's majority owner Stockbridge Capital.

The entrepreneur had his 39 years on display at public hearings the good, the bad, the private as regulators weighed whether to license him, a requirement to participate in Nevada's top industry.

Nazarian's admitted cocaine use plus his evasiveness when talking with investigators about it and his vulnerability to extortion attempts for several years, troubled Nevada Gaming Commissioners charged with maintaining integrity in an industry once tainted by mobsters and corruption.

At the heart of the intense questioning of Nazarian as well as anyone looking to lead casino operations in Las Vegas is the consideration of an individual's character, honesty and the integrity to avoid negative publicity for Nevada and its primary source of income.

Before joining three other commissioners to vote unanimously in favor of Nazarian's limited license, Randolph Townsend warned that the state and commission's integrity were on the line, and missteps by Nazarian would be a "pox on all of us."

"If this goes forward, don't let us down," he said.

Three of the commissioners said they were prepared to deny Nazarian a license based on his answers at a marathon Gaming Control Board hearing earlier this month and what the state's investigation turned up, but noted that he appeared Thursday to be contrite, humble and sincere.

"I hope you've learned that this isn't L.A. or Miami," Commissioner Joseph Brown said. "Gaming is a totally different ballgame."

Nazarian was apologetic throughout the two-hour hearing, telling commissioners he was sorry for not being candid when asked for details on when he used drugs, saying it might have been in the ballpark of two years ago. On Thursday, he gave an exact date in 2013. That was before he tested positive for cocaine use earlier this year when the state's investigation caught traces in a hair-sample drug test. He has previously said his drug use was a mistake.

Also at the center of the investigation were numerous payments totaling nearly $3 million to a former business associate, Derrick Armstrong. Nazarian's lawyers likened the payments to extortion. Nazarian said he made the payments out of fear.

The payments included one involving a $90,000 payment to record producer Marion "Suge" Knight who was upset about apparently being owed money via a deal involving Armstrong.

Nazarian said he had taken different steps more recently, including employing lawyers and working with local law enforcement agencies, to end it.

Armstrong has not been charged with extorting Nazarian.

Commissioners had trouble reconciling why he continued to make payments to Armstrong if his claims for the funds were without merit.

Armstrong said in a phone interview Wednesday that he planned to attend the meeting to clear his name, calling Nazarian's claims of extortion untrue. Commission Chairman Tony Alamo said Thursday that Armstrong was arrested at the Grant Sawyer State Office Building on outstanding warrants before the meeting's start.


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