Nugget of a nonprofit

Gambling in Iowa could be a model for the Carson Nugget if the downtown casino is managed as a nonprofit by its potential new owner.

The oldest casino in Carson City could be bought by a new owner who wants to redevelop downtown under a plan that could make the current casino owners, the Adams family, managers of a nonprofit operating the casino, Nugget managers said in November.

Nugget General Manager Kevin Beaton confirmed the casino is still in negotiations with a possible developer, but said he couldn't name the developer or say how the casino will be managed under the new owner.

"This is all in motion," he said.

But if the casino is managed as a nonprofit, it wouldn't be the first. Nonprofits must hold gaming licenses for casinos by law in Iowa.

Gaming companies usually run the casinos after negotiating what percent of the gross revenue that will go to the nonprofit, generally between 4 and 6 percent. Two Iowa casinos, however, are operated by the nonprofits that hold their gaming licenses.

This has generated over $50 million for grants, charities and education since gambling began to be legalized in 1983, according to the Iowa Gaming Association. Only dog and horse racing was allowed at first, but the state now has 10 riverboat casinos, four land casinos and three racetrack casinos.

Two of the casinos are operated by Las Vegas-based gaming companies Harrah's Entertainment and Herbst Gaming, which runs Terrible's casinos and gas stations.

The arrangement between nonprofits and gaming companies has been popular in the state, Iowa Gaming Association President West Ehrecke said, because of the thousands of people and charities that have benefited from the casinos.

Counties have to approve gaming every eight years, he said, and the most recent referendum in 2002 won in counties by an average of close to 75 percent.

Ehrecke said gaming companies agree to the nonprofit arrangement because they want to be "a good corporate citizen." It's also simply part of the price of doing business in Iowa, he said.

Nonprofit contributions of over $7 million from the Diamond Jo Casino in Northwood, Iowa, helped many including a library, a historical society and high school seniors in northern Iowa's Worth County who all get $6,500 college scholarships, said Kim Miller, executive director of the Worth County Development Authority.

The authority holds the casino's gaming license and gets about 5.75 percent of the gross revenue from casino, giving it to education, grants and local governments.

Diamond Jo Casino, which has over 500 employees, has the support of customers from both Iowa and Minnesota because of its support of education, Miller said.

Customers from Minnesota, she said, especially like the idea that the money they spend "will go back to the community."

The idea to combine betting and nonprofits in the state, said Iowa Racing and Gaming Commission Administrator Jack Ketterer, came from Nebraska.

Nonprofits held gaming licenses for horse racetracks in Nebraska starting in the 1930s, usually at county fairs, to help support the agricultural-based economy, he said.

Other horse racetracks in the country have partnered with nonprofits, he said, but the arrangements are biggest in Iowa.

This probably wouldn't work at a Nevada casino, however, said David Schwartz, director of the Center for Gaming Research at the University of Nevada, Las Vegas.

State gambling regulators want the states more than 270 casinos to keep a clean image, he said, and involving a nonprofit with a casino could cause problems.

"It seems like there would be a great potential for abuse," he said.

Many gaming companies have charitable foundations, he said, but so does every big business.

- Contact reporter Dave Frank at dfrank@nevadaappeal.com or 881-1212.