SLS visionary Sam Nazarian gets limited gaming license

Sam Nazarian speaks during a press conference at SLS Las Vegas on Friday, Aug. 22, 2014.

After a second round of public questioning about dubious business associations and drug use, nightlife entrepreneur Sam Nazarian was awarded an extremely limited gaming license from Nevada regulators today.

Per the limitations from the Nevada Gaming Commission, Nazarian remains barred from involvement with casino operations at the SLS resort. The commission’s decision follows an earlier recommendation from the Gaming Control Board but with even more restrictions, including a more stringent drug-testing requirement for Nazarian.

The resort announced earlier this week that Nazarian, a Los Angeles nightlife and hospitality tycoon whose vision made SLS a reality, will no longer be involved in day-to-day operations.

The commission’s decision means that Nazarian can still get a full license in a year and, at that point, become involved in all operations of his resort brainchild.

As with the Control Board hearing in Carson City two weeks ago, regulators focused today on Nazarian’s dealings with a man who allegedly extorted him and his admission of using cocaine.

Nazarian, 39, apologized to the board for his drug use and responses to questions about it. He said he plans to take some time off from his company, SBE Entertainment, as well.

“Over the last two weeks, I’ve had some time to reflect,” he said. “I’ve realized through this process that I need to take some time to myself.”

Nazarian claims that a convicted felon named Derrick Armstrong pressured him for money on multiple occasions over the course of several years. He has said the two initially had a professional relationship until Armstrong allegedly made threats against Nazarian.

In total, payments made over the years to Armstrong or people allegedly associated with him total nearly $3 million, Nazarian said.

Regulators have grilled Nazarian over why he allowed what commission Chairman Tony Alamo described as an “extortion relationship” to continue. Nazarian said in his defense that he was afraid of Armstrong.

Armstrong, for his part, has denied the claims against him. He told the Los Angeles Times that he was a business partner and “fixer” of Nazarian’s and that “these allegations of extortion and being fearful are a bunch of lies.”

During the hearing, Alamo divulged that Armstrong tried to show up but was arrested. Court records show Armstrong was arrested on suspicion of theft and writing bad checks.

Armstrong had told the Associated Press that he planned to attend today’s hearing in order to clear his name.

Aside from the Armstrong matter, drugs were the second big issue for regulators. Nazarian admitted to using cocaine this year during a recent trip to Mexico and at his last hearing, the Control Board criticized him for not being forthright enough in his answers about other drug use.

Today Nazarian told the commission that his next most recent instance of drug use was in July 2013. He said a drug test would come up negative if one were performed on him now, and he admitted that he’s seeing medical treatment to determine whether he has an alcohol abuse problem.

The Control Board recommended Nazarian be drug tested randomly. The commission today made that requirement tougher by mandating that the drug testing occur no less than every three months and that it include hair and urine testing.

Nazarian is not done with gaming regulators. Another investigation, in preparation for the end of his one-year license, will begin promptly. One of the commission-imposed requirements is that Nazarian set up a revolving fund to finance the investigation as necessary.

“I want the board during this investigation to drive you crazy,” Alamo said. “I want them to be all over everything you do.”

Nazarian promised commissioners not to embarrass them and said “I’ll make you proud.”

And he wasn’t the only one defending himself today. Before the hearing started, several people spoke favorably of him during public comment. During the hearing, new state Sen. Mark Lipparelli, a former gaming regulator himself, said Nazarian’s other business decisions should “balance

and far outweigh” his mistakes.

Some of the commissioners admitted that they had considered denying Nazarian’s application altogether. Commissioner Joseph Brown said he reviewed the transcript from the Control Board hearing last night and decided he couldn’t approve Nazarian for a license.

But he suggested that Nazarian changed his mind by appearing “sincere and contrite” in his appearance today.

“I hope you have learned that this isn't LA or Miami,” Brown said, referring to two of the other areas where Nazarian’s business has SLS hotels. “Gaming is a totally different ball game, and Nevada regulates gaming very, very strictly."​

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