Modern Brewery Age: Casinos may have violated law in dropping wholesaler

AP--It was a beer distributor's political views, not a better deal from Coors, that caused Harrah's Entertainment to drop Budweiser sales at its two Lake Tahoe casinos, the company has confirmed.

Harrah's and Harveys hotel-casinos at Stateline stopped buying Budweiser from Carson City, NV,-based Capital Beverages, owned by Kurt Brown, in August. Last month, the FBI confirmed it was looking into allegations that Brown lost the contracts in retaliation for his opposition to a tax proposal that gambling companies favored.

Harrah's spokesman Gary Thompson initially said the company stopped selling Budweiser because it got "a better business deal from Coors." On Tuesday, Thompson said he later learned of letters that Harrah's Chairman Phil Satre and Brown exchanged earlier this year.

In a July 3 letter, Brown told Satre that he was "backing off from participating in the process" and had been unaware of Harrah's position on the gross receipts tax.

In a July 8 response, Satre told Brown he was entitled to "hold and express your political views"--and Harrah's enjoyed the same right.

Satre wrote that the gambling company's Lake Tahoe casinos would "no longer do business with an entity whose actions support a course that is detrimental to Harrah's financial interest and the financial interests of the state."

Brown has not returned repeated calls to his office.

State officials don't think the retaliation against the beer distributor violated any laws or lobbying regulations.

Legislative Counsel Bureau Administrator Lorne Malkiewich said he knows of no laws broken by businesses that refuse to do business with someone whose political stances they oppose. "No one says you have to buy beer from anyone," Malkiewich said. "This was more of a business decision, not something lobbyists did."

Tom Sargent, a spokesman for the state attorney general's office, could find no law that would apply in a case in which someone refuses to buy a product because he does not approve of the supplier's view on taxes.

"This was a decision not by lobbyists, but by the business owners," said lobbyist John Sande, who represented Harrah's at the Legislature. "It was a business decision."

Legislators decided not to pass the gross receipts tax backed by major casinos and by Gov. Kenny Guinn. Instead, they approved a record $836 million tax increase that includes a 0.7 percent tax on company payrolls.