## Facts

- Frank Rosenthal served as an executive consultant to the chairman of Argent Corporation, which owned three major hotel-casinos in Clark County, and he significantly influenced gaming policy decisions.
- The Nevada Gaming Commission held an investigative hearing (Jan. 1975) to determine whether Rosenthal was a “key employee” requiring licensure; it concluded he was and ordered him to apply for a key-employee gaming license.
- Rosenthal’s application described duties that included consulting, advising, administering, delegating, and supervising corporate standards, procedures, and policies.
- The Gaming Control Board unanimously recommended denial of the application (Jan. 14, 1976).
- The Gaming Commission unanimously denied the license (Jan. 22, 1976), finding licensure would “reflect or tend to reflect discredit upon the State of Nevada” based on: a North Carolina court finding of guilt for conspiracy to bribe an amateur athlete; Senate subcommittee testimony alleging Rosenthal attempted to bribe a football player to throw a game; and law-enforcement statements and related allegations of corrupt activity and exclusion from certain racing operations.
- Under a Commission regulation, denial of the key-employee license could result in automatic revocation of Rosenthal’s work permit without additional notice or hearing, making him ineligible for casino employment.
- Rosenthal sought judicial review; the district court declared NRS 463.140 and NRS 463.220 unconstitutional for lack of standards, found due-process violations in the administrative hearings, and nullified the Commission’s denial decision.
- The State and the Nevada Gaming Commission appealed.

## Issues

1. Whether NRS 463.140 and NRS 463.220 unconstitutionally delegated licensing authority to the Nevada Gaming Commission for want of adequate standards.
2. Whether the Board and Commission procedures in the licensing proceedings violated federal due-process requirements.
3. Whether the Commission’s denial was arbitrary, capricious, or unsupported by substantial evidence.
4. Whether the district court exceeded the proper scope of judicial review by invalidating statutory provisions and substituting its judgment for the agency’s factual and discretionary determinations.

## Decision

- The Nevada Supreme Court reversed the district court’s judgment in all respects and reinstated the Gaming Commission’s denial of Rosenthal’s license.
- The court upheld NRS 463.140 and NRS 463.220 as constitutional, concluding they provided sufficient standards when read as a regulatory scheme governing gaming.
- The court held Rosenthal received constitutionally sufficient process (notice, counsel, opportunity to be heard, and a decision supported by an administrative record).
- The court concluded the Commission’s denial was supported by substantial evidence and was not arbitrary, capricious, or in excess of jurisdiction.
- The court emphasized the limited role of courts on review: they may not reweigh evidence or replace the agency’s character-and-fitness judgment in gaming regulation.

## Legal Principles

- Gaming licensure and gaming employment in Nevada are treated as revocable privileges subject to strict regulation to protect public welfare and the state’s economic interests.
- Broad licensing discretion vested in a specialized gaming regulator is constitutional when guided by statutory policy statements and a reasonableness requirement.
- In administrative licensing matters, due process generally requires notice and a meaningful opportunity to be heard; the precise procedures depend on the nature of the interest and the regulatory context.
- Judicial review of agency licensing decisions is deferential: agency determinations must be upheld if supported by substantial evidence and within statutory authority, even where competing interpretations of the record exist.

## Conclusion

The Nevada Supreme Court reinstated the denial of Rosenthal’s key-employee gaming license, holding that Nevada’s gaming statutes validly confer broad discretionary licensing authority, the administrative proceedings satisfied due process, and courts may not overturn a regulator’s character-and-fitness determination when supported by substantial evidence.


State v. Rosenthal, 559 P.2d 830 (Nev. 1977)