September 15, 2004Casino KiosksLas Vegas Moving to Ban Payday Loan Kiosks? Ban of payday loan companies in casinos considered By Richard N. Velotta Looking to head off technological advancements in the short-term consumer lending industry, the state Gaming Control Board plans to draft regulations that would prohibit so-called "payday loans" inside casinos. With technology moving toward making short-term, high-interest loans available through kiosks, one regulator said the state's gaming industry needs to stay one step ahead of "electronic loan sharks" and keep them out of the state's casinos. Board member Bobby Siller said such loans are not based on a preapproved line of credit and keeping them out of casinos would be a positive step toward curtailing problem gambling. "Once again, technology is presenting us with new challenges," Siller said in a recent meeting at which board members recommended establishing workshop meetings to review draft regulations. In recent months, the board has considered a number of technological issues and how advancements would change the way the gaming industry is regulated. Kiosk systems in the lending industry would enable a customer to receive a loan faster and easier, a fact that spurred the board to consider new regulations. Board member Scott Scherer is expected to consult with members of the Nevada Gaming Commission before setting dates for meetings in Northern and Southern Nevada. The regulations would define payday loans and prohibit the granting of payday loans from gaming establishments. Payday loans have short terms -- usually 14 to 21 days -- and are for relatively small amounts -- usually between $250 and $500. They are so named because they are marketed as a financial bridge between paychecks, and loan recipients often pledge their paychecks as a guarantee of repayment. Deputy Attorney General Michael Wilson, who made a presentation to the board on payday loans, said the interest rates often are exorbitant, with recipients paying between 350 percent and 1,000 percent interest on those loans. Wilson said about 300,000 payday loans are made in Clark County each year. Dennis Bassford, president of Seattle-based Moneytree, one of the largest short-term loan companies in Las Vegas, said Siller's electronic loan shark remark was "way out of line." He said payday loans generally are misunderstood by the public and companies such as his have no desire to locate inside casinos. " 'Loan shark' connotes heavy-handed, violent collection practices," Bassford said. "It connotes illegal activity. Not only are we legal, but we're regulated by the state of Nevada. We don't even take people to court on collections most of the time. I don't know how anyone can draw the conclusion that we are loan sharks." He said the high "interest rates" usually aren't annual percentage rate-based sums, but fees that are fully disclosed at the time the loan is written. "We make truth-in-lending disclosures and have fees for short-term loans" that aren't calculated with an annual percentage rate, he said. "A fee is more clearly understood than an APR and it exists in the same form as overdraft protection in a checking account," he said. Bassford said Moneytree, which has 20 stores in Nevada, has no desire to locate an operation in a casino, although the company once considered it. "Personally, I don't want to put my business in a casino," he said. "Casinos are full of tourists and we really do most of our business in neighborhoods within the community." He said three or four years ago, a "major Strip casino" asked him if he was interested in setting up a lending business inside the casino. "We looked at it and said no," he said. "It's not the best place for us to conduct business." Bassford declined to name the casino that approached him. He said he plans to participate in the workshop meetings on the proposed regulation. Payday loan companies have been watched carefully by other local government entities. Clark County and the cities of Las Vegas and North Las Vegas have restrictions on the growth of payday loan companies, limiting the distance between two stores and regulating the type of signs and colors of displays operations can have. Las Vegas SUN: Ban of payday loan companies in casinos considered Posted by Craig at September 15, 2004 10:21 PM |