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Randazza Legal Group: The Case for Relocating Porn Production to Las Vegas

Randazza Legal Group: The Case for Relocating Porn Production to Las Vegas
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Aug 6, 2012 12:00 PM PDT    Text size: 

LAS VEGAS — Spurred by the recent condom ordinance, in Los Angeles, producers, talent, and spectators have contemplated that the adult entertainment production industry might move from its traditional San Fernando Valley home to Las Vegas. So far, Interstate 15 has not been jammed with moving vans, but production has been slowly but steadily moving to Las Vegas . Although the prospect of a mass migration from Southern California to Las Vegas came to the forefront as a result of “The Condom Wars,” the real allure of Nevada for both production companies and talent alike is the state’s low taxation, friendly business climate, opportunity-laden real estate market, and traditionally friendly relationship with all aspects of the sex industry. The fact is, Condom Wars or not, there are very good business, legal and logistical reasons for relocating to Las Vegas. 

California’s Exceptionalism Ends

In the famous case of People vs. Freeman, the California Supreme Court ruled that when a porn company pays actors to appear in a film, the company is not violating the state’s prostitution laws.  The Freeman court further held that, even if paying for porn acting did fit the legal definition of “prostitution,” the First Amendment would require an exception to the law, otherwise an entire genre of expression would be rendered de facto illegal. This landmark decision allowed the adult film industry in California to emerge from the shadows and grow into the huge legitimate industry it is today.  For many years, the Freeman decision set California apart as a place where porn production had at least some legal veneer of protection — thus spurring the state to become the industry’s epicenter. 

Although Freeman made California a safe place to shoot, the industry still maintained satellite communities in virtually all 50 states. However, in 49 of them, smart lawyers always advised their clients that Freeman did not necessarily protect them outside of California, and that no other state had weighed in on the issue of whether porn equals prostitution. 

In late 2008, 20 years of California exceptionalism ended with New Hampshire vs.Theriault.  In that case, the New Hampshire Supreme Court held, like its California counterpart, that paying someone to be in a porn film was not the same as paying a prostitute for sex. Going a little further, the Theriault court held that the New Hampshire free speech clause would not permit the state to enforce the prostitution statutes against adult filmmakers. This did not, however, augur the mass migration of the industry to the 603 area code. Despite being a tax haven and a libertarian bastion, New Hampshire was simply not destined to become the next porn Mecca. 

Nevada Is Not Likely to Prosecute Porn Producers

The Nevada prostitution statute is all but identical to the California statute at issue in Freeman, and likely would receive a similar interpretation by Nevada’s courts. Even if the Nevada statute was not intended to allow pornography production as it is written, it would be very unlikely that the Nevada courts would part ways with Nevada’s closest neighbor, California, and its closest genetic relative, New Hampshire. Nevada’s judiciary has a lengthy history of looking to the courts of California and New Hampshire for guidance.  Moreover, Nevada’s social, political, and economic mores are likely to make it at least as friendly as California has been to the adult entertainment industry. 

Unlike New Hampshire, the sex industry is nothing new to Nevada’s government or its residents.  In fact, the state arguably has a friendlier relationship with the sex industry than any other state in the nation. After all, it is the only state with legalized prostitution. Therefore, using the threat of a prostitution charge to discourage adult content production would pack a lot less of a punch and likely be taken less seriously in Nevada.

Given the similarity of the state’s prostitution statute and California’s in Freeman, it would take a stunning display of intellectual dishonesty for the Nevada Supreme Court to reach a contrary conclusion. While lacking California’s robust history with the pornography industry, Nevada has embraced the broader sex industry with some of the country’s most permissive laws for strip clubs, swingers clubs, brothels, and direct-to-you “dancer” services that are heavily advertised on the Las Vegas Strip’s sidewalks. If anything, porn production is the next logical step for Nevada, as its laws have long recognized the expressive and economic importance of adult entertainment.

Business Friendly Nevada

The most obvious winning hand that Nevada has to play is the lack of a state income tax.  Even if an adult production company opts not to physically relocate to the Silver State, the benefits of incorporation or establishing personal residency in Nevada are numerous. In California, if a resident makes an even middle class income, he pays almost 10 percent of that income to Sacramento. Gov. Edmund Brown Jr. is seeking to raise that to an even more onerous 13.3 percent.  Business taxes are hefty as well in California. However, just over the border in Las Vegas, there is no state income tax at all.  In California, regulations on businesses, gross receipts taxes, corporate income taxes, and often byzantine and illogical employment regulations make California a business-stifling environment. On the other hand, in Nevada, the regulations are so simple that they may as well be nonexistent. 

Not only do businesses and their employees keep more of their money in Nevada, they get more for it too. In Los Angeles, a six-figure salary will probably leave the average worker with enough take-home income to rent a modest home in a decent neighborhood. Take that salary up I-15, and he can move out of that 2,300-square-foot, 3-bedroom house and into a mansion that will make his California friends wonder if he has actually become a South American dictator. 

Escape From L.A. (and Condom Regulations)

First Amendment concerns are not the only threat facing California’s porn industry.  The Scylla and Charybdis of porn for the last many years have been CalOSHA and the AIDS Healthcare Foundation (AHF) — the latter organization being capable of hectoring producers nationwide.  Beginning in March, shoots permitted in Los Angeles County were required to use condoms.  Simi Valley recently passed a similar condom requirement. Having long agitated for these changes, AHF has all but had its way with Southern California.

But, it will not likely be able to do the same to Las Vegas.

California has always had an element of liberal social engineering running through its blood.  This has led to strong worker protection laws and many other socially desirable results. On the other hand, it has created an environment that all but acts as a business repellent. 

Las Vegas and Nevada, on the other hand, have carefully cultivated a “live and let live” libertarian philosophy. A busybody trying to press his way into a county commission meeting with a job-killing bill with dubious utility will not find the same reception in Nevada that he found in California — and especially not now. The need for a diversified economy has captured the attention of state and local officials in Nevada. AHF will not win the hearts of minds of locals and elected officials by trying to keep out an industry that could act as the catalyst for an entire film industry to start growing in Clark County.  Furthermore, Las Vegas residents are just not bothered by the “we don’t approve of that kind of thing” moralism that allows politicians and law enforcement to get away with persecuting the porn industry elsewhere. In Las Vegas, doctors and lawyers live in gated communities next door to bouncers and strippers who can pull down six figure incomes in Sin City. If pornography production is not happening in the actual backyard of Vegas’ residents, and they don’t see it, they re not going to care — assuming, in the first place, that they ever found out the porn industry was in town.

Due to Nevada’s reduced size and resources relative to California, the powers of Nevada OSHA (NV/OSHA) are virtually nonexistent.  To get a sense of the disparity of resources at play here, compare the Cal/OSHA website with NV/OSHA’s. While Cal/OSHA will not have jurisdiction over Nevada companies and their Nevada activities, Nevada OSHA has numerous priorities to address before reaching the adult industry — including open mines and other far more dangerous work environments than some phony moralistic crusade by AHF. 

A City Ready for Production.

Because of the business friendly atmosphere in Negada and a broad based desire to diversify the Las Vegas economy, Sin City is welcoming businesses of all types.  Local politicians know that bringing the adult film industry to Las Vegas will be a starter culture for a more broad based film industry.  Already, Las Vegas is no stranger to mainstream filming with feature films ("Ocean’s Eleven;" "The Hangover") and primetime television shows ("CSI"; "The Defenders") filmed in the valley. Having had a taste, the region wants more — and is willing to start its voyage to being a film production center with the adult film business.

Consequently, business owners willing to invest in the city can obtain concessions and red carpet treatment from the Las Vegas region.   Those who can muster six figures in investment capital for relocation to Las Vegas can basically write their deal’s terms with private companies and almost any government agency.  A window of opportunity this golden has hardly ever existed for this industry.

Nevada has many tools available to assist the relocation of individual adult businesses and even the entire industry. The Nevada Film Office, with which all productions are registered, connects companies and individuals at every stage of the production process, and provides resources for filming operations new to Nevada. Nevada law also provides for the licensing of talent agents, important players in the production process. Perhaps most importantly, it has hundreds of thousands of feet of commercial space that can be  reasonably purchased or leased for use in all stages of adult production.

But perhaps most attractive about Las Vegas is what it does not have.  There is no 10 percent income tax that takes effect at the curiously low level of $60,000 per year. In fact, there is no personal income tax at all. Nor is there a 2 percent tax on general receipts of the kind Los Angeles imposes for the privilege of doing business in an increasingly hostile location. In the place of these things are high commercial real estate vacancies, low property prices, and a guardedly optimistic government, willing to seek economic activity without judgment for its shape or form. Rather than antagonizing the adult entertainment industry and compounding its problems, Las Vegas may help it prosper — in large part, by removing the ever-growing pile of obstacles California has placed in front of it.

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