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CASINO REGULATION: Gambling's watchful eye

Nevada Gaming Control Board, Gaming Commission brace to meet new challenges brought on by Digital Age 

By JEFF SIMPSON 
GAMING WIRE 



The first 32 months of the 21st century marked a change in direction for Nevada gaming regulators, industry insiders say, as the men and women charged with making and enforcing the state's gaming rules have shifted their focus away from financial matters and toward social and technology issues. 

Regulators who served on the Nevada Gaming Commission and Gaming Control Board in the 1960s and 1970s focused on eradicating the influence of organized crime from the casino industry, efforts that resulted in well-publicized license revocations and other disciplinary actions at the Stardust, Fremont, Marina, Hacienda and Tropicana. 

State regulators in the 1980s and 1990s dealt with the evolving scope of the casino business, changing state rules to allow ownership by corporations and institutional investors and the growth that accompanied casino-style gambling's legalization across the country. 

The simultaneous development of microprocessor-controlled slot machines forced regulators to evaluate the fairness, security, reliability and performance of the computerized devices. 

In the late '90s the focus began shifting again, toward social issues like problem gambling, neighborhood casinos, slot-machine themes and the propriety of Internet gambling and college sports betting. 

And technology is central to regulators' current concerns, former Gaming Control Board member Dennis Amerine said last week. 

"The prospect of Internet gaming by Nevada casinos and the advances in slot machine technology will require significant attention," Amerine said. "Advances in technology, such as the transfers of funds from a patron's bank account directly to a slot machine, present challenges to regulators not only from a security perspective, but also a social perspective. Their decisions on these issues will make a lasting impact on Nevada's quality of life." 

University of Nevada, Reno professor Bill Eadington, director of the Institute for the Study of Gambling and Commercial Gaming said Nevada regulation is often more professional than in the newer jurisdictions. 

"It wasn't always that way," Eadington said. "Back in the '60s their challenge was to get casino owners to respect regulators' authority. They had little respect and little clout. But since the '80s Nevada's realized it is the leader in this field. You can't afford bozos as regulators." 

The Nevada Gaming Commission is a part-time agency that writes the state's gambling rules and grants or denies gaming licenses, while the Gaming Control Board is a full-time agency that administers the state's Gaming Control Act and its corresponding regulations and serves as both the police officer and tax collector for the gambling industry. 

The control board meets each month and considers a range of license applications and other issues, and decides whether to recommend approval to the commission. 

The commission also meets each month, generally two weeks after the control board meeting, and approves or rejects license applicants. 

The commission also crafts and enacts new regulations and approves control board nominations to Nevada's List of Excluded Persons, the 42-year-old list of people barred from entering the state's casinos, popularly called the Black Book. 

Regulators serving during the past 2 1/2 years have dealt with a range of important topics, many of which dealt with social and/or technology matters. 

Casino merger 

State regulators approved MGM Grand's May 2000 purchase of Mirage Resorts with little controversy even though it was the biggest casino purchase in the history of the state. 

Regulators evaluated the combination in light of the state's casino antimonopoly rules and decided to OK it, with commission members applauding MGM Mirage majority owner Kirk Kerkorian's long-time contributions to the Strip and to Nevada's economy. 

Internet gambling 

State lawmakers last year approved a law enabling regulators to craft rules allowing state casinos to operate online casinos if they're legal under federal law. Regulators have conducted a series of workshops to involve the casino industry in their decisions, and analyzed every state's laws before determining that no U.S. state's laws would permit Web betting on a Nevada Web site. 

Nevada Gaming Commission Chairman Pete Bernhard said the issue has been the panel's most challenging during his 10-month tenure, and he expects it will continue to be a difficult subject. 

College sports betting 

After federal lawmakers, prompted by the National Collegiate Athletic Association, two years ago began considering a nationwide ban on college sports betting, then-commission Chairman Brian Sandoval led state regulators' response. 

Sandoval testified on Capitol Hill, arguing that Nevada's regulated sports betting wasn't the problem; illegal sports betting was the real culprit threatening the integrity of college athletics. 

Sandoval proposed a $550 bet limit on college games, a proposal he said control board agents suggested as a way to curtail illegal bookmakers' attempts to lay off bets in the state. 

Sandoval withdrew the change after acknowledging it could drive bettors away from legal Nevada casinos, encouraging them to place bets illegally on Internet bookmaking sites and creating an environment ripe for illegal bookmaking in Nevada. 

The commission approved other Sandoval proposals, including changes that allowed bets on Nevada college teams and on college games played in Nevada. 

Neighborhood casinos 

The chairmen of the control board and commission are members of the five-person Review Panel of the State Gaming Policy Committee, the panel charged with determining whether casinos violate the provisions of SB 208, a 1997 state law designed to prevent the spread of casinos to county neighborhoods. 

Twice in the past 30 months the panel nixed efforts to build locals casinos near valley neighborhoods. In 2000 the panel voted 5-0 to reverse a decision by the Clark County Commission to permit the operation of a Boyd Gaming Corp. casino in Spring Valley, in southwest Las Vegas, and the panel voted 3-2 to kill a proposed Station Casinos property at Craig Ranch Golf Course in North Las Vegas. Both times the top gaming regulators voted with the majority as panel members said the casinos would harm the quality of life of nearby residents. 

Kiddie slots 

Regulators approved new rules in January 2000 that barred slot machine themes that could appeal to children, an action Sandoval said at the time would "protect children while allowing innovation and creativity for slot manufacturers." 

Themes based on television shows, movies, and computer games rated as suitable for children are barred by the regulations. 

Private gambling salons 

After state lawmakers passed an enabling law last year, gaming regulators approved rules earlier this year allowing Nevada casinos to open "international gaming salons," private gambling areas closed to the public. 

Regulators last month approved the MGM Grand's application to open the first private salon, which, when it opens, will be the first legal private gambling conducted in Nevada since "wide-open gaming" was approved in 1931. 

Problem Gambling 

After enacting new rules targeting problem gambling in 1999, Nevada regulators have not spent much time on the issue. 

That differs from several other U.S. casino jurisdictions, where regulators have responded to public pressure and enacted rules allowing problem gamblers to exclude themselves from casinos. 

Many states offer state-funded problem gambling treatment programs; Nevada does not. 

UNR professor Eadington said there are good reasons why state regulators lag behind their out-of-state cohorts on the issue. 

"Talking about problem gambling used to be seen as as a violation of loyalty," Eadington said. "Nevadans ignored the criticism. When most of the state's gaming revenues came from tourists from outside the state, there was a perception that the problem went home with the gambler." 

Nevada regulators have taken a secondary role on problem gambling issues, allowing industry executives and lobbyists inside the state to lead, the professor said. 

They've also taken a back seat to other state's regulators, he said. 

"There's greater influence coming from outside the state," Eadington said. "But some of that's because the industry has become more proactive on the issue. The industry is the first line of defense when the public perceives a problem, and they see it is in their enlightened self interest to take some action."