By Scott Scherer, Esq.
Like most industries, the gaming industry strives to keep up with the latest technological developments and, more importantly, consumer preferences. As smartphones become ubiquitous and consumers do more online, the gaming industry continues to explore ways to meet consumer demands for convenience and exciting new technology.
Technologies such as cashless gaming, mobile account wagering for sports betting, iGaming, internet poker, social gaming, and betting on esports are becoming more prominent in the United States and are having an impact on gaming in Nevada.
Nevada’s public policy with regard to gaming is about balance, recognizing that gaming is important to the state and that it is important to “foster the stability and success of gaming” while needing to maintain public trust and confidence. NRS 463.0129.
This balance is also seen in NRS 463.673(1)(a), which provides: “To protect and promote the health, safety, morals, good order and general welfare of the inhabitants of this State, and to carry out the public policy declared in NRS 463.0129, it is necessary that the Board and Commission be allowed to react to rapidly evolving technological advances while maintaining strict regulation and control of gaming.”
Currently, 44 states have some form of casino gaming (either commercial or tribal) and 34 states and Washington, D.C., have legalized sports betting. As Nevada competes with these other states for tourist dollars, providing the experience that customers expect is critical. Today, those expectations include engaging technology and convenience.
In the regulated gaming space, new technologies must comply with numerous standards and undergo thorough testing and final approval. While most states have substantially similar standards for gaming devices and equipment, Nevada has certain requirements that are unique. Some of those unique requirements are the result of how Nevada licenses or taxes gaming activities, but others might be considered antiquated or obsolete. When you are the first and the biggest in any field, it is important to not only assess the competition, but to reassess your own methods, if you want to stay a step ahead.
The Nevada Gaming Control Board (“NGCB”) has recently undertaken a review of its technology approval process to, as NGCB Chairman Kirk Hendrick stated, “streamline the approval process while complying with the law.” What this means is that the NGCB has recognized the importance of new technologies for keeping the Nevada gaming industry vibrant and ahead of all the new would-be competitors in other states. Where it has discretion, it is trying to streamline. Where it is constrained by the Nevada Gaming Control Act or the Nevada Gaming Commission Regulations (the “Regulations”), it must follow or seek to change the applicable law.
In furtherance of this process, the NGCB recently issued a Notice to Licensees indicating that, effective September 1, 2023, the Chair will exercise the discretion granted by the Regulations to “presume that a field test of a new or modified gaming device is not required” if the device is in operation in another jurisdiction with similar standards and at least 10 of the devices have been operated in that other jurisdiction for at least 30 days without any violations. Such a field trial would normally come after the device is certified as in compliance with Nevada standards by an independent test lab and approval by the Technology Division. Where the criteria outlined in the Notice to Licensees have been met, the certification and approval requirements will still apply, but the field trial will no longer be required.
At a workshop held on September 27, 2023 (the “Workshop”), the NGCB announced other new initiatives, including one called “ACES” (Approval Categories for Equipment) that divides gaming equipment into three categories and allows licensees to begin using modified equipment in the lowest category (where there is no significant regulatory impact) with notice to the NGCB’s Technology Division and subsequent certification by an independent test lab. Prior approval will no longer be required. In the middle category (where there is some regulatory impact, but no effect on tracking gaming revenue or ensuring that the game is fair to players) approval by the Technology Division will be required, but certification by an independent test lab can follow that approval within six months. Where gaming revenue or fairness are implicated, however, gaming equipment will still be subject to the full certification and approval requirements.
Another new initiative announced, called “Ante Up,” will allow a manufacturer required to conduct a field trial to make an additional payment to have NGCB agents perform certain procedures that the casino hosting the field trial is currently required to perform. These procedures, which are in addition to the typical internal control processes required of casinos, make it a burden for a licensee to host a field trial and sometimes making it difficult for manufacturers to find willing hosts. The Ante Up initiative is similar to processes in other state and local agencies that allow for expedited processing of certain documents for an additional fee.
At the workshop, the Association of Gaming Equipment Manufacturers suggested a series of deadlines that both the licensed manufacturers and the NGCB would be required to meet to keep the technology testing and approval process moving. Representatives of a casino operator suggested that certain Technical Standards should prescribe the “what” rather than the “how,” allowing manufacturers the flexibility needed to use innovative ways to meet prescribed requirements. Chairman Hendrick announced that the NGCB would review these proposals and indicated an intent to form a working group to lead that review and suggest possible action.
All of these initiatives and suggestions are positive steps in streamlining Nevada’s approval of new technology. Nevada has long taken pride in being the best gaming jurisdiction in the world, in both the business and regulatory arenas. For better or worse, its thorough regulatory reviews were not keeping up with advancements in technology. Keeping Nevada at the forefront of a more competitive gaming industry and balancing the stability and success of Nevada gaming with public trust and confidence, as prescribed by the Nevada Legislature, requires a reevaluation of how those interests apply to the technology approval process.
About the author
Scott Scherer, shareholder at Brownstein Hyatt Farber Schreck, uses a unique mix of regulatory, business, policy and legal perspectives to help clients implementing new technologies and systems in the gaming industry, including for payments, sports betting and online gaming.
About the article
This article was originally published in the Communiqué (Nov. 2023), the official publication of the Clark County Bar Association. See https://clarkcountybar.org/about/member-benefits/communique-2023/communique-november-2023/.
© 2023 Clark County Bar Association (CCBA). All rights reserved. No reproduction of any portion of this issue is allowed without written permission from the publisher. Editorial policy available upon request.