Nevada Moves On Interactive Gaming Regulations

After numerous amendments in its path through the Nevada legislature, Assembly Bill 258, which gives the Nevada Gaming Commission the authority to adopt regulations for interstate interactive gaming, was signed into law by Governor Brian Sandoval in June.

The bill’s called-for regulations are aimed to put the Silver State first in line to operate Internet poker if federal legislation is passed or the U.S. Department of Justice determines it is permissible under law.

Multiple attempts are underway in Washington D.C. to push federal legislation through, and if eventually successful, the Nevada Gaming Commission could begin to issue licenses to qualifying casinos for Internet poker.

In late August the Nevada Gaming Commission released its first set of draft regulations for a taxed and regulated online poker system in the Silver State.

Keeping Nevada as the ‘Gold Standard’ in Regulation

Regulators are seeking to establish the same control that has been established for other Nevada licensees: a stable and fair system that is objective and upholds the mandate to protect the gaming public and the reputation of Nevada, according to Gaming Control Board member A.G. Burnett.

“To that end, we want to have the same regulatory standards and protections in place for online licensees and their [interactive] service providers as we do for land-based operators and manufacturers,” he said. Service providers will be the software companies who, on behalf of a land-based licensee that is licensed to operate online poker, perform certain managerial, administrative, or control-related tasks.

The process of determining “suitability” begins with the Gaming Control Board and then on to the Gaming Commission. Along the way a potential operator must have met the standards similar to what Nevada regulators are already accustomed to for land-based gaming licenses for “honesty” and “integrity,” displaying a record that doesn’t pose a threat to gaming in Nevada.

The rules, or barriers to entry, will be the same for foreign operators. An exception would be if the company is publicly-traded in other jurisdictions, in which case the Board will analyze the public market in that country and become familiar with its reporting requirements. Burnett also pointed out that laws on foreign gaming may apply, just as they do for Nevada-based licensees, such as Wynn Resorts in Macau. Additionally, any gaming operations conducted outside of Nevada may be scrutinized for regulatory violations or inappropriate relationships.

For the interactive service provider that wants to go the route of partnership with an established brick-and-mortar operation, the company must file applications in the same
manner as any other gaming applicant.

A big question out there still remains whether offshore online sites that previously served U.S players, such as PokerStars, Full Tilt Poker, and PartyGaming, will be allowed to reenter the U.S. despite having come under indictment from the U.S. Department of Justice.

Burnett said that there is nothing that automatically prohibits one of these existing online sites from being found suitable to operate in Nevada on behalf of a land-based license.

“It is my belief, as only one Board member, that past offshore operators and/or providers will have the same opportunity for licensure as any other company,” Burnett said. “We take our applicants on a case-by-case basis and review their entire histories. We review the individuals that run the companies and we review their past actions and past records with other regulatory bodies.”

Prior to Black Friday the Board was monitoring the nascent, now defunct deals between Wynn Resorts-PokerStars and Stations Casinos-Full Tilt Poker, but the partnerships were not formally investigated because they were not finalized.

Burnett said he couldn’t comment on how many other Nevada-based gaming companies have expressed interested to the Board about being found suitable to offer online poker products, but that “there has been interest.” With requirements for suitability to operate web poker still in the works, Nevada gaming regulators held “workshops” where the intricacies were publicly discussed. If all goes well the Commission will eventually finalize and approve the regulations. Burnett said the goal is to have them “done as soon as possible, within the confines of the process.”

Whatever the process yields, the goal is clear and simple: financially benefit the Silver State and perhaps establish a regulatory model that the Federal government can replicate. “In my own humble opinion, I hope that [these regulations] will spur new innovation and new partnerships that lead to increased gaming revenue and, of course, increased job production.” Burnett said. “Nevada can become a leader in this industry, both in terms of the companies and individuals that are at the forefront of the industry, and also in terms of our regulators and our regulatory structure.”