With Nevada’s legislature set to adjourn on Monday (June 5), time is running short for lawmakers to approve an amended gaming reform bill to eliminate taxes on tournament entry fees and revise the state’s “foreign gaming” reporting requirements.
Senate Bill 266, sponsored by Democratic Senator Julie Pazina along with ten of her colleagues, was amended in the Senate Finance Committee last week to remove current statutory requirements that Nevada gaming licensees submit copies of all documents filed with regulators in other jurisdictions, as well as a report annually regarding their compliance with gaming regulations outside Nevada.
Instead, the document requirement would be replaced with a requirement to file a notice with Nevada regulators upon initiating gaming operations in another jurisdiction.
The requirement that licensees file annual operational and regulatory reports describing compliance with regulations, as well as audit and surveillance procedures related to markets outside the state, would be removed completely from the statute.
Licensee would also have to notify regulators of the fact that “foreign gaming has entirely ceased.”
“Pursuant to the policy on legislative bills not submitted by the Nevada Gaming Control Board, the board has a neutral position on SB 266 and any amendments,” board chairman Kirk Hendrick told VIXIO GamblingCompliance in an email.
However, Hendrick said, “board staff has reviewed the proposed amendment to SB 266 regarding foreign gaming requirements and the board believes the revisions would more efficiently regulate Nevada’s gaming licensees."
Currently, Nevada Revised Statute (NRS) 463.710 requires all documents filed by a Nevada-based licensee or affiliates with a foreign jurisdiction to also be filed with the NGCB, alongside annual operational and regulatory reports describing the licensee's compliance with regulations, audit and surveillance procedures related to any gaming operations outside Nevada.
“The foreign gaming approvals are a remnant of a forgone era in Nevada gaming regulation,” said Anthony Cabot, distinguished fellow in gaming law at the University of Nevada Las Vegas (UNLV) Boyd School of Law.
“When they were introduced, Nevada had a monopoly on casino gaming. Then, any involvement by a Nevada licensee in gambling outside the state had to pass an ominous approval process.”
Greg Gemignani, an attorney with Dickinson Wright in Las Vegas and an adjunct professor at UNLV, noted that “foreign gaming” simply means any gaming activity conducted by a Nevada licensee in any jurisdiction outside Nevada, whether that be in other U.S. states or internationally.
“When originally addressed in Nevada statutes, the gaming industry was still not widely viewed as legitimate, despite Nevada’s strict regulation for decades,” Gemignani told VIXIO.
“The concern was that Nevada licensees that enter other markets would engage in activities beyond Nevada’s borders that would bring disrepute on the gaming industry, Nevada’s efforts to legitimize the industry, and the Nevada gaming industry at large.”
As more jurisdictions have licensed and regulated gaming activities, Gemignani said, “the foreign gaming approval and reporting requirements have been gradually reduced.”
“This bill is a further reduction in those requirements by removing the requirement to provide Nevada gaming with copies of all documents filed in other jurisdictions and replacing it with a notice to regulators that the Nevada licensee has initiated gaming operations in another jurisdiction.”
Cabot said the underlying purpose of Nevada's Foreign Gaming Act was to discourage casinos from contributing to an expansion that could threaten the state’s lifeblood.
“The threat proved unfounded, and the proliferation of casinos added to the overall appeal of Las Vegas,” he said.
Cabot added that the changes in SB 266 are reasonable and should not carry a large administrative or financial burden.
“These will give the regulators all the information to decide whether the licensee’s activity in the foreign jurisdictions merit further investigation.”
Elsewhere, Pazina’s amended bill also proposes to eliminate contest and tournament fees collected from events held on-property from monthly gross gaming tax. The control board did not begin collecting tax revenue on entry fees until after the 2019 legislative session.
In a fiscal note prepared by the Nevada Gaming Control Board (NGCB), it is estimated the change will cost the state more than $1.7m in fiscal years 2023-2024 and 2024-2025.
During a workshop on SB 266 held earlier this month by the Senate Finance Committee, Pazina said the reason for exempting these entry fees is that none of the revenue actually goes to the casino as income.
“It is used in one of three buckets, to pay employees, make a donation or as prizes,” she said.
The Senate voted 18-0 with three members absent on Saturday (May 27) to pass SB 266 and send it to the Assembly Ways and Means Committee for further consideration. As of Wednesday, the committee had yet to schedule a hearing or vote on the bill.