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The chairman of the Nevada Gaming Control Board (NGCB) is advocating for legislation to codify long-standing practices of regulators pursuing disciplinary action and tax collections even when individuals surrender their gaming license or leave their job with a licensed gaming company.
NGCB chair Kirk Hendrick told Nevada lawmakers that pending gaming reform measure Senate Bill 46 would clarify that persons who have received Nevada Gaming Commission (NGC) approvals or registration from the NGCB for either a gaming license, a finding of suitability, a preliminary finding of suitability or non-gaming employee board registration are still within the NGC’s jurisdiction even if there is a unilateral surrender of a license.
The bill also clarifies that the five-member commission must establish a manner by which the industry will know how to surrender an approval or registration.
It also would require the commission to adopt regulations “defining the timeframe before the board divest jurisdiction following a voluntary surrender of an approval or registration,” Hendrick said.
Hendrick added that registration of Nevada gaming employees, as the term is defined in NRS 460.310, are not affected by the bill.
Hendrick said Section 3 of SB 46 clarifies that investigative hearings may be conducted by one board member or a hearing examinator authorized by the NGCB chair. The proposal also allows one or more board members to conduct an investigative hearing without a concurrence of the board.
“The intent is to streamline the administrative function of authorizing a hearing examiner by the board chair, who is executive director of the agency,” Hendrick said.
The control board’s bill also proposes to repeal a regulation regarding the registration or licensing of a person conducting tournaments. Hendrick said it is not necessary to register a person who conducts a tournament on behalf of or in conjunction with a gaming licensee.
“However, for the record, the board has no intention to completely relinquish jurisdiction over persons conducting tournaments,” the chairman said. “Specifically, Section Four of SB 46 would ensure that a person conducting tournaments may be called forward by the board or commission for a finding of suitability or licensing.”
Ultimately, Hendrick said, the licensee is responsible for any tournaments it conducts. He said the NGCB was talking about third parties who conduct tournaments.
Fines In Focus
A further section of SB 46 proposes to raise the fine threshold to $500,000 for a violation in an initial complaint and no more than $1m for each violation in a subsequent complaint.
Hendrick noted that those penalties “are not required fine amounts”.
“The [Nevada Gaming Commission] currently has and will continue to have the entire range, starting at no fine whatsoever, up to the maximum amount for each violation.”
“And, of course, the board acting in its prosecutorial role, can and always does negotiate with licensees for higher or lower fine amounts, regardless of this proposed increase,” he added.
The gaming bill also would repeal former Regulation 6A, which was similar to federal anti-money laundering requirements. The U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) now solely investigates and enforces any violations of the federal Bank Secrecy Act.
Therefore, maintaining a specific fine for that type of violation is no longer required, Hendrick said.
During a February 27 Senate Judiciary Committee hearing on SB 46, Republican Senator John Ellison questioned why regulators were seeking such a large increase in fines.
Hendrick reminded Ellison that there is currently a range for the commission to impose, and that can start at no fine.
“The last time these were increased was 1977,” Hendrick said.
In 1967, the maximum penalty amount was put into statute as $100,000 for a gaming licensee and $50,000 for a person working at the licensee. In 1977, the Nevada legislature made them the same amount.
“We believe that over the approximately 50 years that these amounts should be increased in order to deter bad action,” Hendrick said. “We are not saying that licensees are doing anything wrong and 99.9 percent of the time they are not doing anything wrong.”
Hendrick added that the 0.1 percent of problems are usually self-reported to the control board by gaming licensees.
“We want to make sure there’s a turn factor in effect, and then if there is any violation that the commission has a wider range to ask for potential fines,” he added.
Ellison was curious how any fine gets as large as $1m, leading to Hendrick giving the committee a brief history of regulatory fines in Nevada.
The largest fine the commission has ever approved was a $20m penalty against Wynn Resorts for failing to investigate claims of sexual misconduct made against former CEO Steve Wynn before he resigned.
“The next largest fine that was ever imposed was against Steve Wynn personally, and that was $10m that he paid,” Hendrick said.
The investigation into Wynn and the company he co-founded began after the Wall Street Journal reported that several woman said he harassed or assaulted them. Prior to the Wynn incident, the previous highest penalty imposed by Nevada regulators was a $5.5m fine in 2014 against sports-betting company CG Technology, formerly known as Cantor Gaming.
