Nevada Regulators Taking On Outdated Rules, But Online Gaming Off The Table

October 27, 2022
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After two years in the role, Nevada Gaming Control Board chairman J. Brin Gibson is busy guiding the agency through the massive undertaking of updating the state’s archaic gaming regulations, some of which have not been touched in more than five decades.

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After two years in the role, Nevada Gaming Control Board (NGCB) chairman J. Brin Gibson is busy guiding the agency through the massive undertaking of updating the state’s archaic gaming regulations, some of which have not been touched in more than five decades.

“The regs are old,” Gibson said. “We have regs that were codified in 1959 as the first generation and then we have them developing over a number of years to incorporate such things as corporations, limited liability companies and other types of wagering.”

Gibson told VIXIO GamblingCompliance the agency’s staff is going through all these “old” regulations as they “try to modernize them to oversee a changing industry.”

Gibson was joined for an hour-long interview with VIXIO by James Taylor, chief of enforcement at the control board, and John Lastusky, senior engineer with the NGCB.

“If items aren’t being enforced, we need to get rid of them or ask why it is there,” the chairman said. “When you don’t go through them and pull out the ones that are antiquated and modernize … keep them fresh, it just grows and grows, which is another problem.”

In one of the latest updates to the regulations, updated cybersecurity rules are expected to be finalized in December after consideration of a new draft with some administrative changes released last week was postponed to give the industry a chance to comment on the changes.

The proposal, among other requirements, would require Nevada gaming licensees to perform an initial risk assessment of their business operations, and then perform updated risk assessments as needed.

“There is no question that cybersecurity is a strategic risk to these operators,” Lastusky said.

“I think if anyone has been paying attention to the news for the last couple of years, they can see the material risks of things like ransomware where it may not result in the theft of data, but you can cripple someone’s business.”

Gibson added that cyber threats were one of the most important topics the agency is currently dealing with.

“If there is a breach, we require notification and once there is notice then we can request everything we need to make a judgement as to whether they had adequate security in place,” he said. “If they don’t then we have the ability to bring an action under Regulation 5 for unsuitable operation.”

Overall, Lastusky said, the agency leaves cybersecurity up to the operators because they are the experts, but the NGCB is looking for the industry to implement best practices.

“It is not a one-size-fits-all approach,” Lastusky said. “If you just want to take physical security as an analogy, what may be appropriate for a [Las Vegas] Strip property, may not be appropriate for a property in rural Nevada.”

The control board also will soon consider a regulatory amendment to allow sportsbooks to take bets on esports competitions, without requesting event-specific approval as is currently the case.

Draft regulations on esports betting approved by an NGCB special esports advisory committee on Monday (October 24) also would give Gibson and any future NGCB chairman the ability to prevent sportsbooks from taking wagers on events that have had a questionable past.

In July, Nevada regulators signed off on changes to harmonize the license revocation process with gaming devices and associated equipment, as well as allowing the control board, depending on the risk, to consider changing a gaming entity requiring a license to a registration.

Elsewhere, amendments to regulations have been approved regarding the reporting of financial, tax and other company information, as well as account wagering systems and call center definitions to bring them into line with rules that accommodate the use of cloud computing service providers and hosting centers for gaming in Nevada.

“Much like the Black Book (Nevada’s List of Excluded Persons from casinos) needs to be smaller and enforceable, the regs need to be understandable so we can hold people accountable,” Gibson said. “What’s driving it? Our desire to be more modern and modernize the regs that are old and outdated.”

Last year, the control board postponed a planned workshop to discuss potential regulatory changes that would allow the state to offer full online casino gaming. Nevada only offers online poker while six states — Connecticut, Delaware, Michigan, New Jersey, Pennsylvania and West Virginia — have legalized online casino gaming.

The workshop was never rescheduled.

Gibson reminded VIXIO that although the enabling legislation for interactive gaming has been passed three different times by Nevada lawmakers, the question becomes is it necessary.

“No, it is not,” he said.

Gibson said the “adoption process on our end is not the challenge.” The authority exists and only minor changes to state gambling regulations would be needed to allow for all types of wagering online to occur, he said.

“The challenge is recognizing whether it is valid or not. We have 3,000 licensees in Nevada. We have 302 non-restricted brick-and-mortar casinos. So that’s different than any other jurisdiction in the world.”

Gibson attributed the cautious approach to online gaming to the industry being “hesitant” and not wanting to “mess with a good thing,” especially in the so-called Las Vegas locals market, which is dominated by Boyd Gaming and Station Casinos.

“That’s a challenge,” Gibson said, “understanding how much cannibalization … there might be if there were full online gaming offerings available.”

Although full online gambling remains off the table for now, things got a little easier for gamblers in Nevada when regulators in January adopted regulations allowing the use of remote registration to sign up for casino accounts.

That change, proposed by Sightline Payments, eliminated the need to stand in line at a casino and filling out a paper form, allowing consumers to verify their identity on their digital devices.

Lastusky said sports-betting accounts were not included in the regulatory change and are the only accounts that you must open in-person state-wide.

“That was an industry requested regulatory change,” Gibson said. “There are parties opposed to online registration [for sports betting]. They want the foot traffic through their casinos and there are those who want full online registration. That was a compromise position that the industry came to itself.”

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