AGA starting process leading to changes in gaming industry

Jul 10, 2012 3:07 AM

The hope is that gaming industry regulations in Nevada and across the U.S. will benefit from a thought infusion of new attitudes over the next year or two.

The process that will lead to some dramatic changes is already taking shape, as illustrated by the American Gaming Association’s call for a “working task force” to point action in this direction.

“We should not allow gaming regulations to unnecessarily handicap the industry’s ability to deliver an exciting product to customers and appropriate returns to customers,” an AGA paper on the subject explains.

It continues, “Simply put, the expenses and delays imposed by [many current processes] are major obstacles to the growth of the industry.”

The controversies, expenses and delays generated by suitability investigations from New Jersey to Nevada over the last several years say it all. Old rules and old ways of regulating are not up to the task of serving the reality of growing competition in the so-called global village, assorted technological advancements and the industry’s growing fascination with Internet possibilities.

Caesars Entertainment CEO Gary Loveman shakes his head at what he considers the puzzling conflicts that come from the industry’s ability to offer gaming opportunities in Europe it cannot yet offer in the U.S. or Las Vegas, the self-declared capital of the gaming industry.

MGM CEO Jim Murren and other top officials echo this frustration, each of them saying in his own way that the time for new attitudes and improved regulatory tools has arrived.

Bob Faiss, the chair of the Gaming Law Practice Group at Lionel Sawyer & Collins notes the current model for control of Nevada’s number one industry was created in 1959 when Faiss was serving as Gov. Grant Sawyer’s executive assistant and “the mob” was the big issue.

Sawyer told that first 1959 meeting of the new Nevada Gaming Commission, “If there are any members of the underworld in the gaming industry, get them out. If they are not here, keep them out. I want you to hang tough.”

Faiss told a meeting of gaming lawyers in California, “Nevada was tough. It won the fight against underworld infiltration decades ago. With that threat gone, Nevada has gradually reformed its gaming control system to be responsive to the quality of the industry that has developed.”

So where do we go from here? The AGA’s call for broad change included this statement:

“Because gaming has expanded into many jurisdictions, the industry no longer faces a landscape where demand for gaming consistently exceeds supply. This means tougher competition for customers and tougher competition for investment capital. Gaming businesses also compete in a broader entertainment market where they confront sophisticated companies producing extraordinary experiences in games, movies and even performance venues…

“Gaming risks being left behind unless it can invest in comparable technologies and quickly bring new experiences to customers.”

Companies burdened with regulations that stifle such cutting-edge thinking will find it difficult to compete in such a fast-changing environment. Issues to be considered include the following, according to the AGA:

Are there elements of suitability licensing that might be dropped from the process because they impose too great a burden and produce too small a benefit?

Are talented individuals discouraged from entering the industry because of the intrusive nature of the process?

Can reviews of financing and corporate transactions for casino licenses be performed more expeditiously to improve access to capital for investment and development?

The AGA also wonders if certain types of non-gaming businesses should be deemed “presumptively suitable” because they themselves are subject to substantial regulation or because their activities are not intertwined with gaming activities?

There’s a lot to think about.

The Gaming Association’s goal is a thoughtful focus on “regulatory requirements that have become outmoded because of changes in technology, in the marketplace or in industry practice.” It’s hoping for proposals that redesign requirements to impose fewer burdens, allow for accelerated review times and foster greater innovation.

A panel of gaming industry leaders and regulators meeting in California suggested there be thought given to reciprocity agreements among jurisdictions for the licensing of individuals, entities and gaming devices.

The same panel also suggested efforts to eliminate unnecessary redundancies that require license applicants to begin at “ground zero in each jurisdiction they seek to enter no matter how many times they have been licensed elsewhere.”

And last, but far from least: “Recognize the force and future of online wagering and make plans to deal with it.”