Some advice to Nevada Gaming Policy Committee

Feb 16, 2016 3:00 AM

Recognizing the increasing use of technology in gaming and the changing preferences of the gaming public, Governor Brian Sandoval has called for the Gaming Policy Committee to meet again and has charged it with the following:

“… a. What role Nevada’s licensing and regulatory scheme should play with respect to new and developing interactive gaming markets and technologies, including skill-based games, Daily Fantasy Sports games, and other games and contests;

“b. How Nevada can continue to lead in the interactive gaming industry, including creating a regulatory framework and expanding opportunities to collaborate with other states on interactive gaming, to achieve regulatory and gaming industry certainty, maintain consumer protection, and allow growth to meet new technologies and public demand; …”

A commendable and laudatory action on Governor Sandoval’s part, but alas, Nevada is no longer an island even for its own self determination when it comes to some of the various conceptual and actual forms of gaming the committee could and should envision.

However, Nevada, just like so many other states, suffers or enjoys, depending on one’s perspective, a continuing intrusive federal government when it comes to matters related to gambling and as such should perhaps include a Federal perspective in the committee’s contemplations.

So, as the Gaming Policy Committee gets ready to meet and peer into their cumulative crystal balls, here is some cheap advice in regards to its most interesting assignment.

The notion of linking various interactive skill-based games across the country has lots of promise for interest and participation from the millennial generation. Daily fantasy sports, prior to being determined to be in violation of various states’ laws either from licensing or gambling definitions, proved to be an area of great interest to portions of the public across the country.

Yet, pending its definition as either a contest, a sports wagering activity or gambling activity at the federal government level, daily fantasy activity could pose great problems for our gaming industry to get involved in. The Wire Act bars parties involved in the business of gambling from distributing information that can be used in making a wager, so even if Nevada were to be specific that daily fantasy is not gambling or sports wagering under its laws, Nevada still would need the federal government to concur before it allowed its licensees to pool contests across state borders.

Let’s assume Nevada gets clever and decides it will call daily fantasy activities and multi-player interactive skill-based activities contests or something other than gaming and it is an activity reserved to Nevada gaming licensees. The state would still have to get the IRS to agree the participants’ winnings are prizes under 1099 reporting requirements and not subject to W2G reporting, which otherwise would deem the activity gambling and again, pending federal definitions, subject Nevada licensees to potential violations of the Wire Act, PASPA or BSA.

As exampled above, the feds have so much current and potential impact on various aspects of Nevada and nationwide gaming they simply cannot be ignored. Accordingly, perhaps the committee membership should be adjusted to add one or more of Nevada’s federal representatives so whatever recommendations the committee derives could include a reality check from these representatives, if not put them on notice of areas to effectuate on the state’s behalf.

Separately, it would also make sense for the committee to open with guidance from demographers, data scientists and technology pioneers to get glimmers of insights as to what the population of probable future customers will want and where technology is going to even guess as to what the future of gaming will look like.

We already know from numerous studies that the millennial generation does not understand why they cannot use their phones to buy in and cash out from their gaming activity, why multi-player, individual and team-based, skill games are not already allowed or why smokers are still allowed in casinos. To look to the future the committee will need to look through those future patrons’ eyes and not the eyes of today’s patrons, business and regulatory preferences.

Predicting the future is difficult enough, doing it with all the variables of dynamic consumer preferences, a changing technology environment and unpredictable federal intrusion is truly a challenge. As the committee engages its assignment, hopefully, regulatory territorialism and personal interest will be set aside and the future of Nevada gaming will be the true focus. Good Luck!

The Analyst is an experienced gaming industry executive who offers insight each week on events and issues affecting the industry. Contact The Analyst at [email protected].