Gaming licensing: Time to re-do whole process?

Gaming licensing: Time to re-do whole process?

June 27, 2017 3:11 AM
by

In the most recent Nevada legislative session, and to his credit, Gaming Commission Chairman Tony Alamo sought and obtained a separate category in the concept of “no” for un-approved gaming license applications called “rejection.”

For those not familiar with the gaming licensing process, in Nevada it is an incredibly invasive examination of the applicant’s personal and business life. Applicants must divulge to the Commission, through its subservient Control Board (NGCB), details of their personal lives, provide a complete financial status and history, details of all financial and business transactions, essentially sign away a number of rights, and agree to not sue the various bodies and parties involved in the processing and investigation of the applicant’s license application.

The applicant does not get to see the investigator’s report on their respective application to agree or dispute any of the findings, and the investigator(s) can go pretty much wherever their nose leads them in the process. If someone says something bad about an applicant, they will not likely know what was said or by who and must suffer the consequences if the investigator bought into the story.

Once an investigation is complete the NGCB is given a report and the applicant comes before the Board. Pending the results of the report, the applicant may be grilled or receive token questions. After questions and Board deliberation there will be a motion for the applicant to be referred to the Nevada Gaming Commission (NGC) with the Board’s recommendation for either approval or denial.

A few weeks later the NGC will meet after reviewing the investigator’s report. They take the Board’s recommendation under advisement and usually after separately questioning the applicant then either vote for approval, denial or referral back to the Board. It has been the very rare exception that the NGC does not concur with the Board’s recommendation on an applicant.

So why does the addition of “rejection” mean anything? After all, a no vote of either “denial” or “rejection” still sends the applicant out of the process without a gaming license.

In Nevada gaming regulations, a denial has an important distinction: A denied applicant cannot do business with gaming licensees without separate permission(s) from gaming regulators. So by using the term “rejection” instead of denial the applicant does not suffer the burdens called out for on those who are denied.

However, given there are existing and past licensees that have or had pretty serious issues either shelved, conditioned or tolerated, how bad do you have to be to not get a license in the first place? While a rejected application would not automatically bar the party from doing business with gaming licensees, a licensee should worry about doing business with a party that was bad enough not to get a license.

While Chairman Alamo’s noble and just intent for seeking the category of “rejection” was to have an alternative to the punitive denial, the real benefit of his legislative change may have been in its precedence in changing areas of Nevada gaming law and regulations that had been treated as nearly sacred for close to a half century.

When the core of the Nevada gaming laws and regulations were developed close to five decades ago, the business, regulatory, legal and integrated information world was very different, and extent of mob influence was still very present in some of the then-prominent Nevada casinos. Harsh rules designed for effectiveness and to be very difficult to circumvent were very necessary and appropriate, as were various divisions of authorities between the Board and Commission to keep a balance of control and mitigate corruption.

In the same bill Chairman Alamo obtained his “rejection” category, there was also an almost overlooked change in who could compel a license application in the first place. It used to be, other than for categories already prescribed to require a gaming license, if the Board desired a party to file an application it was up the Commission if they wished to so compel. That has now seemingly shifted to the Board.

Whether motivated by administrative efficiency or other compunctions, over the last several legislative sessions more regulatory powers have been gradually afforded to the Board that, pending the makeup and character of the respective chairman and members, may or may not be a good thing.

As conditions over the last half century have changed and there have been continual shifts in authorities between regulatory functions, perhaps it is time to completely re-write the laws and regulations around the licensing process to focus on the needs and sensitivities of the modern economic environment vs. those of near 50 years ago, and be forward looking for the 50 years yet to come.