Memo to regulators: Leave well enough alone

Memo to regulators: Leave well enough alone

July 25, 2017 3:11 AM


As if driving business is not tough enough in today’s highly regulated globally competitive casino gaming marketplace, the Nevada Gaming Control Board has decided to cast their eyes on Regulation 25, which basically governs Independent Agents aka Junket Representatives. NGCB is proposing modifications that seemingly would restrict casino business opportunities even further.

In old parlance a junket rep was someone who organized a group to come to a particular casino for a commission or a piece of the action. In those days, generally the rep would often guarantee or even front the money for members of their group to gamble with, keep them entertained and handle all their needs while on their gaming excursion.

As the junket reps were generating good money for the casinos they were often given great latitude in extending gaming credit and colleting that same credit. Yes, occasionally some of the reps were, shall we say, aggressive in the collection of their customer’s gaming debts. And, because of the amount of business they were bringing to the casinos some assumed too much power in casino operations.

Because of perceived and real abuses by junket reps it became necessary for the state to reign in and tighten control over their activities. By adopting Reg. 25, Independent Agents, along with other related regulations, the state tidied up the behaviors of certain reps and assured the Nevada Gaming Commission knew who was acting as an independent agent for a casino.

The original regulation was well written and fairly mindful of the need of the casinos to compete. To be sure, over the years it required a tweak here and there, but was a good regulation that did not get horribly in the way of casino operations or the pursuit of the more affluent casino customers by the independent agents, and has not needed to be changed in 25 years.

In today’s world, independent agents are outside commission sales persons for the casino who are compensated by getting a percentage of the gambler’s earning potential and often additionally a percentage of the customer’s retail spending on certain activities at the property. Casinos in today’s environment have a love/hate relationship with the independent agents, they love them to bring in new customers but hate having to fight over whether the customer is the agent’s or the casino’s.

Independent agent status is also used by some casinos as a buffer between themselves and the jurisdiction the agent is fishing in for customers. For example, more than one Las Vegas casino uses independent agents to market customers in China, which as certain executives of a certain Australian based casino learned the hard way (they are being prosecuted for breaking Chinese gambling solicitation laws) takes a dim view of foreign casinos marketing to their citizens.

For the last 25 years the standard has been, an independent agent files their paperwork with the NGCB; then they start providing services to the casino. Though they must await registration by the NGC to get paid they can start working right away for the casino’s and their own benefit. It has worked fairly well and gave “seize the moment” opportunities on several occasions. Many a Las Vegas casino, through independent agents, intercepted affluent gaming customers on their way to other destinations by cutting a better deal with the agent.

However, for their unique motivations, the NGCB is proposing additional restrictive changes to Reg. 25 that would, among other things, require independent agents to be fully registered before they can begin working with and driving customers to the casino, which along with expanded paperwork requirements will simply create another obstacle as well as lost opportunity situations for both the casinos and the state’s tax coffers.

Perhaps the silliest part of the proposed changes is a provision that specifically references a form of commission structure for independent agents tied to revenues or profits of the casino as not being allowable unless the agent is registered. Sadly, the referenced form of commission structure in the proposed regulation could not even be legally used except in the event the independent agent is fully licensed by the Nevada Gaming Commission to participate in a casino’s gaming revenue or profits like an owner, a scenario unlikely to ever happen.

There are other provisions in the proposed regulation that continue the trend of expanding the independent authority of the Board chairman, seemingly to the diminishment of the authority of the Nevada Gaming Commission.

Overall, the proposed Reg. 25 changes are so ill conceived the real smart move might just be to trash them and leave the existing regulation alone.