NGCB hopes to redefine the slot machine

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This past Thursday the Nevada Gaming Control Board held a workshop regarding changes to Nevada’s governing slot machine regulations. The changes were mandated by the Nevada Legislature, which passed a law intended to bring Nevada slot machines into the next century and to establish Nevada as a technology friendly environment to promote new technology innovations and game development.

As a part of this law allows for slot machine games to include or be based on a player’s skill or a combination of skill and luck, instead of just pure luck, this law has been often referred to as the Skill Based Gaming Law.

At the workshop both Control Board and slot manufacturing industry representatives, through the Association of Gaming Equipment Manufacturers (AGEM), presented for consideration various drafts of regulations that would facilitate the adoption of standards from which slot manufacturers would design and build new games.

As the regulations center heavily on parameters around technology some of the dialog started to become so technical and specialized it prompted the chairman of the Control Board to interrupt one exchange that included Jim Barbee, chief of the technology division of the Control Board’s gaming lab, by saying, “Before you start speaking Swahili let’s move on…

In general though what is being attempted by these continuing workshops is to find language that would define regulations broad enough to promote new game and technology development including variations that could use various forms of skill, yet protect the public by assuring reasonable paybacks along with fair and even games while not offending certain social standards. All of which is much harder than it sounds and seemingly unintentionally set up another fight between casinos and slot route operators.

Tracking/monitoring

With the introduction of skill-based slot play, it becomes important to have tracking and monitoring tools for which to evaluate and adjust games based on the skill of the player. This means more information and tighter tracking systems, beyond the normal player slot marketing systems, would need to be adopted and player account-based wagering systems for skill-based slot machines will become more, possibly critically, important.

Enter round two between the casinos and slot route operators. At the workshop, the president of the Nevada Resort Association (NRA), Virginia Valentine, suggested in her presentation that the NRA would prefer the ability to establish wagering accounts be limited to casino licensees. If this preference is adopted it does not mean your favorite bar or corner gas station could not get skill-based slot games, it just means the versions they get would likely be simpler and less intricate, requiring simpler player tracking and remain a cash based business.

Not that many years ago, there was a similar war between the NRA and independent sportsbook operators over the establishment of sports wagering accounts. It will be very interesting to watch where this battle will go or if the route operators will even care.

Missing concepts

Though some great work has been prepared by the various parties, I would suggest the proposed draft regulations are missing a few concepts:

1) Most of the testimony around skill-based games suggests the younger prospective slot player may prefer action adventure games where they could win money based on their skill in a particular game. However, a lot of the more popular action adventure games are team games where it is team vs. team instead of simply player vs. player or player vs. casino, which is how the regulations are seemingly being designed.

2) There is seemingly no notion around the idea of allowing players to be handicapped similar to what is done in golf and bowling. I suspect more patrons would prefer to play on an even playing field than not.

3) The regulations did not seem to have any language to address player protections from collusion. If there is a multi-player skill game, there should be some required protections from colluding players ganging up and squeezing out other players from a prize pool.

Slot machine revenues have been languishing for years and have, on inflation-adjusted basis, fallen billions of dollars a year behind revenues of a decade ago. The efforts around providing a regulatory framework to stimulate innovation and growth are to be applauded.

The next public hearing will be at the first NGCB meeting in September.

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].

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