Nevada gaming equipment manufacturers urged the state’s regulators to shorten the approval process and allow their products and technology into casinos just as quickly as in other states.
The concerns of equipment operators were raised Tuesday during a workshop hosted by the Nevada Gaming Control Board and entitled “Modernization of the Nevada Gaming Technology Approval Process.”
The workshop, which lasted nearly three hours, comes two months after newly elected Nevada Governor Joe Lombardo said in his State of the State address that new gaming products were being introduced in other states more quickly than in Nevada.
Gaming Control Board Chairman Kirk Hendrick said he’s in favor of bending rules but not breaking them. The regulatory framework developed by Nevada over the decades, however, needs to be updated, he said.
“Maybe it’s time to swing the pendulum back the other way,” Hendrick said. “As the chair, my approval process with the governor’s direction is going to be leaning towards that. Effective regulation doesn’t mean slow regulation. But we can’t just be putting things out at speed and allow it to go to the operators.”
Jim Barbee, chief of the technology division for the Gaming Control Board, said there were good suggestions made at the workshop about collaborating more between manufacturers and test labs. He added that regulations and requirements have developed over decades, and Nevada has strict requirements because of its past need to protect against mobs skimming profits.
“As we do an analysis of potential changes we can make and ask those looking into processes in other jurisdictions, maybe we look to what our requirements are in Nevada and do we potentially still need all of the detailed reporting and various requirements based on the environment today and not as not what it was in 1970 or 1980,” Barbee said.
The workshop brought out several manufacturers who called for changes in the regulatory environment.
Daron Dorsey, executive director of the Association of Gaming Equipment Manufacturers, said Nevada’s gaming regulation has earned prestige for many decades, but the approach to overseeing gaming technology has not kept up with more advanced approaches developed and adopted in most other states and tribal regulatory authorities over the past couple of decades. Those government entities made their jurisdictions preferred venues for early and initial introductions to compete with Nevada for operators and customers, he said.
“The result is so many gaming products and innovations of all types conceived, developed, produced, manufactured, managed and delivered by Nevada licensees from their substantial bases in this state are first deployed, enhanced, improved and utilized outside of Nevada months and possibly years before being enjoyed by Nevada customers and gaming establishments,” Dorsey said. “We’re talking about trying to move Nevada back into the forefront of that release site for companies.”
Dorsey blames an extra layer of process in Nevada that doesn’t exist in other jurisdictions that are sophisticated in those products.
Barbee said compared to standards in other states Nevada is 85% to 90% on the same page when it comes to devices. The pain point is with associated equipment – everything that has an impact on accounting and revenue and patron protection.
“That’s what separates Nevada from other jurisdictions in that we have more stringent requirements from an accounting standpoint,” Barbee said. “We separate revenue more and require granular reporting on certain things. The field trials we conduct are designed to demonstrate that you can meet those Nevada requirements.”
Dorsey questioned why all of those reporting items are there if the “fundamental purpose” is player integrity and taxes and fees that are owed to jurisdictions. He said the systems in place are overly redundant.
“The most important thing is the customer gets a fair and honest game and the state of Nevada knows how much money was played so it can collect tax,” Hendrick said.
Hendrick warned that if field trials and the approval process are shortened, “things will collapse and break,” and if the consumer experience becomes patron disputes and the correct amount of tax is not collected then the Gaming Control Board gets blamed.
“We still have to have some regulation, but I don’t believe effective regulation and speedy regulation are at different ends of the field,” Hendrick said. “I think they both co-exist.”
John Acres, the founder of Acres Manufacturing, which offers casino loyalty and other solutions to properties, talked about 2022 being another record year for gaming revenue but when adjusted for inflation is 20% lower than 2006. He’s worried about future gaming revenues.
“We see people coming to town and gambling less. We are seeing the innovation our resorts are doing in sports, food, and concerts like Taylor Swift that draw people in,” Acres said. “Those people come in and do their entertainment and go home without gambling because our gambling technology hasn’t kept pace with their desires or they can gamble at home more conveniently.”
Acres said Nevada has to address both problems. Someone who was born after 1975 grew up with video games and a home computer. Their expectation of entertainment is different from previous generations that grew up with radio and television and were satisfied with slot machines, table games and video poker.
“Today, people reaching their prime gambling age in their forties and fifties aren’t so enthused, and we haven’t been able to adapt our games because regulations restrict our ability to experiment with new ideas, new ways of accommodating a player’s desires, and new ways of achieving that experience they must have between their ears, ” Acres said.
Nevada casino revenue that was once heavily weighted towards gaming in the early 1990s shifted to 50-50 in the late 1990s to become nearly two-thirds non-gaming in the most recent era, excluding the pandemic when amenities were shuttered. Casinos have focused more on that spending over gambling revenue.
Acres said regulations need to be rethought to allow innovation, because coming up with an idea is easy while the hard part is translating that into a commercial success. Manufacturers today have to create that commercial success before they “step foot in a casino,” he added. It has to be approved and refined before it can go into the property. Today, game systems are computerized and code is signatured and approved for deployment and can’t change a line without a new approval, he said.
Acres cited a video poker analyzer to collect data they wanted to use at Resorts World Las Vegas, but couldn’t make any changes without submitting it to the state’s test lab. That took six weeks, and new products face several iterations to get it right, he added.
“From my experience, every product I put out if I want to make a change, I can’t because it’s regulated,” Acres said. “It may have taken me nine to 12 months to get an idea into a field trial in the first place. Now, we go in and turn it and have to wait six weeks or eight to 10 weeks before we can make a change required to accommodate the problem we found,” Acres said.
Acres said he wants rules where, as a licensee who already meets certain tests, he shouldn’t have to to put the company’s license at risk by self-validating that changes are okay during a field trial at a casino.
