Nevada regulators are poised to revise the minimum rate of progression for inter-casino linked systems, making it easier for slot manufacturers to supply progressive products nationwide and enable the state’s casinos to link with those in other states.
The Nevada Gaming Control Board recommended changes to a 1999 regulation during a workshop last week, and the Nevada Gaming Commission will consider its adoption.
Nevada Deputy Attorney General Mike Somps said the changes were initiated by the Board’s technology division based on a request from the slot manufacturing industry.
The proposal changes the minimum rate of progression for inter-casino linked systems from .4% to .1% of the amounts wagered, Somps said. “The reason for the change is it’s intended to promote innovation and to maintain Nevada’s competitiveness in this particular area.”
Jeremy Eberwein, chief of the technology division, pointed out that the Association of Gaming Equipment Manufacturers (AGEM) petitioned the Board for a change in the regulation to lower the rate to .1%.
While the definition of an interlinked-casino system is broad, Eberwein said it’s geared for products known as wide-area or multi-site progressives, in which players at multiple gaming establishments compete for the same jackpot. That increases the size of the prize due to the liquidity of the pool.
When a player wagers $1 on a linked progressive with a 5% increment rate, jackpot increases by 5 cents.
Eberwein said regulations were adopted in 1999 as part of a larger effort to regulate operators of inter-casino linked systems, due to concerns of competition between those operators and non-restricted operators. “I don’t see a clear reason why the rate of progression itself was singled out.”
At the time, the Board proposed a value of .1%, but the industry suggested it be increased to .4% based on a request from their customers, Eberwein said.
“Two major changes in the last 26 years warrant reconsideration,” Eberwein said. “The first is that the complexity of the game has increased. When the statute and regulation were initially adopted, the typical area-wide progressives had one prize per game,” Eberwein said. “Now we have multiple wide-area-progressive prizes or a combination of wide-area progressive prizes and local progressive prizes. Yet this regulation singled out one parameter for one prize and does not account for the offerings as a whole.”
Until 2016, Eberwein said all wide-area progressives available in Nevada had to be restricted to the state. That was when regulations were amended to allow for multi-jurisdictional progressive prizes.
“So now, instead of having dozens of players play for the same prizes at the same time, there can be hundreds,” Eberwein said. “This would include connecting states that don’t have a requirement for a minimum rate of progression at all.”
Jurisdictions that adopted Nevada’s standards to meet their own needs are the only ones that have a requirement for a minimum rate of progression, Eberwein said.
“Both our research and a statement from AGEM identified Arkansas and possibly Mississippi as the only other states that have this. This makes Nevada stand out as more restrictive than the rest of the industry for a reason that isn’t documented and doesn’t for Nevada. It excludes Nevada from participating in multi-jurisdictional prizes. Based on the history, the technology division supports AGEM’s petition and puts forward this proposed regulation change.”
Board Chair Mike Dreitzer asked why not just repeal the regulation instead of amending it, but Eberwein responded that this route would be more timely in the short term. Going to .1% allows Nevada to participate with other jurisdictions, Eberwein said. While that doesn’t come up a lot, it does when it comes to more complex game designs.
“It’s probably more the exception than the rule that they need something that low,” Eberwein said. “It’s been 26 years since the rule has been in effect and this is the first time anyone has come forward to say they want it lowered. Even at .4, the typical progressive we’ve seen come through has been higher than that.”
Dreitzer called it another example in which regulators are doing something that is “common sense” and “allows Nevada to keep pace,” given the complexity of multi-state progressives, It also gives operators the flexibility to create progressive programs they want.
“It’s just a matter of providing further optionality to the manufacturers in Nevada, so they can offer compelling products, not unlike what you find in other states,” Dreitzer said.
Nevada gaming attorney Kelci Binau appeared on behalf of AGEM to support the regulation change. She said the amendment recognizes the state’s efforts to continue to evolve and remain competitive with other gaming jurisdictions.
When the regulation was adopted in 1999, the gaming equipment marketplace was different, Binau said. There was less competition among manufacturers and linked progressives were “far less prevalent” than they are today. The .4 rate at the time reflected the industry standard.
“Over the last 25 years, however, the marketplace has evolved,” Binau said. “There are substantially more licensed manufacturers, product offerings have expanded, and most states and tribal jurisdictions now permit 8.1% minimum progression rates. For manufacturers, that can mean significantly modifying products that comply with requirements in most jurisdictions just to satisfy Nevada’s technical requirement. This is a measured update to a technical requirement that has remained unchanged for more than two decades. It reflects the evolution of the marketplace and reduces the need for Nevada-specific modifications while maintaining Nevada’s long-standing commitment to effective gaming regulations.”
