OPINION: Innovation through collaboration – the evolving relationship between the gaming industry and its regulators

May 11, 2022 7:57 PM
  • Jennifer Carleton, Chief Legal Officer, Sightline
May 11, 2022 7:57 PM
  • Jennifer Carleton, Chief Legal Officer, Sightline

“When people hear that I’ve been a gaming attorney for over 25 years, they often ask whether my job is like Oscar Goodman’s in the movie Casino. Fortunately, we’ve come a long way since the 70s and 80s era of blacklisting and organized crime in gaming, but regulators are just as concerned with the suitability of stakeholders as they were back then.

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The work of people like Patty Becker, who drove out the nefarious elements from our industry’s past, has accelerated gaming from a uniquely Nevada experience to a worldwide industry. As gaming grew, the challenge of regulating on a state-by-state basis was apparent. State and tribal regulators began collaborating on licensing best practices and technology innovation through organizations like the National Congress of Regulators from Gaming States, the Multi-State Lottery Association, and the International Association of Gaming Regulators, sharing information and maintaining a consistent level of minimum internal controls.

The relationship between regulators and those they regulate can be more complex. Gaming licensees often have heightened levels of experience with technology but must work within the existing laws and applicable regulatory structure to introduce that technology to the market. In order for gaming regulations to keep pace with innovation, regulators must occasionally rely on the expertise of industry participants.

The past few years have brought a wave of regulator-industry partnerships, driving innovation through collaboration. While Nevada is the most experienced gaming jurisdiction in the U.S., it is arguably the most complicated, which makes any change to gaming regulation challenging.

Sightline’s recent petition for remote identity registration for casino wagering accounts is a great example of the tension between sound regulation and technological innovation. Comments from the regulatory staff and the public focused on security, customer personal information, the transmission and use of data, casino staffing, artificial intelligence, and patron experience, as well as how the proposed change would impact sports wagering accounts.

The Nevada Attorney General’s office and the Nevada Gaming Control Board’s technology and enforcement divisions anticipated the regulatory change’s impact on existing licensees and casino patrons. The Board also conducted independent research into FinCEN guidance on the use of documentary and non-documentary evidence to prove a patron’s identity. Sightline’s petition did not address sports wagering accounts, and there was no request from interested parties about expanding the petition’s scope to include sports betting.

Despite Nevada’s familiarity with remote identity verification for online interactive gaming, some questioned whether a similar approach within a casino was necessary. Ultimately, the Board suggested a more restrictive process, requiring a patron to verify his or her identity by presenting a valid government ID and proving identity through a secondary means.

A thorough examination of the petition across two public workshops led to the unanimous approval of remote verification of a patron’s identity to establish a wagering account. The entire petition process took several months and wouldn’t have been possible without Nevada’s gaming regulators’ willingness to receive petitions that propose change, to work with the industry as they react to those proposals, and ultimately develop a consistent regulatory standard to encourage innovation.

I recently spoke to gaming regulators about cryptocurrency in the payments industry. As we discussed “gas” and “mining”, I was struck by the parallels between cryptocurrencies and casino loyalty programs. Loyalty points are essentially bitcoin by another name. Decades ago, gaming regulators educated themselves about loyalty programs and how a casino operator manages these systems to incentivize players. These programs are now well-regulated, monitored, and accounted for worldwide.

I have no doubt that cryptocurrency and any other gaming innovation will be met with the same reaction from our industry’s regulatory bodies-with some healthy skepticism and willingness to learn more.”