On the eve of the opening of this year’s G2E in Las Vegas, the American Gaming Association (AGA) released a white paper making a range of recommendations for streamlining gaming regulations without compromising the integrity of the industry or the present regulatory system. Improving Gaming Regulation: 10 Recommendations for Streamlining Processes While Maintaining Integrity, suggests possible national reforms and state-specific improvements.
“This white paper makes a significant contribution to the existing dialogue about updating regulations to accommodate new gaming technology and the corporate and global nature of today’s gaming industry,” said Frank J. Fahrenkopf, Jr., President and CEO of the AGA. “Most importantly, the paper’s recommendations would help maintain the regulatory integrity we all recognize as vital to our industry’s existence.”
The paper notes that regulation must evolve to keep pace as advancing technology transforms the industry, changing both the games to be regulated and the tools available to regulators. According to Fahrenkopf, the white paper’s recommendations are made at a time when regulatory reform is underway in many states, and the paper compliments the major regulatory changes made recently in New Jersey and Nevada.
Without attempting to produce an exhaustive list of improvements, the white paper instead focuses on recommending ways to facilitate the licensing process, simplify gaming licensees’ ability to gain access to financing, reform gaming machine regulation and modify or eliminate unnecessary red tape and reporting requirements. The paper points out that globalization, modernization and other important changes mean, ‘regulatory practices that made good sense when first adopted can become outdated.’
The paper cites several negative effects of duplicative or dated regulations. “By increasing costs, it diverts industry resources away from investment and innovations that create jobs and economic opportunity. It saps the creative spirit of employees. It wastes taxpayer dollars and industry resources on misguided enforcement. And it reduces the morale of regulators, who recognize that they are imposing standards that are losing their relevance.”
The recommendations, which are explained in greater detail in the report, are:
1. License terms should extend for at least five years.
2. Extend the use of uniform license applications.
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3. Allow waiver from licensing or registration requirements for those institutional investors holding less than a 25 percent ownership of a licensee.
4. Extend the use of “Shelf Approvals” for debt transactions and public offerings.
5. Require no more than registration of outside directors.
6. Eliminate unnecessary regulatory filings.
7. Update licensing procedures and practices.
8. Eliminate Prescribed Minimum Internal Control Standards (MICS).
9. Eliminate Prior Notice or Pre-Approval of the Shipment of Electronic Gaming Machines.
10. Reduce the Number of Pre-Approvals for Electronic Gaming Machines.
[Download the full report]
The paper identifies reforms that would free regulators and licensees from processes that no longer serve their initial goals, analyzing each regulatory problem and identifying an effective solution. The paper does not address implementation of the recommendations, other than to acknowledge that some will require statutory action while others will require a change in regulation or perhaps simply a change in practices.
“Our next step is education. We’re going to be sharing the white paper with regulators, lawmakers and members of the broader gaming industry,” Fahrenkopf said. “Once that process is completed, we will work with our member companies and state policymakers to determine the next steps to pursue implementation.”
The white paper was the product of a working group of employees at AGA member companies, including many who are former regulators, as well as conversations with current regulators. The Association of Gaming Equipment Manufacturers also generously contributed to the development of the report. Author David O. Stewart is counsel at Ropes & Gray LLP in Washington, D.C. (E-10.06.11)
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