Regulatory Reform: Why We Need Smarter Standards

The gaming industry has long recognized the vital role regulation plays in maintaining the integrity of our business. In fact, our industry is notable for the collaborative bonds we have formed with regulators at all levels in order to help ensure the type of tough regulatory environment we understand is essential to the industry’s existence. However, the changing nature of our industry demands a closer look at the efficacy of some elements of the current system.

Last month, the AGA released a white paper advocating for broad-based regulatory reforms and state-specific improvements that will help ensure the industry can keep pace with evolving technologies in the years ahead. The paper, titled “Improving Gaming Regulation: 10 Recommendations for Streamlining Processes While Maintaining Integrity,” represents a significant contribution to the existing dialogue about regulatory reform that already is taking place across the country.

Regulatory reform is not a new idea and is already underway in a number of states, including New Jersey and Nevada, where significant changes have been made to amend the states’ regulatory systems. Still much work remains.

Our white paper is the product of a working group of employees at AGA member companies (many of whom are former regulators), as well as conversations with current regulators. The group was tasked with identifying changes that would have the most impact, and the recommendations they put forth are common-sense and necessary to help the industry keep pace with changes in the marketplace and our industry. Our 10 recommendations, while not intended to be an exhaustive list of improvements, focus on improving the licensing process, simplifying the gaming licensee’s ability to gain access to financing, reforming regulation of gaming machines and modifying or eliminating unnecessary red tape and reporting requirements.

Rapidly evolving technologies continue to change both the games and the tools available to regulators and create real challenges to maintaining the effectiveness of current regulations. In fact, many of the gaming regulations currently in place across the country were developed decades ago; subsequent globalization and modernization have thus outdated many of the regulatory practices that made sense when first adopted. Further, the fact that so many casino companies are now publicly-held entities also necessitates a reconsideration of existing requirements.

Duplicative and dated regulations create significant economic drags on the gaming industry.  They increase costs and divert resources from investments in innovation and ultimately dampen job creation and economic opportunity. In addition, taxpayer dollars are wasted on unnecessary enforcement and reduces the morale of regulators who understand these regulations are not effective at achieving their original goals.

Examples of such regulations can be readily seen throughout the industry, but I will limit myself here to sharing just two simple though representative examples. First, some jurisdictions require that an employee’s fingerprint be taken by a law enforcement agency within that jurisdiction as part of the licensing process. Many employees are licensed in multiple jurisdictions and subject to continuing license renewal. Today, regulators could accept certified electronic images of the applicant’s fingerprints from a legitimate law enforcement agency, rather than the time-consuming and burdensome task of visiting an agency in person whenever and wherever fingerprints are needed. Similarly, video-conferencing could be used for conducting regulatory licensing interviews. In the current system, applicants often have to travel long distances – even overseas – for a relatively brief interview. We could save time and money by taking advantage of a reliable technology that many businesses use every day.

Now, to be clear our industry is quite proud of the regulatory framework in place and believes regulators are doing a great job. But the examples I cited demonstrate the need not for less regulation, but certainly for smarter regulation.

The recommendations, which are explained in greater detail in the white paper, go far beyond my previously cited examples and address a number of key areas including licensing, regulatory filings, gaming machine development and operations. For example, updating licensing terms and procedures, extending licensing terms for at least five years and providing for the use of uniform license applications would make the process dramatically more efficient without negatively impacting regulatory effectiveness.  In addition, allowing for modern financial techniques such as an extended use of “Shelf Approvals” for debt transactions and public offerings would create an improved capital environment and make gaming operations much more attractive to investors. 

In short, our recommendations will allow businesses and regulators to keep pace with evolving technology. They will improve access to financing and help the industry better respond to changing market conditions. They will allow and encourage increased industry innovation. And they will free regulators and licensees from processes that no longer meet needs. They will do all of this while maintaining the integrity our industry is known for.

We’re working tirelessly to share the paper and its important recommendations with regulators, lawmakers and members of the broader gaming community. The AGA, state gaming associations and individual members are collaborating in the months ahead on our efforts to utilize this report to streamline and improve the rigorous and effective regulation that is a hallmark of our industry.