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Nevada i -Gaming. A Workshop. Nevada iGaming. Greg Gemignani Lionel Sawyer & Collins +1 702 383 8989 grg@lionelsawyer.com. Agenda Topics. Brief Overview of Terms Used in Nevada for Networked Gaming History of iGaming in Nevada 2011 Legislative Session AB258 SB218 Student Bill.
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Nevada i-Gaming A Workshop
Nevada iGaming Greg Gemignani Lionel Sawyer & Collins +1 702 383 8989 grg@lionelsawyer.com
Agenda Topics • Brief Overview of Terms Used in Nevada for Networked Gaming • History of iGaming in Nevada • 2011 Legislative Session • AB258 • SB218 • Student Bill
Nevada & Networked Gaming Nevada uses a somewhat unique set of terms to describe different forms of networked gaming. These terms are used in other jurisdictions, but do not always have the same meaning as they do in Nevada This has resulted in some confusion in reporting and understanding iGaming issues in Nevada Additionally, Nevada’s sports wagering industry, which is unique in the U.S. adds to the confusion
Nevada & Networked Gaming • The Gaming Premises • A “gaming premises” is any facility in which is approved for licensed restricted or non-restricted gaming. • The “gaming premises” includes everything within the lot of the facility. • For large casino hotel resorts, this means everything within the boarders defined by the adjacent streets.
Nevada & Networked Gaming • Sports Wagering • PASPA prohibited any state or tribe from enacting or permitting sports wagering and prohibited anyone from relying on such enactment to engage in sports wagering. However there was an exemption for Nevada to continue sports wagering in a manner consistent with its conduct between XXXX and XXXX
Nevada & Networked Gaming • Interactive Gaming or iGaming • In 2001, networked based gaming was in its infancy and was being conducted in various parts of the world on public and private networks • The Nevada legislature used the phrase “interactive gaming” to capture wide area network based gaming regardless of the type of network used as a medium. • Internet • Cable TV • Cell phone (non-internet)
Nevada & iGaming In 2001, the Nevada legislature enacted the first interactive/online gaming statutes in the U.S. The 2001 legislation envisioned an industry similar to terrestrial gaming, namely, one in which operators (casinos) and manufacturers (gaming device manufacturers) were the only licensed supply side participants. The 2001 legislation limited operator licenses to large casino operators.
Nevada & iGaming As part of the enabling legislation, the legislature required the Nevada Gaming Commission to make certain findings. Among those requirements was a requirement that the activity could be conducted in compliance with federal law. A letter from the Bush era Department of Justice indicated that the U.S. DOJ believed that the conduct of interactive gaming would violate one or more federal laws. This ended the regulatory activities related to iGaming in Nevada in 2002.
Nevada & iGaming In 2006, the U.S. Congress enacted the Unlawful Internet Gambling Enforcement Act (UIGEA) The UIGEA specifically exempted intrastate wagering from its definition of “unlawful internet wagering” This was viewed by many states as a federal expression that intrastate gaming activities sanctioned by a state were not the subject of federal regulation or prohibition.
Nevada 2011 Legislation In 2011, three bills were introduced to promote interactive gaming within Nevada AB258 – The Poker Bill SB218 – The Omnibus Gaming Bill XXXXX – The Preliminary Finding of Suitability Bill Each of these bills plays a role in promoting the regulation of interactive gaming and the use of interactive gaming technologies in Nevada
Nevada AB258 As originally introduced, AB258 was a bill that would radically alter Nevada’s gaming regulator regime by carving out special privileges for applicants of interactive gaming poker licenses. After a letter from Governor Sandoval, the bill was modified to avoid special privileges, avoid constitutional issues, and avoid any modification of the gaming regulatory regime in the state.
Nevada AB258 • AB258 ultimately did the following: • It removed the requirements that the Commission make the findings required in 2001 • It required the Board to draft and the Commission to adopt regulations regarding intrastate online poker • It allowed the Commission to issue licenses in compliance with federal law, should federal law change. • It allowed the Commission to issue interstate licenses upon a change in federal law or a change in the U.S. DOJ’s interpretation of federal law that such interstate activity can be conducted in compliance with federal law.
Nevada SB218 SB218 was the final bill that included concepts from other bills and was the bi-annual omnibus gaming bill. SB218 recognized that the licensed operator and manufacturer model of iGaming expressed in the 2001 legislation was an outdated concept. In response SB218 introduced the concept of a “service provider” as a licensed or licensable activity.
Nevada SB218 “Service Providers” are anyone, in conduction with a licensed interactive gaming operator engage in any of the following:
Nevada SB218 Regulations related to SB218 further classified service providers into three classes. Class 3 Service providers are mark licensees and marketing affiliates. Only subject to cursory investigation. Class 1 Service providers are…. Class 2 Service providers are anyone that does not fit in either class 1 or class 3. Class two and three providers may deemed Class 1 service providers at the discretion of the Chairman.
Nevada SBxx • From the inception of regulated gaming in Nevada until this year, the only way for anyone to trigger a gaming investigation was to engage in an activity requiring licensing. • This means executing a definitive agreement to purchase a licensed operator, provide services requiring a license, or committing to an activity requiring licensing • Many deals and investments were thus negotiated drafted and executed with provisions that made the entire arrangement subject to licensing approval.
Nevada SBxx SBxxx changed this by allowing an applicant to apply for a finding of suitability Such an application will subject the applicant to the full investigative scrutiny previously reserved for license applicants. However, it does not require a definitive agreement to be executed or the imminent conduct of an activity requiring licensing.
Nevada SBxx It is a vehicle for vetting suitability in Nevada The investigative materials and reports from a preliminary finding can be used as a foundation for a future licensing application. A licensing applicant that has a prior finding of suitability will generally be investigated only for the period after the issuance of the finding of suitability. This has the potential for dramatically reduce the investigative time normally experienced by license applicants.
Nevada SBxx SBxx provided an opportunity for prospective investors, service providers, manufacturers and general licensees to determine their suitability before committing significant resources and investment to negotiating, engineering, and executing a definitive deal. Additionally, it provides current licensees with a stable of potential partners and suppliers that are suitable for licensing, thus making those with a preliminary finding more desirable.
