Five Ways Nevada Leads the World Gaming Industry

Introduction to Nevada Leads

While much has changed with regards to the gaming industry in the last 10 years, with so many casinos available closer to home for most people, at the same time Nevada’s gambling reputation remains true. Nevada provides and maintains this leadership tole despite no longer being the epicenter for gambling itself.

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How the U.S. Gaming Industry Expanded, Historically

First, a brief history lesson. Before May 26, 1978, the only legal casinos in the U.S. were those available in the state of Nevada. After this date after this date when Atlantic City’s first casino opened, U.S. casinos existed only in Atlantic City, New Jersey and within the state of Nevada.

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A nationwide scarcity of casinos lasted until the federal Indian Gaming Regulatory Act of 1988, quickly followed in 1989 by Iowa’s legislature legalizing the first riverboat casinos.

New state gaming regulations allowing casino gambling in other states occurred later that same year. These early adopters include South Dakota legalizing gambling in Deadwood as well as Illinois and Indiana legalizing riverboat casinos, all during a very busy 1989.

The next decade saw this gaming industry expansion grow even faster, with Connecticut, Colorado, Illinois, Indiana, Louisiana, Mississippi, Missouri, and other states quickly legalizing casinos by the end of 1993.

Furthermore, legalized cruise ship gaming occurred in 1991 while Michigan legalized gambling in the city of Detroit in 1996.

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By 1994, thirteen states had legalized casinos. Excepting Nevada and possibly New Jersey, saying that these states underwent a steep learning curve would be an understatement.

Luckily, the state gaming board commissioners from these states could follow an excellent example: Nevada state gaming regulations.

For a more detailed history, see “A Chronology of (Legal) Gaming in the U.S.” by George Fenich, which documents U.S. gaming industry developments from gambling sailors on Columbus’ ships in 1492 until 1996.

By around the late 1990s, this tremendous and unprecedented gaming industry expansion had sputtered to a near halt. Why? Because states regulate and enforce gambling operations at all non-tribal casinos, and no states had previously established gaming regulations in these states. Prohibitions, yes. Legalization, no.

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We can see the consequences of this unpreparedness today. States like Oklahoma have tribal gaming compacts which are good until perpetuity with changes only possible if both the tribe and state agree.

Sure, they’ve agreed to update these compacts to add using Ticket-In, Ticket-Out technology in place of coins, but how much the state receives in fees and income taxes remains unchanged from the establishment of these compacts despite the tremendous growth of tribal gaming in Oklahoma.

Consider the pressure this has placed on the state legislature to find more gaming income. While not as immersed in Oklahoma politics as I probably should be, it amazes me that the state of Oklahoma limits non-residents to $17,000 in gambling deductions on their Oklahoma state income tax return. That’s right, only $17k in gambling deductions for non-state residents.

For several years a row, I’ve exceeded $100k in gambling deductions which Ohio allowed me to deduct, thereby allowing me to only pay income taxes on my profits. If I’d had a $17k limit, I’d have paid thousands of dollars more in state taxes and, just like that, about 10% of my profits would have been ate away.

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Yet many slots enthusiasts have yet to learn my winning strategies and/or find casinos where they are success. Those slots enthusiasts from Texas, Louisiana, and other states bordering Oklahoma who also gamble in Oklahoma with a similar performance that do well enough to break even would suddenly have an additional $3,000 or more tax bill. Ouch!

And why is this happening? It’s one consequence of the terms of early tribal gaming compacts. I sympathize with state negotiations back in 1989, because who could possibly know what would happen over the next 30 years, like the Oklahoma Governor’s hissy fit back in January 2020.

Because of its early adoption of gambling, only Nevada had the needed professional experience to both regulate and enforce state gaming regulations. This professionalism wasn’t just with regards to the state laws and the legislature that had enacted them.

There was also a large group of academics and attorneys who had, for many years, been challenging these gaming laws in court. This resource contributed significantly to an overall refinement of Nevada gaming laws as well as the development of a substantial amount of precedence with regards to case law.

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Because of this valuable, decades-long activity, a core of gaming industry specialists was available to help other states besides Nevada to generate comprehensive gaming regulations in other states.

Perception is Reality – The Virtual World of Las Vegas

There is a lot to say about the gaming industry in Nevada. These dialogues and monologues include quite a few gambling blogs, podcasts, and social media channels devoted to all things Las Vegas.

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These personalities and even celebrities appreciate Nevada’s leadership role with regards to the gaming industry as well as the entertainment industry. After all, gambling and entertainment often go hand in hand.

But for those people who have never traveled to Las Vegas, they still often know about whatever portion of Las Vegas shows up in movies like Casino and Next as well as television shows like CSI: Crime Scene Investigations, Pawn Stars, and various shows called Vegas or Las Vegas.

So, there is another aspect to Las Vegas, which is the perception of Las Vegas. While typically far less than accurate, an understanding of gambling in Las Vegas matters. So many people believe in the glamour of the casino and gambling lifestyle based on what they have heard about Las Vegas.

Perspectives come from their favorite movies, television series, as well as other online sources like “what’s happening in Las Vegas” articles and podcasts.

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Why this is important comes in once a casino opens within easy driving distance to individuals who have no real experience gambling, but think they do because it’s long been an integral part of some of their favorite television shows and movies.

However, when it comes time to enter a casino, several preconceived notions can get in the way. For example, they could consider casinos to be high crime areas. Like, that gamblers often win big without trying too hard. For these individuals, the perception of fictional shows has become a reality for them.

As a result, there can be a steep learning curve to understanding what a real casino environment is like, and well as understanding and practicing the necessary skills for thriving in a casino environment.

First, they unlearn what they think they know. Then, they learn it right. This retraining and can be expensive in time, money, or both.

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In my opinion, the worst circumstance is never entering a casino simply because fictional shows have taught someone to be afraid of them for reasons that don’t exist.

Another circumstance, nearly as unfortunate, I’ve already mentioned: Having severe misunderstandings about how casinos work. If you don’t understand how to “shop” at a specific business, many businesses have a sales representative that explains what they have to offer in terms of what you need.

For example, consider if you’ve gone to a pool store to buy a residential pool. The sales rep will explain the differences between above ground and below ground pools, as well as the immediate and long-term costs involved.

Now, have any of you had a similar conversation with a casino employee? Anyone? Anyone? Bueller? You can bet you haven’t!

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My point here is that casinos aren’t going to tell you anything except how to spend money. Those casino employees that regularly interact with casino patrons get reprimanded and can even lose their jobs, if they suggest a gambler stop gambling, even under the worst circumstances of problem gambling.

My primary consideration is casinos don’t educate their patrons to gamble well. And television and movies are not very realistic about the casino environment. All of this is less than useful and at worst dangerous misinformation.

It’s your responsibility to educate yourself about gambling. That’s why many of you bought my book, watch my videos, and listen to my podcast. And I point out sometimes very specifically with links and discussions about every U.S. state gaming jurisdiction, if you want to educate yourself, a great resource is your state’s gaming commission or the gaming commission of the state in which you gamble.

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And all of them, in the beginning, were based on Nevada’s state gaming regulations, before customization for each gaming jurisdiction. This doesn’t just apply to U.S. gaming jurisdictions, but for every gaming jurisdiction in the world.

Legalized Sports Betting: Nevada was First

Nevada’s gaming industry leadership role was seen in the May 14, 2018 ruling from the U.S. Supreme Court, which ended the nearly nation-wide ban on sports betting. It was “nearly” a nation-wide ban because only Nevada legally allowed sports betting. As an interesting aside, the PASPA excluded the banning pari-mutuel wagering of horse and dog racing.

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That’s right: Nevada was always fully exempt from the federal law from 1992, the Professional and Amateur Sports Protection Act of 1992 aka PASPA aka the Bradley Act, which had initially banned sports betting. Again, as seen in this 2018 news about this overturned law, Nevada’s leadership in the gaming industry is not at all new.

Officially, the PASPA of 1992 exempted sports lotteries in Oregon, Delaware, and Montana as well as licensed sports betting pools in Nevada. One component of the law provided a 1-year opportunity for states with licensed casino gaming to pass laws permitting sports wagering. This portion was meant to include New Jersey, despite their later failing to meet that deadline.

To be clear, the court ruling does not legalize sports betting. Instead, the U.S. Supreme Court said that the PASPA violated the 10th Article of the U.S. Constitution.

They reasoned that the federal PASPA illegally empowered the federal government to order states to disallow sports gambling. This court ruling on May 14, 2018, removed only this specific application of that empowerment.

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So now, as with most types of gambling in the U.S., sports gambling is allowed by law in states that wish to legalize sports betting. And changing state laws can sometimes take a while. Stay tuned to your state’s legislature to follow if legal sports betting becomes allowed in your state.

Sports betting is not an area I focus on. My niche is casino slots. But I feel I need to point out that the Supreme Court ruling was in May 2018. A few states were able to get sports betting on the ballot by the November 2018 election, but most were not.

Well, as I write, this week was the November 2020 election. Ignoring most of what has been happening this week and focusing on something that hasn’t gotten a lot of attention yet is … most states have gotten voter approval for their sports betting ballots and more.

The more part includes residents of the city of Bristol, Virginia enthusiastically approving the state’s first casino to open there. A casino, I will also mention, which has been under construction for some time in anticipation of this approval.

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And Colorado has approved updating its state constitution with a host of changes to gambling, from permitting sports betting to lifting the $100 bet limit. Being able to bet more than $100 hardly affects slots, but it sure does affect table games!

Getting back to Nevada’s leadership role, the 2018 Supreme Court ruling allows states to develop laws that legally allow sports betting. Only Nevada has had an operational sports betting system. Other states now have an opportunity to adapt their sport betting laws based on Nevada’s successful application.

When I first began researching the gaming industry, I learned something about illegal gambling which completely astonished me. What surprised me was how common it was along with how much money was involved.

Did you know that illegal gambling is a $150 billion per year industry? In the U.S., this is mostly from unlawful wagering of professional and amateur sports. States losing its associated income tax revenue is highly relevant to straining state budgets.

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Concerns about sports betting have been that it will lead to the gamification of sports. Gamification is when fans become more focused on gambling than following a team.

Others, like trade groups that represent casinos, have predicted that the ruling would generate revenue without endangering the integrity of sports competitions.

Analysts also believe it’s likely to be a boon for media companies, as allowing sports betting will benefit them due to fans becoming more deeply invested in sporting events which in turn will result in higher ratings for these companies.

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Whatever the case may be, Nevada’s practical and operational experience with decades of existing sports betting will be an essential factor. As mentioned, it won’t just be the how-to aspect of running significant sports betting pools, but also through providing an example of high-quality legislation and case law.

Nevada State Gaming Regulations

Nevada is known to have world-class state gaming regulations. The 80+ year history of the Nevada Gaming Control Board has developed a robust gaming regulatory framework.

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This development was only possible thanks to long-standing contributions from both state policymakers as well as ongoing challenges to the Nevada system by those with new and innovative ideas.

Consequently, Nevada gets extensive use by other gaming jurisdictions, both domestically and internationally, as an excellent example of what works.

Most of these gaming regulations and case documents can be found online at the joint website for Nevada Gaming Control Board and Nevada Gaming Commission. For example, there are:

• Agendas & Dispositions
• Statutes & Regulations
• Licensee Information
• Gaming Employee Registration
• Tax Forms
• Statistics and Publications

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The breadth and depth of the board itself can be seen by the way it is organized. For example, it consists of the following six divisions:

• Administrative
• Audit
• Enforcement
• Investigations
• Tax & License
• Technology

Also found, as a type of newsfeed, are “Industry Notices & Technical Bulletins” as well as “Upcoming Events.” I especially found the “I Want To…” menu to be quite an excellent example of useful information.

This online resource shows the transparency and thoroughness of the Nevada Gaming Control Board. Need a form? Here you go. Want to submit information about a public investigation? That’s here, too. How about compliance training? Yes, it has that! What about a variety of gaming legislation references? Yes, indeed, those are there are well.

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Without putting too fine of a point on it, the Nevada Gaming Commission has a comprehensive depth and breadth of information available for the world.

Nevada and International Gaming Jurisdictions

As mentioned, Nevada’s regulatory framework has developed a reputation around the globe as the leader through its 80-year history and long-standing contributions.

Legislative and government leaders, gaming commissioners, board members, and dedicated employees have made these contributions. Further contributions came from gaming lawyers, accountants, advisors, and members of the academic community who have challenged the system with continued new ideas.

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At the end of 2011, for example, Nevada was the first U.S. state to have gaming regulations in place for Internet poker play despite online poker play being against U.S. law. This was indicative of Nevada gearing up for if/when federal lawmakers eventually approving legislation removing these barriers.

In the leading up to these new regulations from 2011, Nevada received attention for its leadership role for doing so, with one gambling conference in Las Vegas referring to Nevada as “the gold standard of gaming regulation.”

Nevada gaming regulators, such as former chairman Dennis Neilander of the Nevada State Gaming Board, discuss with news reporters about regularly talking with government officials from around the world that look to Nevada for guidance.

In his own words, Neilander has said, “It’s usually an exchange of ideas,” Neilander said. “They’ll ask about the structure of the agency or about best practices. How the industry is regulated differs around the world. Some things that work well in Nevada may not work as well in Singapore, Australia, or Canada or among the various states.”

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Neilander continued this interview with the Las Vegas Sun in its 2011 article “Is Nevada still the national leader in gaming regulation?” by stating such conversations started with him saying, “Here’s what works for us in Nevada. It may not work exactly like that for you or you may need to modify it, but it’s served us well.” Or, “Here’s what hasn’t worked for us.”

Summary of Nevada Leads

The gaming industry in the U.S., and indeed, the world, is a dynamic environment where Nevada’s leadership role is vital. Frankly, a lot is going on. It hardly matters which gaming jurisdiction you are in either domestic or internationally. Wherever you are, change is coming, and Nevada leads.

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