Introduction to State Gaming Regulations and You
For slot machine players as well as other law-abiding gamblers, state gaming regulations are a simple fact of life whether known to exist to most people or not. State-run gaming commissions work hard to ensure the protection of private citizens from the dangers of gambling.
But what do state gaming regulations mean for you? What do they mean to gaming companies and casino operators? This blog provides a perspective of how the gaming industry, both providers and players, can be impacted by state legislation.
Popularity and Acceptance of Gaming
The gaming and betting industry is highly regulated. The popularity and acceptance of gaming is influenced by prevailing social mores, and changes in these social mores could result in a reduced acceptance of gaming as a leisure activity.
Gaming companies and casino operators depend on the appeal of its gaming offerings to its customers and players and the general acceptance of gaming.
Negative perceptions and publicity surrounding the gaming industry could lead to increased gaming regulation. If the popularity of gaming declines for any reason, the financial condition and results of operations for gaming companies and casino operators may be adversely affected.
For example, if a perception develops that the gaming industry is failing to adequately address concerns over problem gambling, the resulting political pressure may result in the gaming industry being subject to increased regulation.
Such an increase in regulation could adversely impact results of operations and financial condition of gaming companies as well as casino operators.
Typically, gaming regulations in the jurisdictions in which gaming companies operate are established by statute and are administered by a regulatory agency with broad authority to interpret gaming regulations and to regulate gaming activities.
Gaming is regulated by state law in the United States, which typically prohibits gaming except as authorized and regulated by the particular state. There are currently 45 jurisdictions which authorize the operation of gambling establishments in the United States.
Regulatory requirements vary among jurisdictions, but the majority of jurisdictions require licenses, permits or findings of suitability for each gaming company. In some jurisdictions major stockholders, directors, officers, and key employees are subject to lengthy background investigations that may require extensive personal and financial disclosures.
Among other things, gaming authorities in the various jurisdictions in which gaming companies are licensed, may:
- adopt additional rules and regulations under the implementing statutes;• investigate violations of gaming regulations;
- enforce gaming regulations and impose disciplinary sanctions for violations of such laws, including fines, penalties and revocation of gaming licenses;
- review the character and fitness of manufacturers, distributors and operators of gaming products and services and make determinations regarding their suitability or qualification for licensure;
- grant licenses for the manufacture, distribution and operation of gaming products and services;
- review and approve transactions (such as acquisitions, material commercial transactions, securities offerings and debt transactions); and,
- establish and collect related fees and/or taxes.
Further, the regulatory review process and licensing requirements may limit the use of technologies owned and developed by those unwilling to subject themselves to regulatory review or do not meet regulatory requirements.
Often, casino operators need to obtain approval within their jurisdiction to use new product hardware, software, and online gaming products. Gaming hardware and software must be approved either by a gaming authority laboratory or a private laboratory authorized by the gaming authority.
Such approvals may require a license from the jurisdiction, which may place a limit on the amount of space allocated or limit the amount of new product to be made available. Substantial changes in any such regulations can also adversely affect demand.
State gaming regulations are a simple fact of life, whether known to exist to most people or not. Gaming commissions work hard to ensure the protection of private citizens from the perceived dangers of gambling.
Each state’s gaming commission is slightly different, although many model themselves after the gaming laws of the state of Nevada. Because state-run gaming commissions are non-identical, I’ve started a weekly blog covering what each state offers players within their gaming commissions. Sometimes, these state gaming regulations include published statistics for payout percentages for both slot machines and table games.
Sometimes, they only provide an overall payout percentage for each casino. Others, like Colorado, offer the overall payout percentages for each casino as well as for each denomination slot machine within that casino.
My year-long, weekly blog covering each U.S. state, territory, and federal district can be found HERE. I’m writing each state’s blog in alphabetical order, with the expectation of completing the series by mid-2018.
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Next: Getting to Know Common Legal Gaming Classifications – Accepted legal gaming classifications are available to state gaming boards to restrict which class of slot machines can be used in a casino or other gaming area, specifically Class I (tribal ceremonies), Class II (bingo), and Class III (for everything else, including Las Vegas style casino games).