State Gaming Regulations & What You Need To Know

Introduction to State Gaming Regulations

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.

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Popularity and Acceptance of Gaming

The gaming and betting industry is highly regulated. The popularity and acceptance of gaming are influenced by prevailing social mores, and changes in these social mores could result in reduced acceptance of gaming as a leisure activity.

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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.

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Such an increase in regulation could adversely impact results of operations and financial condition of gaming companies as well as casino operators.

Gaming Jurisdictions

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.

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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.

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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)
• Establish and collect related fees and/or taxes

Gaming Licenses

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.

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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.

Summary of State Gaming Regulations

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.

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