Page Updated Nov. 27, 2011
Summary
Nevada’s legislature has already enacted a statute to license and regulate “interactive gaming” within the territorial borders of the state. Only “resort hotels” may obtain an operator’s license. The State Gaming Control Board will proceed with regulating on an intrastate basis regardless if Congress enacts a federal law. The Gaming Control Commission has nearly finalized its first round of regulations and appears likely to approve them at a hearing in December. Furthermore, the Gaming Control Board is already accepting license applications for interactive gaming operators and service providers, even though the regulations are not yet officially promulgated. Although the legislature has given the Gaming Control Board authority to regulate “interactive gaming,” defined broadly, the Control Board is drafting regulations only for internet poker.
Nevada interactive gaming law (2011 Nev. Stat. 1668)
On June 10, 2011, Nevada enacted a statute legalizing “interactive gaming” within the territorial borders of the state. (2011 Nev. Stat. 1668). The bill had been introduced into the state legislature on March 10, 2011 as Assembly Bill 258. The Assembly approved the bill by a vote of 42-0 on May 19, 2011 and the Senate approved it by a vote of 19-2 on May 30, 2011. Governor Brian Sandoval signed the bill into law on June 10, 2011.
Specifically, the statute orders the Nevada Gaming Commission to adopt regulations for “interactive gaming,” which is defined broadly. Only “resort hotels” which already hold an unrestricted gambling license in Nevada are permitted to obtain a license to operate interactive gaming. Operators will be subject to a monthly license fee of 3.5 percent of gross revenue if their gross revenue does not exceed $50,000 per month, 4.5 percent of gross revenue if their gross revenue is between $50,000 and $134,000 per month, and 6.75 percent of gross revenue if their gross revenue exceeds $134,000 per month. The statute also orders the Gaming Commission to establish rules for the licensing of manufacturers and service providers.
Nevada Gaming Commission’s Draft Regulations
The Nevada Gaming Commission published its first set of draft of regulations for interactive gaming on August 1, 2011 and has subsequently made adjustments considering written submissions and comments at public workshop meetings. The latest draft regulations are available on the ‘Proposed Regulation Amendments‘ section of the Nevada Gaming Control Board website. One set– Draft Regulation 5A– is entirely new. The other draft rules are proposed amendments to regulations which already had been in existence to cover various aspects of gambling businesses.
Although the legislature’s enabling act defines interactive gaming broadly, the Gaming Commission proposes that poker is the only game it will license and regulate on the internet. In addition to the taxes applied to their monthly gross revenue, operators would be subject to an initial license fee of $500,000, which is good for a period of two years. After the initial two-year period the license can be renewed each year for a fee of $250,000. The draft regulations also propose rules for applications and investigative fees, initial license fees and license renewal fees, the enforcement powers of the Gaming Commission and Gaming Control Board, internal controls and minimum standards for interactive gaming systems, player registration, customer accounts, self-exclusion rules, information which must be displayed on operators’ websites, house rules, player disputes, record keeping, preventing financial crimes, suspicious wagering reports, employee reports, and transaction reports.
Applications for interactive gaming licenses
On November 22, 2011 the Gaming Control Board gave official notice that “due to an increasing level of interest, applications for [license] approvals may be submitted to the Gaming Control Board prior to the passage of said regulations.” Applications are available on the Gaming Control Board website for licenses a) to manufacture interactive gaming products, b) to operate interactive gaming, c) to operate as an interactive gaming service provider, d) or to operate as any service provider seeking to share in the revenue from games. Chairman Lipparelli says applications “should be treated in the same fashion as for any nonrestricted gaming license.”
Other Research Sources:
Website of the Nevada Gaming Commission and State Gaming Control Board
Nevada Revised Statutes Chapter 463: Licensing and Control of Gaming