Former gaming chief says Nevada must lead the way in regulation

Nevada must continue to support a strong regulatory environment for the gaming industry, even as society races into uncharted technological advancements, a former gaming regulator said.

A.G. Burnett, who joined a private law practice in Reno last year after serving as chairman of the state Gaming Control Board from 2012 to 2017, said Nevada must be a leader in gaming regulation because jurisdictions worldwide look to the state and often replicate its expertise in their own regulations.

“Tiny little Nevada did something incredible,” Burnett said Thursday at the annual Robert D. Faiss Lecture on Gaming Law and Policy at UNLV’s Boyd School of Law.

“We exported not just integrated resort gaming to the rest of the world but how gaming is regulated,” he said. “The model that was deemed to be ‘best practices’ in gaming regulation and compliance throughout the world came from none other than right here in the deserts of Las Vegas and the mountains of Carson City in the north.”

‘Tip of the spear’

Burnett said he laughed when a colleague told him that a regulator from another state warned that Nevada didn’t want to become “the tip of the spear” on the touchy issue of daily fantasy sports when it first made overtures to enter the Nevada market.

In 2015, a nationwide debate raged as to whether fantasy sports was a contest requiring skill, like poker, or whether it involved chance and therefore a gambling game. After consulting with state legal experts, Burnett deemed it gambling in October 2015 and determined that daily fantasy sports operators would be required to be licensed under state sports betting regulations.

Instead of applying for licensure, operators pulled out, even after gearing up to lobby legislators that daily fantasy sports was a game of skill that didn’t need regulation.

In his Thursday presentation, Burnett recalled the “tip-of-the-spear” remark.

“I laughed and I shook my head and said tip of the spear? Tell him we’re not just the tip of the spear. We are the spear,’” he said.

He said he recognized then how much other jurisdictions rely on Nevada’s expertise, even as Macau and Singapore easily race past Nevada in generating gaming revenue.

“When I was chairman, I learned that many regulators around the world look to Nevada for leadership and to set an example on the myriad issues that arise in gaming and the businesses that surround gaming,” he said. “What the regulators do here has a ripple effect. It goes around throughout the world.”

Technological advancements

And for that reason, Burnett said, Nevada has to be ready for the fast-paced change the industry is seeing in technology and must stay ahead of it. He said he would often tell colleagues that Nevada “can’t just be looking down the road, but looking down the road and around the corner” for what issues are coming next.

“The gamer of the 2020s and beyond will one day be more integrated into their own devices, even potentially having computing, probably within a decade, being quantum-based, embedded within their physical bodies. This is all coming and we have to think about this,” he said.

And, unless regulative enforcement is prepared, new opportunities for cheating will emerge.

“Regulators must be given the budgets and manpower to keep up,” he said. “Regulators must also be given not just broad authority to regulate in technologies, but the mandates to embrace them in a careful, cognizant, responsible way that still calls for strict regulation over the mindset toward enhancing gaming.

“Also, the enforcement side of regulation must always be carried forward because as new technological interfaces for gaming arise and enter the marketplace, new ways to cheat and scam the system will as well,” he said. “Investigators on the Gaming Control Board must be on the cutting edge of investigative technologies.”

Marijuana issues

Other social issues are bound to enter the regulatory realm, he said, but one of those that has been in the spotlight — the integration of marijuana sales and the gaming industry — has been easy to process.

Control Board policy since voter approval of recreational marijuana use in Nevada has been to keep the industries separate. The reason: Marijuana has been deemed an illegal controlled substance by the federal government. As long as the feds maintain that stance, gaming regulators hold the view that ownership roles in gaming and marijuana can’t cross.

Burnett said Nevada had the opportunity for advice from a state — Colorado — that already had gaming before legalized recreational marijuana.

Burnett said when he asked a Colorado regulator what the state was going to do about its stance, he replied, “I don’t know. What are you guys going to do about it?”

Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.