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Tarnished Gold

Nevada regulation is not the gold standard for responsible or problem gambling, and this should change

Tarnished Gold

Nevada has an opportunity to rethink its approach to responsible and problem gambling. In the process, it can forge a new path for gaming regulation that has lacked innovation for decades.

Problem and pathological gambling are communal issues. Problem gamblers report higher rates of divorce, bankruptcy, suicide and criminal activity. Ideally, casinos would have responsible gambling programs that reduce the number of persons who develop problems. Treatment programs would be accessible that lessen the impacts of those who do experience a disorder.

Responsible gaming programs attempt to create a gambling environment that avoids problem gaming-related harm by encouraging players to make informed choices that maintain gambling as a recreational activity consistent with their finances, time and other responsibilities.

Nevada is not the “gold standard” for addressing responsible or problem gambling. Nevada gaming regulation on responsible gambling has not progressed much since gambling was legalized in 1931. Minimal Nevada requirements generally require casino operators to post signage in the casino, have responsible gambling options for creating wagering accounts, and provide online players options regarding bet, loss, and deposit limits.

This position was understandable. Nevada was once a sparsely populated state. Predominantly out-of-state visitors exported problem gambling issues when they left. This changed, as Las Vegas and Reno combined have almost 3 million residents. More frequently, the social problems end up with our family, colleagues, friends and neighbors.

How prevalent is this problem in Nevada? We really don’t know, because the state has not conducted or funded a prevalence study for 20 years. Moreover, Nevada continues to woefully underfund treatment.

A 2021 University of Nevada, Las Vegas study found that 97 percent of clients eliminated or reduced their gambling activity one year after treatment, and 56 percent of participants reported not gambling since enrolling in treatment. Despite the effectiveness of treatment, in 2021, the state allocated only $1,167,087 for prevention, research, workforce development, treatment, information management, and administration. This meager funding is unacceptable for a state that generated over $11 billion in gaming revenues in the last 12 months.

Nevada does not do much better in addressing responsible gambling. Current gaming regulation focuses on a one-size-fits-all approach to regulating over 200 casinos and 2,000 smaller locations such as bars and convenience stores with slots. In sum, the Gaming Commission sets out rules for these locations, and if the operators fail to comply, the Gaming Control Board can bring disciplinary action.

This command-and-control approach generally works with technical requirements like the type and placement of surveillance cameras or the steps for issuing player credit, but it is challenging to use for responsible gambling. First, regulators do not have a repository of best practices to choose from.

While an admirable amount of research on identifying and treating problem gambling exists, evidence-based research on the effectiveness of mandated responsible gambling measures is deficient.

Second, where research exists, it is even rarer that the studies analyze the effectiveness of the mandates in promoting responsible gambling with implementation difficulties and costs that may have a significant economic impact. Third, absent evidence-based research, mandates often derive from what regulators reason will be effective. Yet, these “common sense” approaches often are ineffective or counterproductive.

Fourth, once regulators have established broad minimum standards, the regulated have little motivation to exceed the standards or innovate to achieve better results.

Nevada has a unique opportunity to approach responsible gambling from a new perspective—to allow the industry to focus on innovative solutions that demonstrate tangible positive outcomes. Some companies, like MGM Grand, have developed responsible gaming programs. Yet, as a community, we cannot rely on the benevolence of a few and require a meaningful industry-wide response. Because Nevada has few regulations regarding responsible gambling, changing how the regulators approach responsible gambling does not risk that the new system will underperform the baseline.

The new approach should be reward-based. Casino companies could create responsible gaming programs, test these systems for effectiveness and submit the methods and results to the regulators.

Why would companies be motivated to innovate responsible gaming programs? Companies that achieve various levels of success based on outcome could be multiple levels of certification. A casino may strive to achieve a “platinum level responsible gaming” award for many reasons.

Government certification allows patrons to make choices based on their values and supply the rewards in the market for desired behavior, like those who buy “Green” or “Responsibly Sourced” products or prefer LEED-certified construction. Certified casino companies also may have an advantage in bidding for new global casino projects that consider social responsibility as a factor.

The Nevada regulators also need to create a position for a responsible gambling liaison. This professional could, among other things, actively work with the casinos to strengthen programmatic, regulatory and enforcement components of responsible gambling programs, and translate academic studies on responsible gambling and best regulatory practices into easily consumable information.

Nevada also should help fund and encourage innovation through a grant program. The regulatory liaison could assist in seeking grant money from the federal and state governments and make recommendations for awarding such program funding.

If this regulatory experiment proves successful, Nevada may even consider changing the dynamics of other regulatory areas to recognize that casino regulatory innovation may benefit from having the brightest minds in the casino industry concentrate on results instead of minimum standards.

Anthony Cabot is one of the premier legal experts in land-based and online gaming, and is a partner in Lewis & Roca in Las Vegas. He is also a partner in the iGaming North America Conference.

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