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The Power of Perception

The Power of Perception

We proudly say that gaming is one of the most heavily regulated industries in the world. That’s a good thing, because gambling as an activity has often been on the shadowy fringes of society, conducted by criminals and less-than-savory characters. By legalizing gaming and regulating it with transparency and diligence, gaming is today a respected business that pays massive taxes and employs millions around the world.

So it’s important to maintain the reality, as well as the perception, that gaming is clean and can be trusted.

There are a couple of instances in the past month that both threaten this and reinforce this perception. And in neither case am I even coming close to suggesting wrongdoing, however.

In Nevada last month, Patricia Mulroy resigned from the state Gaming Control Board one day and accepted a seat on the board of directors of Wynn Resorts the next. Again, not suggesting any skullduggery here. But let’s review.

Up until the time she resigned, Mulroy voted on issues brought before the board by Wynn Resorts. Should she have recused herself from these votes? Not according to the Nevada Commission on Ethics, which signed off on Mulroy’s resignation from the gaming board and her subsequent appointment by Wynn Resorts. The ethics commission waived the normal one-year waiting period that regulators have to sit out of the game in Nevada (and this is a recent development, by the way; regulators in Nevada used to have a revolving door to the casino companies).

Just as an aside, I believe any government entity—not just in Nevada, but all governments—that oversees ethics is a bit like letting the fox watch the henhouse, but that’s just me.

Again, I’m not alleging any wrongdoing. I’m sure Ms. Mulroy is a very reputable and competent executive. After all, she ran the water district in Southern Nevada for many years, and nothing is more important in Nevada than water.

But how does this look to the outside world? Here’s a woman, politically connected to everyone in the state, who skips out on regulating the state’s major industry to immediately work for one of the most important companies in that same industry.

Sorry, it looks bad. Perception may not be reality, but it certainly stains the credibility of our heavily regulated industry. Why couldn’t she have resigned and waited the one year?

In New Jersey, they have a four-year cooling-off period! And that is never waived like the one-year period was in Nevada. I know some very competent and excellent regulators in New Jersey who had to put on the shelf the very expertise they acquired by serving on a state regulatory body for four years. Just to be clear, this restriction only applies to companies that they regulated in New Jersey and not the entire gaming industry.

So this ties into a recent decision by the New Jersey Division of Gaming Enforcement (DGE) to issue an iGaming license to Amaya Gaming, the parent company of PokerStars, the notorious company that illegally offered iGaming in all the United States following the passage of the Unlawful Internet Gaming Enforcement Act in 2006.

Amaya had, of course, purchased the assets of PokerStars (and related Full Tilt Poker) after they were closed down following the Black Friday indictments in April 2011.

The DGE was tasked with investigating the reformed PokerStars, which wanted to operate in the legal online gaming market in New Jersey. The Amaya deal was done in January 2014, and licensing—and not the final license, mind you, just that the company is found “suitable” to operate in the state—was completed in October 2015.

The DGE was at least given the opportunity to vet PokerStars. In Nevada, the legislature placed PokerStars in a five-year “penalty box” because of its previous illegal activity via the bill legalizing iPoker in the state.

New Jersey has long been seen as the toughest place to get licensed in gaming. Amaya is rightly proud of the approval by the DGE. I can’t imagine the lengths the DGE went in its pursuit of the truth. And Amaya will use this “golden ticket” when they approach other jurisdictions for licensing.

But how valuable is that ticket if there’s a question about the propriety of an agency’s oversight? What if a gaming commissioner can quickly switch sides after a positive vote for a prospective employer?

The industry needs to be totally transparent and free of any negative perceptions. Even with the assurances of ethical standards being upheld, being good is better than looking good.

Roger Gros is publisher of Global Gaming Business, the industry's leading gaming trade publication, and all its related publications. Prior to joining Global Gaming Business, Gros was president of Inlet Communications, an independent consulting firm. He was vice president of Casino Journal Publishing Group from 1984-2000, and held virtually every editorial title during his tenure. Gros was editor of Casino Journal, the National Gaming Summary and the Atlantic City Insider, and was the founding editor of Casino Player magazine. He was a co-founder of the American Gaming Summit and the Southern Gaming Summit conferences and trade shows. He is the author of the best-selling book, How to Win at Casino Gambling (Carlton Books, 1995), now in its fourth edition. Gros was named "Businessman of the Year" for 1998 by the Greater Atlantic City Chamber of Commerce, and received the Lifetime Achievement Award from the American Gaming Association in 2012.

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