The American Gaming Association Celebrates Good Gambling Regulation

The American Gaming Association (AGA) has issued its fourth white paper on gambling regulation. This year it focuses on three case studies where regulators have adapted to the needs of the industry.

Although the AGA says “we celebrate reform efforts in numerous gaming jurisdictions,” the sub-text of the white paper is to urge all state regulators to improve their own regulation.

Ohio & Michigan get sensible on gaming machine deliveries

The AGA explains how Ohio and Michigan have reformed their regulations for gaming machine shipments. The regulators accepted industry arguments that the regulations were outdated. They increased costs with serving any regulatory need.

Now, they have eliminated the requirement that machines be shipped in an inoperable condition. The AGA pointed out that:

“That requirement, which applies in more than three-fourths of all gaming jurisdictions, dates from a time when gaming machines were far simpler.”

In other words, the AGA is gently prompting the other gaming jurisdictions to follow Ohio and Michigan’s example.

Nevada allows shared wallets for multiple gambling activities

Until Nevada changed its regulations, customers had to open separate accounts for sports betting, online poker, and at each casino where they wanted to play.

Now all a customers accounts at one casino can be merged into a shared wallet. In time this will expand so that room bills and restaurant costs can also be paid from the same account. The intention is that ultimately, the shared wallet will be usable at all the casinos owned by a single company, even across different states.

The AGA is full of praise for the change, but again adds a little dig at the Gaming Commission:

“Nevada permits remote registration, but (except for online poker) does not allow the patron to use the wagering account for gaming until he or she confirms the application in person at a venue operated by the licensee offering the account.”

Several states have followed Nevada’s example in requiring in-person account registration. Most recently Rhode Island’s new sports betting laws demand in-person registration. This is a major problem for online gambling that substantially reduces the potential market.

Pennsylvania and Mississippi flex over licensing for casino shareholders

The obligation for major casino shareholders to obtain a gaming license is a problem for investors who want to buy equity in casinos.

“For investors who can purchase interests in firms in many industries, the gaming license process may pose too great a barrier by imposing costs, demanding executives’ attention, and imposing crippling delays in business initiatives. These negatives multiply if the investor is buying a share of a gaming company that operates in multiple jurisdictions, requiring multiple licensing proceedings. Institutional investors can always turn to opportunities in other industries that present no comparable licensing hurdles.”

Most jurisdictions have a partial solution which is to create a category of “institutional investors” where the ownership stake is below a threshold. But that threshold is usually extremely low.

Pennsylvania and Mississippi have increased the ownership percentage that triggers the need for an “institutional investor” to acquire a gaming license. The change may seem small, but it can have a big impact when casinos are looking to fund expansion.

The AGA white paper is not thrilling reading, but it does have customer consequences

The gaming industry is changing rapidly as new technology makes old regulations redundant. The AGA’s examples of good regulatory practice are not exciting, but the message they send does have an impact on casino customers.

Bad regulation increases casino costs and these get passed on in higher prices. Bad regulation results in inconsistencies where games legal in some states are banned in others.

Casinos, especially online casinos that can’t offer the games that customers want at fair prices face competition from the offshore online gambling sites. And if customers choose to take their business to the black market, they lose all the legal protection available at the American casinos licensed in their state.