Nevada Gaming Regulation and Licensing

There was a time, not so long ago, when Nevada was the only state that permitted games of chance. Today, all but one state has some form of legalized gaming. When the Nevada State Legislature created the Nevada Gaming Control Board in 1955, they had to invent a new model for regulation, as no protype previously existed. The current regulatory structure is a comprehensive approach to licensing (and taxing) gaming, on which many other states have patterned their gaming regulations.

History

Gambling was not legal in the Nevada Territory after 1861 until the legislature overrode a gubernatorial veto in 1869 to permit it. In 1909 the state legislature once more prohibited all forms of gambling. This law was amended in 1915 to permit slot machines and social games for stakes of $2 or less, but gambling as a business was pretty much outlawed until 1931, when a measure described by its sponsor, Mr. Tobin, as a "wide open gambling bill" was signed into law by Governor Balzar. The respective counties were responsible for the licensing and the collection of fees.

The opening of the Flamingo in 1946 began a new era in Nevada gambling. Before then, southern Nevada was basically railroad tracks and desert, and Reno was the center of gaming. The development of the "Strip" and concerns about the wrong sorts of elements in the gambling industry caused the legislature to establish statewide regulation and licensing through the Nevada Gaming Control Board, which started its work in 1955.

Regulatory Agencies

The Nevada Gaming Control Board (or "State Control Board," as it is informally known) has three members, who work full-time, appointed by the Governor for four year terms. This entity receives and processes applications for the licensing of gaming establishments and employees, receives and processes licensing fees and taxes, disciplines violations, checks the integrity of gaming devices, performs audits, checks on publicly traded companies that are also licensees, and maintains other divisions to monitor different aspects of the gaming industry. The Board currently employs nearly 500 persons.

In 1959 the Legislature created the Nevada Gaming Commission to act as a supervisory body over the Board's work and to be a vehicle for policy development. It has five part-time members, appointed by the governor. Its main job is to act on the licensing recommendations coming from the Board. The Commission also develops and promulgates all the gaming regulations. Finally, it adjudicates in disciplinary actions against licensees, in matters in which the Board acts as a prosecutor.

To provide public and political input to the policy-making process, state law also created an eleven-person Nevada Gaming Policy Committee with a membership that includes legislators, regulators, political appointees, representatives of licensees and Native American communities. The Committee meets at the call of the governor. Its advice, when given to the Commission, is advisory only.

Licensing and Taxation

Since the end of World War II, gaming has become Nevada's main economic activity. A significant portion of the state's revenue is derived from the licensing and taxation of gaming. To protect the industry and maintain the public's faith and confidence in fair gaming in Nevada, the regulators hold licensees to the highest standards of integrity and transparency.

Approximately 3,000 gaming licenses of all kinds (including device manufacturers) have been issued as of 2006. A "restricted gaming license" applies to any operation of 15 or fewer gaming machines with no other games on premises or interlinks with other operations. A "non-restricted gaming license" applies to a property having more than 15 machines or any other game or book on premises. The Board's list of current licensees is at http://gaming.nv.gov/publications.htm.

A license can be required of any person or entity that shares in gaming revenues of a licensee, has influence over a gaming operation in Nevada, lends money to a licensee or owns the land on which a licensee operates. In addition, all gaming employees must be registered and licensed by the Commission.

Taxes are collected on gross revenues and on individual gaming devices (like slot machines) and on individual table games. The state taxes gross gaming revenues at graduated rates from 3.5% to 6.75% (annual gross revenues over $134,000). Machines pay a tax of $250 per year and $20 per quarter. Table games are taxed in several graduated levels, depending on the number of games operated at the property. One game is taxed at $100 per year and $500 per quarter. For example, 16 games are taxed at $1,000 per year per game and $500 per quarter.

The Board's monthly reports on total gaming tax collections for nonrestricted licensees for the month and the comparative data from the prior year are publicly available. An annual financial analysis of the nonrestricted licensees that generate $1 million or more in gaming revenues is called the "Gaming Abstract Report" and is also publicly available at http://gaming.nv.gov/abstract_rpts.htm.