Nevada Favours Resorts In Draft I-Gaming Regulation
by Bradley P. Vallerius, JD

The State of Nevada’ Gaming Commission has published drafts of regulations to license and regulate interactive gaming. In publishing the drafts, the Commission is fulfilling duties that were assigned to it by Nevada’ legislature earlier in 2011.

Nevada’ legislators first granted the Gaming Commission power to adopt regulations for interactive gaming in 2001, but their enabling act restrained the Commission until it believed it could regulate in compliance with federal law. Ten years later the Commission had yet to begin the rulemaking process.
So in the spring of 2011 the legislature voted almost unanimously to amend the earlier enabling act. The new enabling act orders the Gaming Commission to begin the rulemaking process anyway, regardless of federal inactivity. 

As for potential conflicts with federal law, the new enabling act forbids licensees to operate on an interstate basis until one of two things occur- either the U.S. Justice Department notifies the Gaming Commission that operating interstate would not violate federal law, or else U.S. Congress enacts a statute specifically addressing the issue.
But the legislature has not placed restraints on licensees’ ability to operate on an intrastate basis. Instead, it is implied that the Gaming Commission has discretion to decide whether it can regulate intrastate gaming in harmony with federal law.
In keeping with principles of administrative law, it is appropriate that the legislature should delegate certain regulatory questions to be decided by the Gaming Commission in light of its specialized expertise on subjects related to gaming. Generally legislatures decide the blueprint of a regulatory plan and then delegate to a state agency the task of fine-tuning the plan through a mostly transparent rulemaking process. 

The publication of draft regulations is the Gaming Commission’ first step in the process.
One decision the legislature made for itself rather than delegate to the Commission is what class of business organizations may operate interactive gaming. On this point, the Legislature has decided that only resort hotels that already possess a non-restricted gaming license in Nevada are eligible for interactive gaming licenses.
The Legislature has also created a manufacturer’ license and a service provider’ license for interactive gaming.
The decision to permit only poker is one that has been proposed by the Gaming Commission rather than the legislature. The legislature’ enabling act orders the adoption of regulations for “interactive gaming”- defined broadly – but the Commission’ draft of Regulation 5A would allow only poker and its derivatives.
The Commission’ draft regulations also establish rules for license application procedures, ongoing compliance requirements, technical operating standards, license fees, employee responsibilities, and the handling of customers’ accounts.
The next step is to gather public opinion about the draft regulations so that subsequent drafts can be improved if necessary. 
The Gaming Commission was accepting statements, argument, and contention related to its draft regulations until September 19th. Then there will be a public workshop on September 26th at the Offices of the Nevada Gaming Control Board, at which parties who have submitted statements may be permitted to present orally.
Prior to the events of Black Friday in April 2011 Full Tilt and PokerStars had both been on the verge of partnerships with Nevada-based casino firms. As Nevada’ regulatory process unfolds it will be interesting to see if that saga has any bearing on the final licensing process. 

Author’ Note:
Nevada Legislature’ 2011 i-gaming enactment:
2011 Nev. Stat. page 1668.
Nevada Legislature’ 2001 i-gaming enactment:
2001 Nev. Stat. page 3075.
Nevada Gaming Commission’ draft regulations:  Possible new Regulation 5A – Operation of interactive Gaming
‚ Possible amendment of NGC Regulation 14 ‚Äî Manufacturers, Distributors, Operators of Inter-Casino Linked Systems, Gaming Devices, New Games, Inter-Casino Linked Systems, On-line Slot Metering Systems, Cashless Wagering Systems and Associated Equipment
‚Possible amendment to NGC Regulation 3 – Licensing: Qualifications
• Possible amendment to NGC Regulation 8 РTransfer of Ownership; Loans
‚ Possible amendment to NGC Regulation 4 – Applications: Procedure 

Bradley P. Vallerius, JD has eight years of experience specializing in research and information for the global online gaming industry and is currently pursuing a career in regulatory compliance and government affairs in the U.S.