The Role of Regulators in the Gaming Environment

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June 01, 2014
Gaming
Bill Geoghegan - Bill@LGTConsulting.com

Gambling is a basic component of the human psyche. In ancient times, it was believed that the outcome of casting lots was determined by the gods. In Greek mythology, the gods themselves cast lots to divide the universe. Zeus got the sky, Poseidon the sea, and Hades, the loser, got the underworld.

It is assumed that the earliest known method of casting lots was to toss an astragalus, which is the talus or heel bone of a hooved animal such as a deer or pig. The primary feature of this bone is that it has a rounded and cubic shape, which, when thrown, can land in one of four different configurations. It is the randomness of the result that made the ancients believe that the gods or a god controlled the outcome. Guilt or innocence, distribution of property, and omens foretelling the future all were determined by casting of the astragalus.

While few would accuse the gods of being unfair, the same cannot be true when humans are involved.  Six-sided ivory dice dating back to 1573 BC have been found in Thebes, Egypt, but it is perhaps the loaded dice found in the archeological site at Pompeii that emphasize the need for oversight in the gaming environment.

Gambling in America has a long history. Many of the original settlers brought English traditions and beliefs, while the Puritans discarded those values. As a result, the tolerance of gambling was very much a regional attitude. In New England and Pennsylvania, the Puritan values prevailed.  In the Massachusetts Bay Colony, the possession of cards, dice and gaming tables was outlawed (even in private homes) as was dancing and singing. In other colonies, gambling was viewed as a harmless diversion, as long as it was for recreation and not as a trade.  Professional gamblers were considered unsavory, a theme which prevailed for more than two centuries.

Lotteries were common throughout the early colonies as a way to raise revenue for the government. All 13 colonies established lotteries, and many of our most prestigious Ivy League universities were funded partially through lottery proceeds.  In 1769, lotteries became an issue in the drive for independence when the English Crown tried to prevent lotteries from occurring without its permission.

The Great Depression led to a greater acceptance of gambling. Massachusetts decriminalized bingo in an attempt to help churches and charitable organizations raise money. In 1931, Nevada became the first state to legalize most forms of gambling. Games of chance, including table games and slot machines, were licensed and taxed by city or county based on the number of games or machines in operation. The calculation of taxes was simple, and as long as they were paid, little scrutiny was paid to the casino owners.

For the most part, each jurisdiction has its own regulations, but many are based on those of Nevada. In all jurisdictions, the gaming or gambling controls are in place not only to ensure the proper assessment and payment of taxes, but to ensure the integrity of gaming. In addition to investigating and reviewing the suitability of individuals or organizations for licensure, a focus of the control boards is to ensure that all games introduced into the gambling environment are fair, and cannot be manipulated either by the casino or a player.

With each slot machine and table game variation, the task of getting jurisdictional approvals becomes an enormous undertaking, with a manufacturer or game developer having to endure the cost and time of submission to each jurisdiction in which it intends to sell.

In 1989, James Maida joined forces with Paul Magno to create Gaming Laboratories International (GLI), and obtained a contract to perform machine testing for South Dakota’s implementation of Video Lottery Systems. As gaming grew, GLI became the contracted testing laboratories for a majority of jurisdictions.

In 2005, the Australian testing lab BMM relocated its headquarters to Nevada, and in 2013, Nevada outsourced all its technical testing to GLI and BMM. The role of these third-party laboratories is to perform technical testing of the gaming devices and programs submitted by game suppliers, and assess whether a game meets the requirements and regulations of a specific jurisdiction. The lab then turns its findings over to the targeted jurisdiction for its approval or denial. While a separate test script is used for each jurisdiction, after a game has been tested for a single jurisdiction, the test results for requirements that are common in a second jurisdiction do not have to be repeated, thus economizing the task of submissions to multiple jurisdictions. For those states that do not use the third-party labs, the testing process starts from scratch, increasing the time and expense to the game suppliers.

Michael F. Capen, director, U.S. government development at GLI, deals directly with the regulatory agencies throughout the United States. He observes that regulations frequently differ among jurisdictions based on local values, political issues, etc., but that the one common thread is to always maintain public trust in the industry by ensuring the integrity of gaming.

Bill has compiled an in-depth history of gaming and gaming regulation which can be read online at hospitalityupgrade.com/A-History-of-Gaming-and-Gaming-Regulation.

Bill Geoghegan is a consultant in Las Vegas. He can be reached for comment at Bill@LGTConsulting.com.

 
 
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