Now that the dust has settled on the 2015 Nevada legislative session, we find the gaming landscape has been altered in some pretty interesting ways. There are a few bills that will allow Nevada gaming licensees to explore a diverse new world of gaming technologies and offerings, other bills that serve to extend the reach of Nevada's gaming regulators to new entities and activities, and yet others that clarify administrative issues and procedures.
Exploring New Worlds of Gaming: SB9, SB443 and SB445
SB9
This bill gives Nevada's gaming regulators a policy directive
and enhanced rulemaking authority to develop technical standards
for "hybrid" games – games that are a blend of
skill and chance, where the outcome will be determined by both as
well as external factors including frequency of play, use of other
casino services, and use in combination with other technologies.
The idea is to ensure Nevada's leadership in the next
generation of gaming, and to attract a new generation of customers
who relate to electronic skill-based game play and would be drawn
to features such as bonus rounds that reward the skill of a player,
integration of the games with their social media accounts,
interactive networked game play, and the use of electronic commerce
transactions. The first public regulation workshop on SB9 was
already held by the Nevada Gaming Control Board (the
"Board") on June 24, 2015, with the next to be held
sometime this summer.
SB443
Senate Bill 443 is the "entity wagering" bill. It allows
the formation of business entities to place race and sports pool
wagers, where out-of-state investors can join business entities and
share the profits and losses from wagers at Nevada gambling
establishments.
SB445
Senate Bill 445 permits licensed race and sports book operators to
provide centralized management to race and sports book operations
in Nevada and other jurisdictions where such bets are legal.
Extending the Reach of Nevada's Gaming Regulation: SB38, SB40 and SB409
SB38
Senate Bill 38 extends the reach of the Board to a new category of
licensees, to nightclubs and day clubs that are located on the
premises of a Nevada licensed casino resort. Senate Bill 38
essentially treats club operators in a manner similar to gaming
licensees. If required by the Board or the Nevada Gaming
Commission, the employees of such clubs shall be subject to a
background investigation similar to those conducted for gaming
employees.
As noted in this week's lead article, Senate Bill 38 also
expands the powers of the Board to regulate and license associated
equipment manufacturers ("AEMs"). Specifically, licensing
or findings of suitability for AEMs will move from discretionary to
mandatory. This change will also shift the burden for the cost of
any licensing investigations from the Board to the AEM applicant.
Finally, the employees of an AEM are now deemed to be "gaming
employees" and subject to regulation as such.
This bill also removes certain licensure requirements for
manufacturers of equipment associated with interactive gaming. The
Board determined that there are two categories of interactive
gaming service providers with no need for licensure: those who
provide certain intellectual property related to identifying
interactive gaming systems and those who provide information
regarding persons for customer lists and databases. The Board had
similarly considered removing licensing requirements for cash
access and wagering service providers, and had language to this
extent in the initial draft of the bill, but decided to keep those
requirements in place.
Finally, SB38 amends Nevada's charitable lottery laws to
expressly list nonprofit alumni organizations and legal bar
associations as qualified nonprofit organizations that may offer
charitable lotteries and to permit statewide charitable lotteries.
It also clarifies language in the statute regarding triggers for
charitable lottery registration requirements to be consistent with
the Board's practice.
SB40
Filed on behalf of the Board, Senate Bill 40 targets illegal
offshore wagering sites and other illegal bookmakers. It prohibits
a person from receiving any compensation or reward, or any
percentage or share of the money or property played for, in return
for facilitating a bet on a future contingent event, unless that
person has the required gaming license to do so. The Board brought
this bill because Nevada did not have an illegal bookmaking law to
use to prosecute this illegal activity. The intent was to make a
specific illegal bookmaking statute the Board can utilize in future
prosecutions instead of a licensing statute (NRS 463.160).
SB409
Senate Bill 409 amends Nevada's consumer reporting laws to
remove restrictions on what a credit reporting agency may report to
gaming operators. Now a credit reporting agency is no longer
prohibited from reporting to gaming licensees information about a
job applicant regarding bankruptcies older than ten years, other
civil judgments older than seven years, and criminal convictions
older than seven years. Now there is no limitation on how far back
such checks may run.
Procedural and Administrative Changes and Clarifications
AB40
A key administrative change effected by AB40 is to change the name
of the "State Gaming Control Board" to the "Nevada
Gaming Control Board."
This bill also serves to clarify that certain actions and
proceedings of the Board are not subject to certain provisions of
the Nevada Open Meeting Law ("OML"). Specifically, the
OML requires all deliberation, actions, and discussions of a public
body to take place in a public setting. This bill grants a limited
exemption to the Board from the open meeting law related to the
Board's investigative activities while inquiring as to whether
a violation has occurred and, if so, what actions should be taken
in determining if those violations have occurred. The OML still
applies to the Board's procedures, including monthly
meetings.
Updates to Nevada's Live Entertainment Tax (NRS Chapter 368A)
SB266
Under existing law, the rate and imposition of the tax depended
upon the size of the facility in which the live entertainment is
provided, with the break being 7,500 persons or fewer. Those
facilities were to charge the patron a 10% tax on admission, food
and merchandise. The old law provided a reduced tax rate for
facilities above 7,500 persons, where the rate was reduced to 5%.
The new tax rate will be a uniform 9% of the admission charge to a
facility where live entertainment is provided, however, the tax is
not imposed on amounts paid for food, refreshments or merchandise.
The value of certain admissions provided to a patron on a
complimentary basis is excluded from the tax.
Additionally, under the new law, there is no distinction in the
size of the facility or whether live entertainment was provided by
licensed vs. non-licensed entities. The prior exclusion for events
that were provided outdoors was eliminated. All live entertainment
events are taxed uniformly (with certain exemptions for charitable
activities where fewer than 7,500 tickets are sold), however NASCAR
would be exempt if they give Nevada a second race weekend and
professional sports would be exempt if one of the teams playing in
the contest is domiciled in Nevada. Combat sports are exempt from
the live entertainment tax but are subject to the levies imposed by
other sections of the law that have oversight by the Nevada
Athletic Commission. Finally, collegiate sports involving
Nevada's schools are exempt, with the exception of the Silver
Bowl, which would not be exempted.
The effective date of the law is July 1, 2015, which would be
applicable to events that were previously subject to the old law;
however, if not previously taxed under the old law, the effective
date would be October 1, 2015. For example, the National Finals
Rodeo would be covered under the new law, but prepaid tickets sold
prior to October 1, 2015, would be exempt.
Amendments to Other Areas of Privileged Licensing
SB22
This bill moves the local licensing and regulatory power over
certain persons and businesses, including importers of liquor,
wholesale dealers of beer or wines and liquors, winemakers,
instructional wine-making facilities, breweries, brew pubs and
craft distilleries, from the board of county commissioners of the
county in which the applicant maintains his or her principal place
of business to the governing body of the city in which the business
is located, if the applicant's principal place of business is
located within an incorporated city.
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