The ‘Law & Practice’ sections provide easily …...6.3 Affiliates p.11 6.4 White Labels p.11 6.5...

NEVADA

LAW AND PRACTICE: p.2Contributed by HOWARD & HOWARD

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GLOBAL PRACTICE GUIDE

Gaming Law

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Law and PracticeContributed by HOWARD & HOWARD

contents1. introduction p.3

1.1 Current Outlook p.31.2 Recent Changes p.3

2. Jurisdictional Overview p.42.1 Online p.42.2 Land-Based p.4

3. Legislative Framework p.53.1 Key Legislation p.53.2 Definition of Gambling p.53.3 Definition of Land-Based Gambling p.53.4 Definition of Online Gambling p.53.5 Key Offences p.63.6 Penalties for Unlawful Gambling p.63.7 Pending Legislation p.6

4. Licensing and regulatory Framework p.64.1 Regulatory Authority p.64.2 Regulatory Approach p.74.3 Types of Licences p.74.4 Availability of Licences p.84.5 Duration of Licences p.84.6 Application Requirements p.84.7 Application Timing p.94.8 Application Fees p.94.9 Ongoing Annual Fees p.9

5. Land-Based Gambling p.105.1 Premises Licensing p.105.2 Recent or Forthcoming Changes p.10

6. Online Gambling p.116.1 B2C Licences p.116.2 B2B Licences (Suppliers, Software, etc) p.116.3 Affiliates p.116.4 White Labels p.116.5 Recent or Forthcoming Changes p.116.6 Technical Measures p.11

7. responsible Gambling p.117.1 RG Requirements p.117.2 Gambling Management Tools p.12

8. Anti-money Laundering p.128.1 AML Legislation p.128.2 AML Requirements p.12

9. Advertising p.139.1 Regulatory/Supervisory Agency p.139.2 Definition of Advertising p.139.3 Key Legal, Regulatory and Licensing

Provisions p.139.4 Restrictions on Advertising p.139.5 Sanctions/Penalties p.13

10. Acquisitions and changes of control p.1410.1 Disclosure Requirements p.1410.2 Change of Corporate Control Triggers p.1410.3 Passive Investors Requirements p.14

11. Enforcement p.1411.1 Powers p.1411.2 Sanctions p.1511.3 Financial Penalties p.16

12. recent trends p.1612.1 Social Gaming p.1612.2 eSports p.1612.3 Fantasy Sports p.1612.4 Skill Gaming p.1712.5 Blockchain p.1712.6 Reform p.17

13. tax p.1713.1 Tax Rate by Sector p.17

LAw AND PrActicE NEVADA

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Howard & Howard was founded in 1869 and is a full-service law firm with a national and international practice that provides legal services to businesses and business owners. With 160 attorneys, the firm has offices in Michigan (Ann Arbor and Royal Oak); Illinois (Chicago and Peoria); Las Vegas, Nevada; and Los Angeles, California. Howard & Howard’s major areas of practice include alternative dispute resolution; business and corporate; business bankruptcy and creditors’ rights; data privacy and cybersecurity; employee benefits; environmental; franchising; intellectual property;

labour, employment and immigration; litigation; mergers and acquisitions; real estate; securities; tax; and trust and estate planning. The attorneys’ distinguished backgrounds provide the firm with a solid understanding of the industries it serves, including automotive; cannabis; chemical arts; commodity futures; construction and development; energy, infrastructure and utilities; financial institutions; gaming; healthcare; and hospitality. For more information, please visit the firm’s website at www.howardandhoward.com.

AuthorJennifer carleton spent the first decade of her career as in-house counsel for an Indian tribe, and the past 13 years representing public and private gaming companies in an extensive range of multi-jurisdictional corporate and

regulatory matters. She is licensed in the states of Nevada, Illinois and Wisconsin and is currently a partner in the Las Vegas office of Howard & Howard, a 150-year old firm specialising in business law.

1. introduction

1.1 current Outlook The uncertainty created by the Department of Justice and the resultant litigation surrounding the Wire Act of 1961 (“Wire Act”) has caused confusion regarding exactly what type of internet gaming is lawful. The Department of Justice (DOJ) issued an opinion in 2011 that the prohibitions contained in the Wire Act applied only to sports betting. On 14 January 2019, the DOJ reversed its 2011 opinion, concluding that only one of four parts of the Wire Act applies to sports bet-ting, while the other three apply to any form of wagering.

It is important to note that the prohibitions contained in the Wire Act apply to the transmission of information “in interstate or foreign commerce” only. In other words, the intrastate transmission of information is not prohibited by the Wire Act, regardless of the position of the DOJ on the types of transmissions prohibited. A number of US states have recently joined Nevada and Delaware to authorise sports wagering within the boundaries of that state, includ-ing New Jersey, Indiana, Iowa, New York, Mississippi, West Virginia, Pennsylvania, Rhode Island and Arkansas.

1.2 recent changesIn early 2019, the Nevada Gaming Commission amended sportsbook regulations to allow for wagering on “virtual sports” to cover newly popular computer gaming competi-tions, and “other events” to define events on which wagers can be placed. All such types of wagering must be approved by the Nevada Gaming Control Board chair. The Nevada sportsbook regulations were also amended to allow Nevada licensees to take wagers from patrons in other states if fed-eral government laws are modified.

During its 2019 session, the Nevada legislature eliminated the requirement that cashless wagering systems be operated and maintained in-house by a gaming licensee. The legis-lature also changed “mobile gaming” from non-restricted gaming to a “gaming device.”

The Nevada Gaming Commission is currently adopting regulations for beneficial owners of any amount of any class of voting securities of a publicly traded corporation, whether held directly or indirectly, individually or in association with others, if such persons are engaged in certain “proscribed” or activist activities that influence or affect the affairs of the publicly traded corporation.

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2. Jurisdictional Overview

2.1 OnlineInternet gaming (known as “interactive gaming”) was ini-tially introduced in Nevada in 2001. The Nevada Assembly Bill 466 allowed the Nevada Gaming Commission to adopt interactive gaming regulations on the advice and assistance of the Nevada Gaming Control Board.

In March 2011, the state legislature introduced AB 258. This law empowered the Nevada Gaming Commission to adopt regulations and manage the licensing of:

•operators of internet poker; •manufacturers of interactive gaming systems;•manufacturers of equipment associated with interactive

gaming; and•interactive gaming service providers who provide servic-

es, software or equipment to operators of internet poker.

2.2 Land-BasedPoker“Poker” is defined as the traditional game of poker, and any derivative of the game of poker as approved by the chair (of the Nevada Gaming Control Board) and published on the Nevada Gaming Control Board website, wherein two or more players play against each other and wager on the value of their hands. For purposes of interactive gaming, poker is not a banking game (Nevada Gaming Commission Regulation 5A.020).

BettingUnder Nevada state law, “wager” means a sum of money or representative of value that is risked on an occurrence for which the outcome is uncertain (NRS 463.01962).

Sports BettingUnder Nevada state law, the following definitions are applied in relation to sports betting.

•“Race book” means the business of accepting wagers upon the outcome of any event held at a track which uses the pari-mutuel system of wagering (NRS 463.01855).

•“Sports pool” means the business of accepting wagers on sporting events or other events by any system or method of wagering (NRS 463.0193).

casino GamesThe term “casino games” is undefined in Nevada.

Slot and Other Machine GamingUnder Nevada state law, a slot machine is defined as any mechanical, electrical or other device, contrivance or machine which, upon insertion of a coin, token or similar object, or upon payment of any consideration, is available to play or operate, the play or operation of which, whether by

reason of the skill of the operator in playing a gambling game which is presented for play by the machine or application of the element of chance, or both, may deliver or entitle the person playing or operating the machine to receive cash, pre-miums, merchandise, tokens or any thing of value, whether the payoff is made automatically from the machine or in any other manner (NRS 463.0191).

terminal-Based GamingUnder Nevada state law, a “gaming device” means any object used remotely or directly in connection with gaming or any game which affects the result of a wager by determining win or loss and which does not otherwise constitute associated equipment. The term includes, without limitation:

•1. A slot machine.•2. A collection of two or more of the following compo-

nents:(a) An assembled electronic circuit which cannot be

reasonably demonstrated to have any use other than in a slot machine;

(b) A cabinet with electrical wiring and provisions for mounting a coin, token or currency acceptor and provisions for mounting a dispenser of coins, tokens or anything of value;

(c) An assembled mechanical or electromechanical display unit intended for use in gambling; or

(d) An assembled mechanical or electromechanical unit which cannot be demonstrated to have any use other than in a slot machine.

•3. Any object which may be connected to or used with a slot machine to alter the normal criteria of random selec-tion or affect the outcome of a game.

•4. A system for the accounting or management of any game in which the result of the wager is determined electronically by using any combination of hardware or software for computers.

•5. A control program.•6. Any combination of one of the components set forth

in paragraphs (a) to (d), inclusive, of subsection 2 and any other component which the Nevada Gaming Com-mission determines by regulation to be a machine used directly or remotely in connection with gaming or any game which affects the results of a wager by determining a win or loss.

•7. Any object that has been determined to be a gaming device pursuant to regulations adopted by the Nevada Gaming Commission (NRS 463.0155).

BingoThe term “bingo” is undefined in Nevada.

LotteryThe following rules apply to lotteries (Article 4, Nevada Con-stitution):


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•1. Except for certain enumerated charitable activities, no lottery may be authorised by Nevada, nor may lottery tickets be sold.

•2. The State of Nevada and the political subdivisions thereof shall not operate a lottery. The legislature may authorise persons engaged in charitable activities or activities not for profit to operate a lottery in the form of a raffle or drawing on their own behalf. All proceeds of the lottery, less expenses directly related to the operation of the lottery, must be used only to benefit charitable or non-profit activities in Nevada. A charitable or non-profit organisation shall not employ or otherwise engage any person to organise or operate its lottery for compensa-tion. The legislature may provide by law for the regula-tion of such lotteries.

Further, the following rules apply according to the Nevada state legislature (NRS 462.105):

•1. Except as otherwise provided in subsection 2, “lot-tery” means any scheme for the disposal or distribution of property, by chance, among persons who have paid or promised to pay any valuable consideration for the chance of obtaining that property, or a portion of it, or for any share or interest in that property upon any agree-ment, understanding or expectation that it is to be dis-tributed or disposed of by lot or chance, whether called a lottery, raffle or gift enterprise, or by whatever name it may be known.

•2. “Lottery” does not include a promotional scheme conducted by a licensed gaming establishment in direct association with a licensed gaming activity, contest or tournament.

•3. For the purpose of this section, a person has not “paid or promised to pay any valuable consideration” by virtue of having:(a) engaged in or promised to engage in a transaction in

which the person receives fair value for the payment;(b) accepted or promised to accept any products or

services on a trial basis; or(c) been or promised to have been present at a particu-

lar time and place,•... as the sole basis for having received a chance to obtain

property pursuant to an occasional and ancillary pro-motion conducted by an organisation whose primary purpose is not the operation of such a promotion.

Mobile GamingUnder Nevada state law, mobile gaming means the conduct of gambling games through communications devices oper-ated solely in an establishment which holds a non-restricted gaming licence and which operates at least 100 slot machines and at least one other game by the use of communications technology that allows a person to transmit information to a computer to assist in the placing of a bet or wager and corresponding information related to the display of the

game, game outcomes or other similar information (NRS 463.0176).

3. Legislative Framework

3.1 Key LegislationNevada legalised casino gambling in 1931. From 1931 to 1945, gaming licensing was handled at local and county level. In 1945, licensing authority shifted to the state. The Nevada state legislature created the Nevada Gaming Control Board (at that time, a division of the Nevada Tax Commission) in 1955. The Nevada Gaming Control Board’s primary purpose was to oversee the licensing and operation of Nevada casinos while eliminating unsavoury elements that threatened the industry’s existing and future integrity.

In 1959, the state legislature passed the Gaming Control Act, which established the Nevada Gaming Commission. The Nevada Gaming Commission acts on the recommenda-tions of the Gaming Control Board and is the final arbiter of all gaming licensing matters in Nevada.

3.2 Definition of GamblingIn Nevada, the definition of a gambling game is “any game played with cards, dice, equipment or any mechanical, elec-tromechanical or electronic device or machine for money, property, checks, credit or any representative of value” (NRS 463.0152). This definition excludes games played with cards in private homes or residences in which no person makes money for operating the game, except as a player, or games operated by charitable or educational organisations that are approved by the Nevada Gaming Control Board.

3.3 Definition of Land-Based GamblingLand-based gaming is not specifically defined in Nevada law. There are two types of land-based casinos in Nevada: restricted and non-restricted. Both types can be licensed to operators.

3.4 Definition of Online GamblingIn Nevada, “interactive gaming” means the conduct of gam-bling games through the use of communications technology that allows a person, utilising money, cheques, electronic cheques, electronic transfers of money, credit cards, debit cards or any other instrumentality, to transmit to a computer information to assist in the placing of a bet or wager and cor-responding information related to the display of the game, game outcomes or other similar information.

This includes (without limitation) internet poker. However, it does not include the operation of a race book or sports pool that uses communications technology approved by the Nevada Gaming Control Board pursuant to regulations adopted by the Nevada Gaming Commission to accept


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wagers originating within this state for races, or sporting events or other events (NRS 463.016425(1)).

3.5 Key OffencesProhibitionsGaming or employment in gaming is prohibited for persons under the age of 21 years.

In relation to both gaming carried out by owners of a casino and the issuance of gaming credit to them, the following rules apply (Nevada Gaming Commission Regulation 5.013):

•1. Except as provided in subsection 2, no officer, director, owner or key employee of an entity which holds a gaming licence in this state, or of an affiliate or an affiliated com-pany of an entity which holds a gaming licence in this state, shall play or place a wager at any gambling game, slot machine, race book or sports pool which is exposed to the public for play or wagering: (a) by that gaming licensee; or (b) by an affiliate or an affiliated company of that gam-

ing licensee. •2. Subsection 1 shall not apply to the playing of or

wagering on poker, panguingui or off-track pari-mutuel wagering.

•3. No race book or sports pool employee shall place a wager, other than an off-track pari-mutuel wager, with the book at which they are employed or at a book of an affiliate or an affiliated company whether on their behalf, on behalf of the race book or sports pool, or on behalf of another person.

•4. Licensees shall not issue credit for purposes of gaming to key employees of that licensee whether or not such credit is evidenced by a player card, wagering account or a credit instrument.

restrictionsThe Nevada Gaming Commission therefore makes a pay-ment into the Revolving Account every three months to support programmes for the prevention and treatment of problem gambling (NRS 458A.090). With this payment, an amount equal to USD2 for each slot machine subject to the licence fee must be collected and paid into the Revolving Account by the Commission (NRS 463.320(e)).

3.6 Penalties for Unlawful GamblingNevada specifically prohibits a number of activities associat-ed with gambling, including fraud (NRS 465.070), the use of a device for advantaged play (NRS 465.080), the possession or use of counterfeit wagering instruments (NRS 465.080), cheating (NRS 465.083), the unlicensed manufacture, sale or distribution of gaming equipment (NRS 465.085), the unlicensed receipt of compensation for bets or wagers (NRS 465.086) and the unlicensed dissemination of information concerning racing (NRS 465.090). Violation of these prohi-bitions is a B felony, punishable (i) for the first offence, by

imprisonment in the state prison for a minimum term of not less than one year and a maximum term of not more than six years, or by a fine of not more than USD10,000, or by both fine and imprisonment; and (ii) for a second or subsequent violation of any of these provisions, by imprisonment in the state prison for a minimum term of not less than one year and a maximum term of not more than six years, and may be further punished by a fine of not more than USD10,000 (NRS 465.088).

In addition, the Nevada Gaming Commission may deter-mine that a licensee has violated Nevada gaming law. The Commission is empowered to assess fines and penalties when such violations occur.

3.7 Pending LegislationThe Nevada Gaming Commission amended its regulations regarding the operations of nightclubs and daytime clubs located on the premises of casino licensees. The new provi-sions require greater oversight of club venues by casinos and club operators and require that certain employees and inde-pendent contractors of club venues register with the Nevada Gaming Control Board.

During the 2017 Nevada legislative session, the location of Gaming Enterprise Districts (GEDs) within the City of Las Vegas were redefined to eliminate a portion of the Las Vegas Boulevard gaming corridor GED that encroached on an established residential area. The Historic Downtown Gam-ing District was also created during this session, to promote the development of new and expanded gaming locations in downtown Las Vegas.

Nevada’s legislature meets in odd-numbered years for 120 consecutive days beginning on the first Monday in February. Consequently, its most recent meeting concluded in June 2019.

4. Licensing and regulatory Framework

4.1 regulatory AuthorityThe Nevada Gaming Control Act provides for a two-tier state regulatory system for gambling in Nevada.

•Nevada Gaming Control Board – this is a full-time regu-latory agency consisting of two members and a chair, all appointed by the governor. The Nevada Gaming Control Board employs staff allocated among various divisions that perform investigations related to applications for licences, findings of suitability and other approvals, as well as other functions.

•Nevada Gaming Commission – this is a part-time body consisting of four members and a chairman, all of whom are also appointed by the governor. The Nevada Gaming Commission has no staff, other than an executive secre-


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tary who serves in the same role for the Nevada Gaming Control Board.

In addition to the above authorities, local licensing authori-ties in Nevada issue gaming and liquor licences in respect of gaming establishments within their respective jurisdic-tions. However, local licensing authorities typically defer to the state authorities in relation to:

•background investigations of applications for gaming licences or findings of suitability in connection with acquisitions of existing licensees; and

•approvals of corporate structure arrangements.

4.2 regulatory ApproachThe laws, regulations and supervisory procedures of the Nevada gaming authorities are based upon declarations of public policy. These public policy concerns include:

•preventing unsavoury or unsuitable persons from being directly or indirectly involved with gaming at any time or in any capacity;

•establishing and maintaining responsible accounting practices and procedures;

•maintaining effective controls over the financial practices of licensees, including establishing minimum procedures for internal fiscal affairs, and safeguarding;

•assets and revenue, providing reliable record-keeping and requiring the filing of periodic reports with the Nevada gaming authorities;

•preventing cheating and fraudulent practices; and•providing a source of state and local revenue through

taxation and licensing fees.

In Nevada, the burden of proving qualification to receive a licence is solely on the applicant. Such approvals are privi-leges and no person has any right to receive a licence. Once granted, such approvals are “revocable privileges” and no holder acquires any vested rights therein or thereunder.

A licence must not be granted unless the Nevada Gaming Commission is satisfied that the applicant is (i) a person of good character, honesty and integrity; (ii) a person whose prior activities, criminal record, if any, reputation, habits and associations do not pose a threat to the public interest of this state or to the effective regulation and control of gaming... or create or enhance the dangers of unsuitable, unfair or illegal practices, methods and activities in the conduct of gaming... or in the carrying on of the business and financial arrange-ments incidental thereto; and (iii) in all other respects quali-fied to be licensed or found suitable consistently with the declared policy of this state (NRS 463.170(2)).

A licence to operate a gaming establishment must not be granted unless the applicant has satisfied the Nevada Gam-ing Commission that (i) he has adequate business probity,

competence and experience in gaming or generally; and (ii) the proposed financing of the entire operation is adequate for the nature of the proposed operation and from a suitable source.

4.3 types of LicencesDepending upon the structure of the business entities that are applying for a licence, various corporate applications are required. Also, depending upon the financing involved, additional approvals may be required. Applications and fees must also be filed with the applicable local regulatory authorities. There is no material difference between a “reg-istration”, “finding of suitability”, “licence” or “approval” as each is subject to the same qualification standards and requires the same extensive investigation.

When the Nevada gaming regulatory authorities issue a licence to a casino, certain individuals affiliated with the casino licensee and the casino licensee’s holding companies need to file applications and be investigated and found suita-ble. Generally, the Nevada Gaming Commission will impose a condition on a casino’s licence requiring the general man-ager of the casino to file an application as a key employee of the casino. For privately held businesses, the licensing requirements vary depending on the type of entity involved.

No person may acquire a 5% or greater interest in a pri-vately held licensee or a holding company, nor become a controlling affiliate of such licensee or holding company, nor become a holding company of such licensee or hold-ing company without first obtaining the prior approval of the Nevada Gaming Commission. “Control” is defined as “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securi-ties, by contract, or otherwise” (Nevada Gaming Commis-sion Regulation 15.482-4) (see Nevada Gaming Commission Regulations 15.1594-6, 15A.060 and 15B.160). The Nevada Gaming Commission may require any or all of a privately held business entity’s lenders, holders of evidence of indebt-edness, underwriters, key executives, agents or employees, as applicable, to be licensed or found suitable (Nevada Gaming Commission Regulations 15.530-3, 15A.160 and 15B.160).

For a corporate licensee, in addition to owners of 5% or more of the equity securities issued by the corporate licensee, all officers and directors of a privately held corporation that holds or applies for a state gaming licence must be licensed individually (NRS 463.530). For a limited partnership licen-see, every general partner of, and every limited partner with more than a 5% ownership interest in, a limited partnership that holds a state gaming licence must be licensed individu-ally (NRS 463.569). Each general partner of a limited part-nership holding company must be licensed, and each limited partner of a limited partnership holding company must be licensed if the limited partner owns more than 5% of any


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licensee owned by the limited partnership holding company (Nevada Gaming Commission Regulation 15A.190). For a limited liability company licensee, every member and trans-feree of a member’s interest with more than a 5% ownership interest in a limited liability company, and every director and manager of a limited liability company that holds or applies for a state gaming licence must be licensed individually (NRS 463.5735). Each manager of a limited liability holding com-pany must be licensed, and each member of a limited liability company holding company must be licensed if the member owns more than 5% of any licensee owned by the limited liability company holding company (Nevada Gaming Com-mission Regulation 15B.190(1)).

Publicly traded corporations (PTCs) are treated differently under Nevada law than privately held business entities. The Nevada gaming statutes that deal with PTCs focus on vot-ing control rather than on equity ownership. Each officer, director and employee of a PTC that the Nevada Gaming Commission determines is or is to become actively and directly engaged in the administration or supervision of, or is to have any other significant involvement with, the gam-ing activities of the corporation or any of its affiliated or intermediary companies must be found suitable and may be required to be licensed by the Nevada Gaming Commis-sion (NRS 463.637(1); Nevada Gaming Commission Regula-tions 16.410(1) and 16.415(1)). A holder of more than 5% of the voting securities of a PTC registered with the Nevada Gaming Commission must notify the Nevada Gaming Com-mission within ten days after filing notice with the United States Securities and Exchange Commission (SEC) (NRS 463.643(3)). A holder of more than 10% of the voting secu-rities of a PTC registered with the Nevada Gaming Commis-sion must file an application with the Nevada Gaming Com-mission for a finding of suitability within 30 days after the Nevada Gaming Control Board chair mails written notice to the owner (NRS 463.63(4)). Qualified institutional inves-tors can hold up to 25% of the voting securities of a PTC but they need to obtain a waiver from the Nevada Gaming Commission in order to do so (Nevada Gaming Commis-sion Regulation 16.010(14)).

4.4 Availability of LicencesThere is no limit to available gaming licences in Nevada.

4.5 Duration of LicencesNevada gaming licences do not expire and do not have to be renewed, although they are subject to periodic updates and reporting requirements.

4.6 Application requirementsIt is unlawful for any person – as owner, lessee or employee – whether for hire or not, to operate, carry on, conduct or maintain any form of manufacture, selling or distribution of any gaming device for use or play in Nevada without first

procuring and maintaining all required federal, state, county and municipal licences (NRS 463.650).

A person may act as a manufacturer, distributor, or manu-facturer of an interactive gaming system, or as an operator, only if that person holds a licence specifically permitting the person to act as a manufacturer, distributor, or manufacturer of an interactive gaming system, or as an operator except as provided for in NRS 463.160(2) (Nevada Gaming Commis-sion Regulation 14.020(1)).

If a particular device is not a gaming device, it may be con-sidered associated equipment in Nevada. “Associated equip-ment” is any equipment or mechanical, electromechanical or electronic contrivance, component or machine used remotely or directly in connection with gaming or mobile gaming, any game, race book or sports pool that would not otherwise be classified as a gaming device, including dice, playing cards, links which connect to progressive slot machines, equipment which affects the proper reporting of gross revenue, computerised systems of betting at a race book or sports pool, computerised systems for monitoring slot machines and devices for weighing or counting money (NRS 463.0136). Any manufacturer or distributor of associ-ated equipment for use in this state must register with the Nevada Gaming Commission pursuant to NRS 463.665 if such associated equipment:

•is used directly in gaming;•has the ability to add or subtract cash, cash equivalents

or wagering credits to a game, gaming device or cashless wagering system;

•interfaces with and affects the operation of a game, gam-ing device, cashless wagering system or other associated equipment;

•is used directly or indirectly in the reporting of gross revenue;

•records sales for use in an area subject to the tax imposed by NRS 368A.200; or

•is otherwise determined by the Nevada Gaming Com-mission to create a risk to the integrity of gaming and protection of the public if not inspected (Nevada Gaming Commission Regulation 14.020(4)).

The Nevada Gaming Commission has the discretion to require any manufacturer or distributor of associated equip-ment who sells, transfers or offers the associated equipment for use or play in Nevada to file an application for a find-ing of suitability (Nevada Gaming Commission Regulation 14.305(1)).

Nevada has three classes of service provider licensure. A ser-vice provider is defined as a person who:

•acts on behalf of another licensed person who conducts non-restricted gaming operations, and who assists, man-


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ages, administers or controls wagers or games, maintains or operates the software or hardware of games on behalf of such licensed person, and is authorised to share in the revenue from games without being licensed to conduct gaming at an establishment (which includes an informa-tion technology service provider);

•is an interactive gaming service provider;•is a cash access and wagering instrument service pro-

vider; or•meets other such additional criteria as the Nevada Gam-

ing Commission may establish by regulation.

An interactive gaming (or “internet”) service provider is required to obtain a Class 1 licence. Marketing affiliates are required to obtain a Class 3 service provider licence. Other types of service providers are required to obtain a Class 2 licence. These include information technology service providers, location determination providers, patron man-agement providers and payment processors that facilitate transactions directly between a merchant account associ-ated with wagering and a financial institution, as well as entities that provide authorisation and settlement services. Advertising companies, acquiring banks that comply with federal banking regulations, fraud detection service provid-ers, graphics designers, patron interaction service providers, risk assessors, and hardware and software support providers for non-regulated hardware and software are not required to be licensed as service providers (Nevada Gaming Control Board Service Provider Licensure Guidelines).

4.7 Application timingOnce the Investigations and/or the Corporate Securities Section receives the application package, it assigns inves-tigators on an “as available” basis. When an investigative team is assigned to an application, the application package is reviewed to determine an initial deposit for investigative fees. The applicants must bear the entire cost of the investi-gation. No investigation will commence until the required initial investigative deposit has been paid and no investiga-tion will continue until the investigators have received such additional deposits as they request during the course of the investigation. The Nevada Gaming Control Board charges an hourly rate for its agents, together with all costs of trans-portation, lodging, food, transcripts and other charges. At the end of an investigation, applicants are entitled to receive a refund of any monies still on deposit.

4.8 Application FeesEach individual and business organisation application requires a USD500 filing fee with the Nevada Gaming Con-trol Board. Individual and privately held company applica-tions are reviewed by the coordinator of applicant services and once he or she determines that the application package is complete, he or she forwards it to the Investigations Divi-sion. Applications for registration by publicly traded corpo-rations are forwarded to the Corporate Securities Division

for processing. This process can take several weeks. Costs of investigation are charged to the applicant on an hourly basis. Investigation costs can run anywhere from USD20,000 to over USD100,000 for an individual depending on the per-son’s finances and personal history.

4.9 Ongoing Annual FeesLand-Based GamblingA land-based casino licence-holder may be subject to the following.

•Annual fee – a casino licensee must pay an annual fee based on the number of slot machines it operates (NRS 463.380). For establishments operating more than 16 games, the licensee must pay a sum of USD1,000 for each game for up to 16 games (NRS 463.380(1)(j)).

•Annual taxes – a licensee must pay an annual excise tax of USD250 on each slot machine it operates (NRS 463.385(1)).

•Quarterly fees – casino licensees must pay a fee every three months of USD20 per slot machine it operates in the establishment, and another quarterly fee based on the number of games operated (NRS 463.375(2)).

The taxes and fees vary for other licensing categories, such as restricted licensees, operators of slot machine routes and manufacturers.

In addition, some casinos are subject to Nevada’s live enter-tainment tax (LET), which is an excise tax imposed on admission to any facility in Nevada where live entertainment is provided (NRS 368A.200(1)). A 9% rate of LET is levied on the admission charge to the area or premises (indoor or outdoor) in which live entertainment is provided when a fee is collected to enter or have access to the area or premises (NRS 368A.200(1)(a) and NRS 368A.060).

Online GamblingNevada Gaming Commission Regulation 5A.170 addresses the tax and licence fees applicable to gross revenue.

Gross revenue received from the operation of interactive gaming is subject to the same licence fee provisions of NRS 463.370 as the games and gaming devices of the licensee. Gross revenue received from the operation of interactive gaming by an interactive gaming operator shall be attrib-uted to the non-restricted licensee and counted as part of the gross revenue of the non-restricted licensee for the purpose of computing the licence fee. For each game in which the operator is not a party to the wager, gross revenue equals all money received by the operator as compensation for con-ducting the game.


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5. Land-Based Gambling

5.1 Premises Licensing“Restricted licence” or “restricted operation” means a state gaming licence for, or an operation consisting of, not more than 15 slot machines and no other game or gaming device, race book or sports pool at an establishment in which the operation of slot machines is incidental to the primary busi-ness of the establishment (NRS 463.0189).

“Nonrestricted licence” and “nonrestricted operation” are legally defined. “Nonrestricted licence” or “nonrestricted operation” means (NRS 463.0177):

•A state gaming licence for, or an operation consisting of, 16 or more slot machines.

•A licence for, or operation of, any number of slot machines together with any other game, gaming device, race book or sports pool at one establishment.

•A licence for, or the operation of, a slot machine route.•A licence for, or the operation of, an inter-casino linked

system.•A licence for, or the operation of, a mobile gaming sys-

tem.

EligibilityThe development of casinos is restricted to the counties of Nevada that have a population of 700,000 people or more (NRS 463.3074). This restriction currently only applies to Clark County, where the Las Vegas Strip is located. One of the purposes of restricting the location of future casinos to Clark County is to concentrate “the next generation of large gaming establishments on the Las Vegas Strip. This is to promote responsible use of financial and natural resourc-es by encouraging urban development in areas where the transportation systems and infrastructure are best suited for intensive development” (NRS 463.3072(2)).

Therefore, any new casino in Clark County must be located within a gaming enterprise district (GED) (NRS 463.308(1)). Casinos that were not located within a GED when the law was enacted in 1997 are grandfathered in. However, “the number of games or slot machines operated at these casinos must not go beyond the number of games or slot machines that were authorised when the casino was established under the local ordinance on 31 December 1996” (NRS 463.308(3)).

The Nevada Gaming Commission may approve the place-ment of a casino outside of a GED if the petitioner can dem-onstrate that certain enumerated development criteria has been met (NRS 463.3084(2); 463.3086(6)).

Application ProcedureDepending on the structure of the business entity applying for a licence, various corporate applications are required. In addition, every individual needing to be licensed must

file a personal application with the Nevada Gaming Con-trol Board. Applications and fees must also be filed with the applicable local regulatory authorities.

Non-Nevada corporations must also qualify to do busi-ness in Nevada. Again, depending upon the business enti-ties involved, additional requirements must be met. These requirements can be more fully explained once the owner-ship structure of the particular transaction is understood.

Duration of Licence If the Nevada Gaming Control Board votes a recommen-dation of approval, it may impose conditions or vote for a limited licence to be awarded.

A limited licence automatically expires after a period of time (usually two years). After the period of the limited licence expires, the applicant must apply for a new licence and the review of such application generally focuses only on the period since the initial grant of the limited licence. Nevada gaming licences do not otherwise expire.

5.2 recent or Forthcoming changesOn 17 March 2016, the Nevada Gaming Commission cre-ated a new category of licensed casino owner: the private investment company. This is any privately held legal entity that is not a natural person that holds or applies for a licence (or that directly or indirectly owns a beneficial interest in any corporation, firm, partnership, limited partnership, limited liability company, trust or other form of business organisa-tion that holds or applies for a licence) and which has all of the following characteristics (Nevada Gaming Commission Regulation 15C.010(1)).

•100% of the economic securities of the company are directly or indirectly held by either: (a) one or more private investment funds managed by

an investment manager or managers, which invest-ment manager or managers collectively have more than USD1 billion in assets under management; or

(b) one or more institutional investors as defined in Regulation 16.010(14) that each has assets of more than USD1 billion.

•100% of the voting securities of the company are held by one or more legal entities controlled by one or more controlling persons or key executives of the investment managers or institutional investors.

•The company is not a “publicly-traded corporation” as defined in NRS 463.487 or has received Nevada Gaming Commission approval to convert its registration from a publicly traded corporation to a private investment company.


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6. Online Gambling

6.1 B2c LicencesOn 22 December 2011, the Nevada Gaming Commission adopted regulations to establish a regulatory framework for the state regulation of interactive gaming, which is currently limited to internet poker. The core components of an inter-active gaming system (including servers and databases run-ning the games on the interactive gaming system and storing game and interactive gaming account information) must be located in the State of Nevada, unless otherwise permitted by the chair of the Nevada Gaming Control Board.

There are currently two online poker websites operating in Nevada. There is no limit to the number of websites that can offer online poker in Nevada.

6.2 B2B Licences (Suppliers, Software, etc)No distinction is made between the law applicable to busi-ness-to-business (B2B) and business-to-customer (B2C) operations in Nevada.

6.3 AffiliatesThe term “service provider” includes a person who acts on behalf of another licensed person who conducts non-restricted gaming operations, and who assists, manages, administers or controls wagers or games, or maintains or operates the software or hardware of games on behalf of such licensed person, and is authorised to share in the revenue from games without being licensed to conduct gaming at an establishment.

A Class 1 service provider includes any interactive gaming service provider (Nevada Gaming Commission Regulation 5).

The application process for a Class 1 service provider licence is made, processed and determined in the same manner as an application for a non-restricted gaming licence.

The employee of a service provider who is connected directly with the operations of the service provider or who, on behalf of a licensee or on behalf of the service provider, performs the duties of a gaming employee is a gaming employee sub-ject to the provisions of NRS 463.335 and 463.337 and Regu-lations 5.100 through 5.109.

Interactive gaming service providers must pay an annual licence fee of USD1,000 (Nevada Gaming Commission Regulation 5A.220).

6.4 white LabelsThere is no applicable information in this jurisdiction.

6.5 recent or Forthcoming changesThere are no recent or forthcoming changes to online gam-bling in this jurisdiction.

6.6 technical MeasuresThe process for registering and verifying an authorised player is set out in Nevada Gaming Commission Regula-tion 5A.110.

The operator of interactive gaming can only register an indi-vidual as an authorised player if the operator can establish the following in relation to the player:

•the identity of the individual;•that the individual is 21 years of age or older;•the physical location where the individual resides;•the social security number for the individual, if the indi-

vidual is resident in the US; •that the individual has not previously self-excluded with

the operator (players typically self-exclude due to prob-lem gaming issues); and

•that the individual is not on Nevada’s list of excluded persons.

The minimum internal controls required for operators of interactive gaming are set out in Nevada Gaming Commis-sion Regulation 5A.070. This includes internal controls for:

•administration, accounting and audit; •system security;•player identification, verification and registration;•confidentiality of player accounts and player information;•system testing; and•responsible gaming.

7. responsible Gambling

7.1 rG requirementsNevada Gaming Commission Regulation 5.170 defines a set of minimum responsible gaming standards for all gaming licensees operating in the State of Nevada.

Each licensee shall post or provide in conspicuous places in or near gaming and cage areas and cash dispensing machines located in gaming areas written materials concerning the nature and symptoms of problem gambling and the toll-free telephone number of the National Council on Prob-lem Gambling or a similar entity approved by the Nevada Gaming Control Board chair that provides information and referral services for problem gamblers.

Each licensee shall implement procedures and training for all employees who directly interact with gaming patrons in gaming areas. That training shall, at a minimum, consist of information concerning the nature and symptoms of prob-


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lem gambling behaviour and assisting patrons in obtaining information about problem gambling programmes. This subsection shall not be construed to require employees of licensees to identify problem gamblers. Each licensee shall designate personnel responsible for maintaining the pro-gramme and addressing the types and frequency of such training and procedures. Training programmes conducted or certified by the Nevada Council on Problem Gambling are presumed to provide adequate training for the period certi-fied by the Nevada Council on Problem Gambling.

Each licensee that engages in the issuance of credit, cheque cashing, or the direct mail marketing of gaming opportuni-ties shall implement a programme containing the elements described below, as appropriate, that allows patrons to self-limit their access to the issuance of credit, cheque cashing, or direct mail marketing by that licensee. As appropriate, such programme shall contain, at a minimum, the follow-ing: (i) the development of written materials for dissemina-tion to patrons explaining the programme; (ii) the devel-opment of written forms allowing patrons to participate in the programme; (iii) standards and procedures that allow a patron to be prohibited from access to cheque cashing, the issuance of credit, and the participation in direct mail marketing of gaming opportunities; (iv) standards and pro-cedures that allow a patron to be removed from the licensee’s direct mailing and other direct marketing regarding gaming opportunities at that licensee’s location; and (v) procedures and forms requiring the patron to notify a designated office of the licensee within ten days of the patron’s receipt of any financial gaming privilege, material or promotion covered by the programme (Nevada Gaming Commission Regula-tion 5.170).

7.2 Gambling Management toolsOperators must have and put into effect policies and pro-cedures for self-exclusion and take all reasonable steps to immediately refuse service or to otherwise prevent an indi-vidual who has self-excluded from participating in inter-active gaming (Nevada Gaming Commission Regulation 5A.130(1)). Interactive gaming systems must employ a mechanism to allow authorised players to self-exclude their interactive gaming account from conducting any gaming activities.

8. Anti-money Laundering

8.1 AML LegislationAnti-money laundering is addressed at the federal level. Nevada makes use of the standards set out in Title 31 of the Code of Federal Regulations.

8.2 AML requirementscompliance ProgrammeCasinos must implement an anti-money laundering com-pliance programme. At a minimum, each compliance pro-gramme must provide for (Title 31 CFR § 1021.210):

•a system of internal controls to assure ongoing compli-ance;

•internal and/or external independent testing for compli-ance;

•training of casino personnel (including training in the identification of unusual or suspicious transactions, to the extent that the reporting of such transactions is required by law or regulation, or by the casino’s own administrative and compliance policies);

•the appointment of an individual or individuals to assure day-to-day compliance with the programme; and

•procedures for using all available information to deter-mine and verify the name, address, social security num-ber and other information of a person.

Suspicious transactionsCasinos must report any suspicious transactions or any pos-sible violation of the law to the Financial Crimes Enforce-ment Network (FinCEN). A transaction must be reported if all of the following are applicable (Title 31 CFR § 1021.320).

•The transaction is conducted or attempted by, at, or through a casino.

•The transaction involves or aggregates at least USD5,000 in funds or other assets.

•The casino knows, suspects, or has reason to suspect that the transaction (or a pattern of transactions of which the transaction is a part):(a) involves funds derived from illegal activity or is

intended or conducted in order to hide or disguise funds or assets derived from illegal activity (in-cluding the ownership, nature, source, location, or control of such funds or assets) as part of a plan to violate or evade any federal law or regulation, or to avoid any transaction reporting requirement under federal law or regulation;

(b) is designed (whether through structuring or other means) to evade any requirements of this chapter or of any other regulations promulgated under the Bank Secrecy Act;

(c) has no business or apparent lawful purpose, or is not the sort in which the particular customer would nor-mally be expected to engage, and the casino knows of no reasonable explanation for the transaction after examining the available facts, including the back-ground and possible purpose of the transaction; or

(d) involves use of the casino to facilitate criminal activ-ity.


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Verification of identityBefore concluding any transaction (for which a report is required under the Code of Federal Regulations (see above)), a financial institution must verify and record the:

•name and address of the individual presenting a transac-tion; and

•identity, account number and the social security or taxpayer identification number (if any) of any person or entity on whose behalf such transaction is to be effected.

Verification of the identity of an individual who indicates that he or she is a foreign national or a non-resident of the US can be fulfilled by providing any of the following:

•passport;•alien identification card; or•another official document evidencing nationality or

residence (for example, a provincial driver’s licence which indicates their home address).

In any other case, verification of identity must be made by examination of a document (other than a bank signature card) that is normally acceptable within the banking com-munity as a means of identification when cashing cheques for non-depositors (for example, a driver’s licence or credit card). A bank signature card can only be relied on if it was issued after the documents establishing the identity of the individual have been examined and notation of the specific information has been made on the signature card. In each instance, the specific identifying information (the account number of the credit card, the driver’s licence number and so on) used in verifying the identity of the customer must be recorded on the report, and the mere notation of “known customer” or “bank signature card on file” on the report is prohibited (Title 31 CFR § 1010.312).

The requirements for establishing and maintaining interac-tive gaming accounts are set out in Nevada Gaming Com-mission Regulation 5A.120. These requirements include the following.

•An authorised player cannot hold more than one account.

•An authorised player cannot occupy more than one posi-tion at a game at any given time.

•The operator cannot allow the use of anonymous interac-tive gaming accounts or accounts in fictitious names.

•Players cannot transfer funds to another player. •Players’ accounts cannot be overdrawn, nor can an opera-

tor extend credit to a player. Credit shall not be deemed to have been extended where, although funds have been deposited into an interactive gaming account, the opera-tor is awaiting actual receipt of such funds in the ordi-nary course of business.

9. Advertising

9.1 regulatory/Supervisory AgencyThe Nevada Gaming Commission retains the authority under Nevada law to monitor and sanction any gaming licensee that violates Nevada casino advertising laws.

9.2 Definition of AdvertisingNevada does not specifically define “advertising.” It is a crime in Nevada to engage in false, deceptive or mislead-ing advertising and other sales practices. It is unlawful for any person, firm, corporation or association or any agent or employee thereof to use, publish, disseminate, display or make or cause directly or indirectly to be used, published, disseminated, displayed or made, in any newspaper, maga-zine or other publication, by any radio, television or other advertising medium, or by any advertising device, or by public outcry, proclamation, or declaration, or by any other manner or means, including but not limited to solicitation or dissemination by mail, telephone or door-to-door contacts, any statement which is known or through the exercise of reasonable care should be known to be false, deceptive or misleading in order to induce any person to purchase, sell, lease, dispose of, utilise or acquire any title or interest in any real or personal property or any personal or professional services or to enter into any obligation or transaction relat-ing thereto, or to include such statement as part of a plan or scheme which intentionally misstates cost or price for the purposes of producing an erroneous belief by any person that the actual cost or price is the same as stated therein (NRS 207.171).

9.3 Key Legal, regulatory and Licensing ProvisionsCasinos can advertise in Nevada. However, all advertising must be conducted in a manner that does not bring the gam-ing industry in Nevada into disrepute. Casinos must there-fore conduct their “advertising and public relations activities in accordance with decency, dignity, good taste, honesty, and inoffensiveness” (Nevada Gaming Commission Regulation 5.011(4)). Marketing affiliates are required to obtain a Class 3 service provider licence. Advertising companies are not required to be licensed.

9.4 restrictions on AdvertisingAn interactive gaming operator, including its employees or agents, must be truthful and non-deceptive in all aspects of its interactive gaming advertising and promotions. A pro-motion related to interactive gaming must clearly and con-cisely explain the terms of the promotion and the operator must adhere to such terms (Nevada Gaming Commission Regulation 5A.155).

9.5 Sanctions/PenaltiesThe Nevada Gaming Commission will assess fines for oper-ators and licensees that violate advertising restrictions in accordance with the severity of the action.


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10. Acquisitions and changes of control10.1 Disclosure requirementsWhen the Nevada Gaming Commission issues a licence to a gaming operator, certain individuals affiliated with the casi-no licensee and the casino licensee’s holding companies need to file applications and be investigated and found suitable. Generally, the Nevada Gaming Commission will impose a condition on a casino’s licence requiring the general manager of the casino to file an application as a key employee of the casino.

10.2 change of corporate control triggerschanges of corporate controlFor privately held businesses, the licensing requirements vary depending on the type of entity involved. No person may acquire a 5% or greater interest in a privately held licen-see or a holding company, nor become a controlling affiliate of such licensee or holding company, nor become a holding company of such licensee or holding company, without first obtaining the prior approval of the Nevada Gaming Com-mission. “Control” is defined as “the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise” (Nevada Gaming Commission Regulation 15.482-4).

The Nevada Gaming Commission may require any or all of a privately held business entity’s lenders, holders of evi-dence of indebtedness, underwriters, key executives, agents or employees, as applicable, to be licensed or found suit-able (Nevada Gaming Commission Regulations 15.530-3, 15A.160 and 15B.160). For a corporate licensee, in addition to owners of 5% or more of the equity securities issued by the corporate licensee, all officers and directors of a privately held corporation that holds or applies for a state gaming licence must be licensed individually (NRS 463.530).

Publicly traded corporations are treated differently under Nevada law than privately held business entities. The Nevada gaming statutes that deal with PTCs focus on voting control rather than on equity ownership. Each officer, director and employee of a PTC that the Nevada Gaming Commission determines is, or is to become, actively and directly engaged in the administration or supervision of, or is to have any oth-er significant involvement with, the gaming activities of the corporation or any of its affiliated or intermediary companies must be found suitable and may be required to be licensed by the Nevada Gaming Commission (NRS 463.637(1); Nevada Gaming Commission Regulations 16.410(1) and 16.415(1)). A holder of more than 5% of the voting securities of a PTC registered with the Nevada Gaming Commission must noti-fy the Nevada Gaming Commission within ten days after filing notice with the United States Securities and Exchange Commission (NRS 463.643(3)). A holder of more than 10%

of the voting securities of a PTC must file an application with the Nevada Gaming Commission for a finding of suitability within 30 days after the chair of the Nevada Gaming Control Board mails written notice to the owner (NRS 463.643(4)). Qualified institutional investors can hold up to 25% of the voting securities of a PTC, but they need to obtain a waiver from the Nevada Gaming Commission in order to do so (Nevada Gaming Commission Regulation 16.010(14)).

Licences issued by the Nevada Gaming Commission are not transferable. A PTC cannot acquire control of a licensee or affiliated company, and a person cannot acquire control of a PTC, without the prior approval of the Nevada Gaming Commission (Nevada Gaming Commission Regulation 16.200). No person can acquire any equity security issued by a privately held business entity, nor become a control-ling affiliate of a privately held business entity, without first obtaining the prior approval of the Nevada Gaming Com-mission (Nevada Gaming Commission Regulation 15.1594-6).

10.3 Passive investors requirementsA holder of more than 5% of the voting securities of a PTC registered with the Nevada Gaming Commission must noti-fy the Nevada Gaming Commission within ten days after filing notice with the United States Securities and Exchange Commission (NRS 463.643(3)). A holder of more than 10% of the voting securities of a PTC must file an application with the Nevada Gaming Commission for a finding of suitability within 30 days after the chair of the Nevada Gaming Control Board mails written notice to the owner (NRS 463.643(4)). Qualified institutional investors can hold up to 25% of the voting securities of a PTC, but they need to obtain a waiver from the Nevada Gaming Commission in order to do so (Nevada Gaming Commission Regulation 16.010(14)). The Nevada Gaming Commission is currently adopting regula-tions for beneficial owners of any amount of any class of voting securities of a publicly traded corporation, whether held directly or indirectly, individually or in association with others, if such persons are engaged in certain “proscribed” or activist activities that influence or affect the affairs of the publicly traded corporation.

11. Enforcement

11.1 PowersUnlicensed gambling is a crime in Nevada. It is unlawful for any person to “deal, operate, carry on, conduct, maintain or expose for play in the State of Nevada any gambling game, gaming device, inter-casino linked system, mobile gaming system, slot machine, race book or sports pool” without a licence issued by the Nevada Gaming Commission (NRS 463.160(1)(a)). It is also illegal to “receive, directly or indi-rectly, any compensation or reward or any percentage or share of the money or property played, for keeping, running


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or carrying on any gambling game, slot machine, gaming device, mobile gaming system, race book or sports pool” (NRS 463.160(1)(d)). A violation is a category B felony, which is punishable by imprisonment of between one and ten years and a fine of up to USD50,000, or by both (NRS 463.360(3)). In addition, a “person who contrives, prepares, sets up, proposes or draws any lottery... is guilty of a misde-meanor”, which is punishable by imprisonment for not more than six months, or by a fine of not more than USD1,000, or by both (NRS 462.250; NRS 193.150(1)).

The Nevada gaming regulatory authorities have broad authority to investigate and discipline licensees and reg-istrants for violations of gaming laws, regulations and any applicable conditions. If the Nevada Gaming Control Board investigates a licensee or registrant and thereafter deter-mines that the licensee or registrant should be disciplined, the Board must “initiate a hearing before the Nevada Gam-ing Nevada Gaming Commission by filing a complaint with the Nevada Gaming Commission... and transmit therewith a summary of evidence in its possession bearing on the matter and the transcript of testimony at any investigative hearing conducted by or on behalf of the Board” (NRS 463.310(2)). The Nevada Gaming Commission has the authority to limit, condition, suspend, or revoke a licence or registra-tion (463.310(4)). The Nevada Gaming Commission may also fine a licensee or registrant up to USD250,000 for each separate violation, depending on the nature of the violation.

The Nevada gaming regulatory authorities also have the authority to exclude individuals from entering a gaming establishment or participating in gambling activity. The Nevada Gaming Control Board publishes a list of excluded persons on its website. Often referred to as the “black book”, individuals on this list are prohibited from entering any gaming establishment. To determine whether an individual belongs on the list, the Nevada gaming regulatory authori-ties may consider the following factors: “(a) Prior conviction of a crime which is a felony in this state or under the laws of the United States, a crime involving moral turpitude or a violation of the gaming laws of any state; (b) Violation or conspiracy to violate the provisions... relating to: (1) The failure to disclose an interest in a gaming establishment for which the person must obtain a licence; or (2) Wilful eva-sion of fees or taxes; (c) Notorious or unsavory reputation which would adversely affect public confidence and trust that the gaming industry is free from criminal or corruptive elements; or (d) Written order of a governmental agency which authorizes the exclusion or ejection of the person from an establishment at which gaming or pari-mutuel wagering is conducted” (NRS 463.151(3)).

11.2 SanctionsAll publicly traded corporations that are licensed by the Nevada gaming regulatory authorities are required to main-tain a gaming compliance programme for the purpose of,

at a minimum, performing due diligence, determining the suitability of relationships with other entities and individu-als, and to review and ensure compliance by the PTC, its subsidiaries and any affiliated entities with the laws and reg-ulations of Nevada and any other jurisdictions in which the PTC, its subsidiaries and any affiliated entities operate. The gaming compliance programme, any amendments thereto, and the members of the compliance committee, one such member who shall be independent and knowledgeable of Nevada gaming laws and regulations, must be administra-tively reviewed and approved by the chair of the Nevada Gaming Control Board or her designee.

The purpose of a compliance programme is to set forth the manner in which a PTC’s compliance committee will exer-cise its best efforts to identify and evaluate situations arising in the course of the business of the PTC that may have a negative effect upon the objectives of gaming control. Gener-ally speaking, a situation adversely affects the objectives of gaming control if it has an adverse effect on the public faith in the ability of any appropriate gaming regulatory system to ensure that licensed gaming is conducted honestly and competitively and that gaming is free from criminal and cor-ruptive elements. Most compliance programmes include the duty to promptly report to the compliance officer any infor-mation relating to any written notice of any civil, criminal or administrative actions taken or proposed to be taken against the PTC, any member of the board or any key employee of the PTC that involve (i) any law or regulation related to gaming from any gaming authority involving a potential fine or disciplinary action, (ii) any non-gaming law or regula-tion involving a potential fine or civil penalty over a certain materiality threshold, or (iii) any felony.

Not only does the Nevada Gaming Control Board inves-tigate the qualifications of all licence applicants, but it is required to continue to observe the conduct of all licensees and other persons having a material involvement directly or indirectly with a licensed gaming operation or registered holding company to ensure that licences are not issued or held by, nor is there any material involvement directly or indirectly with, a licensed gaming operation or registered holding company by unqualified, disqualified or unsuitable persons, or persons whose operations are conducted in an unsuitable manner or in unsuitable or prohibited places or locations (NRS 463.1405(1); Nevada Gaming Commission Regulation 5.040).

The Nevada Gaming Control Board is required to investigate any apparent violations of the Gaming Control Act and regu-lations adopted thereunder (NRS 463.310). It is the policy of the Nevada gaming regulatory authorities to require that all establishments wherein gaming is conducted in Nevada be operated in a manner suitable to protect the public health, safety, morals, good order and general welfare of the inhabit-ants of the State of Nevada (Nevada Gaming Commission


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Regulation 5.010(1)). Responsibility for the employment and maintenance of suitable methods of operations rests with the licensee, and wilful or persistent use or toleration of meth-ods of operation deemed unsuitable will constitute grounds for licence revocation or other disciplinary action (Nevada Gaming Commission Regulation 5.010(2)).

Regulation 5.011 lists certain acts or omissions that may be determined to be unsuitable methods of operation. These include the “failure to exercise discretion and sound judg-ment to prevent incidents which might reflect on the repute of the State of Nevada and act as a detriment to the devel-opment of the industry”, “failure to comply with or make provisions for compliance with all federal, state and local laws and regulations and with all commission approved conditions and limitations pertaining to the operations of a licensed establishment” and “failure to conduct gaming operations in accordance with proper standards of custom, decorum, and decency, or permit any type of conduct in a gaming establishment which reflects or tends to reflect on the repute of the State of Nevada and act as a detriment to the gaming industry” (Nevada Gaming Commission Regulation 5.010(1), (8) and (10)).

11.3 Financial PenaltiesWhen satisfied that a licence should be limited, conditioned, suspended, revoked, or fined, the Nevada Gaming Control Board shall initiate a hearing before the Nevada Gaming Commission by filing a complaint with the Commission. Before such a complaint is filed, the Nevada Gaming Control Board may issue an Order to Show Cause. The purpose of an Order to Show Cause is to aid the regulators in decid-ing whether to seek a fine or the limitation, conditioning, suspension, or revocation of a licence. “The Board has full and absolute power and authority to recommend the denial of any application, the limitation, conditioning or restric-tion of any license, registration, finding of suitability or approval, the suspension or revocation of any license, regis-tration, finding of suitability or approval or the imposition of a fine upon any person licensed, registered, found suitable or approved for any cause deemed reasonable by the Board” (NRS 463.1405(3)).

12. recent trends

12.1 Social GamingTraditionally, the US federal government has not played a major role in the regulation of gaming. It was viewed that gaming regulation was most appropriately handled by state and local governments, with enforcement generally being left to the state.

With the notable exception of the Wire Act of 1961 (18 USC § 1081 et al) (Wire Act), rather than pre-empting state gam-bling laws, federal laws that govern gambling crimes were

designed to aid individual states in the enforcement of state gambling laws. Examples of such federal laws include:

•the Illegal Gambling Business Act of 1970 (18 USC § 1955 et al); and

•the Unlawful Internet Gambling Enforcement Act of 2006 (31 USC § 5361 et al).

State gambling laws do not require a prize to be money for a game to constitute illegal gambling. State law provides guidance on what is considered a “prize” in the context of gambling.

In Nevada, a gambling game is defined as “any game played with cards, dice, equipment for money, property, checks, credit or any representative of value” (NRS 463.0152). “Rep-resentative of value” is defined as “any instrumentality used by a patron in a game whether or not the instrumentality may be redeemed for cash” (NRS 463.01862). In 2006, the Nevada Attorney General issued an opinion that acknowl-edged that this definition is “inherently ambiguous”, and that while “instrumentality” is not defined, its plain mean-ing “would appear to include any physical or tangible thing” (Nevada Opinion Attorney General No 2006-06, 2006 WL 2725695 (2006)).

12.2 eSportsIn early 2019, the Nevada Gaming Commission amended its sportsbook regulations to allow for wagering on “virtual sports” to cover newly popular computer gaming competi-tions, and “other events” to define events on which wagers can be placed. All such types of wagering must be approved by the Nevada Gaming Control Board chair. The Nevada sportsbook regulations were also amended to allow Nevada licensees to take wagers from patrons in other states if fed-eral government laws are modified. The Nevada Gaming Commission amended its regulations pertaining to race books and sports pools to define a “virtual event” as an event where the outcome is generated by an electronic device (Nevada Gaming Commission Regulation 22.010(27)). The chair of the Nevada Gaming Control Board will not approve wagering on a virtual event unless (i) an approved gaming device is used to determine the outcome(s) and to display an accurate representation of the outcome(s) of the virtual event and (ii) a live display of the virtual event is offered to all approved sports pools (Nevada Gaming Commission Regulation 22.1201).

12.3 Fantasy SportsOn 15 October 2015, the Nevada Gaming Control Board issued a notice concluding that daily fantasy sports is gam-bling under Nevada law. The Gaming Control Board ordered all unlicensed daily fantasy sports operators to “cease and desist” their operations in Nevada until the requisite gaming approvals were obtained or until the applicable gaming laws were changed by the Nevada state legislature.


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12.4 Skill GamingDuring the 2015 Nevada legislative session, the Gaming Control Act was amended to allow games of skill and hybrid games of skill and chance to be offered. The Nevada Gam-ing Commission amended its regulations and the technical standards for gaming devices to allow skill games.

12.5 BlockchainBlockchain is not currently used for gambling in Nevada.

12.6 reformDuring its 2019 session, the Nevada legislature eliminated the requirement that cashless wagering systems be operated and maintained in-house by a gaming licensee. The legis-lature also changed “mobile gaming” from non-restricted gaming to a “gaming device.”

The Nevada Gaming Commission is currently adopting regulations for beneficial owners of any amount of any class of voting securities of a publicly traded corporation, whether held directly or indirectly, individually or in association with others, if such persons are engaged in certain “proscribed” or activist activities that influence or affect the affairs of the publicly traded corporation.

13. tax

13.1 tax rate by Sector A land-based casino licence-holder may be subject to the following.

•Annual fee – a casino licensee must pay an annual fee based on the number of slot machines it operates (NRS 463.380). For establishments operating more than 16 games, the licensee must pay a sum of USD1,000 for each game for up to 16 games (NRS 463.380(1)(j)).

•Annual taxes – a licensee must pay an annual excise tax of USD250 on each slot machine it operates (NRS 463.385(1)).

•Quarterly fees – a casino licensee must pay a fee every three months of USD20 per slot machine it operates in the establishment, and another quarterly fee based on the number of games operated (NRS 463.375(2)).

The taxes and fees vary for other licensing categories, such as restricted licensees, operators of slot machine routes and manufacturers.

In addition, some casinos are subject to Nevada’s live enter-tainment tax. The LET is an excise tax imposed on admis-sion to any facility in Nevada where live entertainment is provided (NRS 368A.200(1)). A 9% rate of LET is levied on the admission charge to the area or premises (indoor or outdoor) in which live entertainment is provided when a fee is collected to enter or have access to the area or premises (NRS 368A.200(1)(a) and NRS 368A.060).

Online GamblingNevada Gaming Commission Regulation 5A.170 addresses the tax and licence fees applicable to gross revenue.

Gross revenue received from the operation of interactive gaming is subject to the same licence fee provisions of NRS 463.370 as the games and gaming devices of the licensee. Gross revenue received from the operation of interactive gaming by an interactive gaming operator shall be attrib-uted to the non-restricted licensee and counted as part of the gross revenue of the non-restricted licensee for the purpose of computing the licence fee. For each game in which the operator is not a party to the wager, gross revenue equals all money received by the operator as compensation for con-ducting the game.

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