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Best of Liz Benston

Gaming Guru

Liz Benston

Too much gambling, even for Vegas

1 October 2007

NEVADA -- As with so much else about the gaming industry, it comes down to perspective.

Last week, when the Nevada Gaming Commission blocked efforts to allow gamblers to insert debit cards into kiosks for cash-equivalent vouchers that then could be used in slots, regulators scored points with problem gambling advocates who feared the devices might enable compulsive gamblers.

Others, though, accused the commission of hypocrisy, saying the vote was a public relations ploy that allowed regulators - and by extension, the casino industry - to claim credit for addressing problem gambling while nixing technology that would not have significantly boosted casinos' profit s anyway.

Whatever the motive, the decision will cost some gaming suppliers millions of dollars in potential sales and chill future efforts to introduce technology designed to make gambling more convenient.

For Nevada, the vote also raises a sticky policy question with no clear answer: In a free-market system with no mandate to consider problem gamblers in the regulation and adoption of new technology, should regulators be dictating which technology goes too far?

Nevada Council on Problem Gambling Executive Director Carol O'Hare, who testified at last week's commission meeting, said the decision reflects a growing public awareness of and concern about problem gambling.

State rules require the regulation of casinos "to protect the public health, safety, morals, good order and general welfare" of residents, O'Hare said.

Regulators have more recently become stakeholders, with casinos, in determining what's appropriate in the context of compulsive gambling, she said. Regulators took that to heart in 1998, she said, by enacting the state's first problem gambling rules requiring, among other things, that casinos post hot lines and fliers for gambling addicts.

But critics say last week's vote contradicts previous approvals in recent years of convenience-driven technology in development, such as handheld gambling devices and systems allowing gamblers to download their favorite slot games from a centralized electronic library , as well as the now-widespread "cashless" slot machines that dispense tickets instead of coins.

Insiders say the decision also opens the door for problem gambling advocates to attack future devices, furthering a trend of gaming suppliers first introducing products in other locations, especially tribal reservations, with lower regulatory hurdles.

Casinos have offered ATMs for more than a decade, although these devices weren't subject to regulatory oversight because they don't interact with slot machines or casino accounting systems, the way the kiosks would have.

Still, problem gambling advocates in Nevada haven't attacked ATMs or other casino mainstays that have contributed to problem gambling behavior, such as paycheck cashing and the granting of casino markers, which are essentially interest-free loans.

Likewise, commissioners approve dozens of new slot machines and table games each year based on whether the underlying technology is sound, without questioning whether the games could hurt compulsive gamblers.

Casino companies make millions of dollars after splitting transaction fees with ATM manufacturers. Besides getting money from ATMs with a debit or credit card, gamblers can swipe their cards and get cash from casino cages.

O'Hare, whose agency receives casino donations to train casino workers, fund public awareness campaigns and run the state's primary problem gambling hot line, has testified before regulators only a few times in the past decade. Questioning each system or game isn't her responsibility, nor should she be blamed for new technology that comes to market, O'Hare said.

"This isn't about (kiosks) but about getting regulators to consider all the relevant information before they make any decision," she said. Both the Nevada council and the affiliated National Council on Problem Gambling hope to make more appearances at regulatory hearings, she said.

Global Cash Access Executive Vice President Tom Sears, whose company produces the devices in partnership with slot machine manufacturer International Game Technology, said he felt "blindsided" by the decision.

The panel's action was unusual, he said, because most technology companies have some confidence that regulators and casino bosses will accept new technology before it reaches a public vote.

Like ATMs, the devices would be installed at no cost to casinos and might make them money based on negotiated transaction fees, he said.

"Products that get approved don't necessarily get adopted," he said. "The free market determines that because casinos don't have to offer them. But when you start saying what can and can't be tested in Nevada, where do you draw the line?"

One company that doesn't want the kiosks says the decision wasn't surprising because both industry and problem gambling representatives have had long-standing concerns about similar devices.

"This is different from mobile devices and (cashless slot machines) because it brings the debit card that much closer to the gaming device," MGM Mirage spokesman Alan Feldman said.

"At the moment there's a very distinctive sense in the problem gambling research world and in the gaming industry itself that giving players the opportunity to take a break, no matter how short, is critically important. I've got a ton of my casino staff saying, 'I don't feel good about this,' which says a lot about how far the industry has come in the last 15 years."

In a previous meeting to discuss the kiosks, the three-member Gaming Control Board said the technology was similar to ATMs and there was no reason why the kiosks should be singled out for research or other special consideration.

In a rare moment of dissent between the two regulatory bodies, the tone of the Gaming Commission meeting was vastly different, with at least two commissioners speaking out against the technology and the other commissioners largely silent.

The Gaming Commission has the final word on policy issues, although the part-time body first seeks guidance from the Gaming Control Board, which has a large full-time staff of engineers, accountants and attorneys.

Commission Chairman Pete Bernhard said it would be risky and irresponsible for Nevada to adopt the technology, which could "make us look greedy."

There's also little evidence that either casinos or consumers are clamoring for the devices, although that could change, he said.

"I'm not so concerned about saving casinos money . I'm concerned about problem gaming," Commissioner Art Marshall said.

The kiosks remove one step in the decision-making process by allowing gamblers to play through a voucher rather than continue to feed cash into a machine, he said.

Besides killing near-term prospects for the technology in the state, the decision will have ramifications in other states with commercial casinos, which often follow Nevada's lead.