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Rod Smith

G2E Attendees Say Regulation of Gaming Could Use Overhaul

13 October 2004

While there was widespread agreement at the Global Gaming Expo on the need to reform regulations governing the gaming industry, there was less agreement on how to do it in the 49 states with some form of legalized gambling.

Artistocrat Technology Vice President Walt Stowe, a major manufacturer of slot machines, said Thursday that no other industry is as heavily regulated as gaming, except possibly the nuclear power business.

Strict regulations are expensive, time-consuming and intrusive, especially in making it very difficult for public companies to recruit outside members for boards of directors, he said.

However, Stowe said strict regulations have also been essential to protecting the integrity of individual gaming companies and the industry.

Stowe and Nevada Gaming Commission Bobby Siller agreed, while it is critical for regulators and the industry to re-examine current regulations, it is even more important to strike a balance between desirable corporate reform and the need to protect public confidence in the industry.

"It's partly because investors have confidence in the financial reporting because of the heavily regulated environment that (gaming stocks) have done so well," Stowe said.

Still, Stowe said state-by-state regulations raise serious questions, including how to deal with multi-jurisdictional licensing, reciprocity in sharing applications or the results of investigations, limiting investigations into individual licensees and providing recourse for applicants subject to overly zealous investigators.

Tom Auriemma, director of the New Jersey Division of Gaming Enforcement, said the real hot topics for reforming regulations are reciprocity, the sharing of information and creating a more business-friendly environment.

He said regulators in different states are already sharing information and working together to streamline and simplify regulations and licensing procedures.

Still, David Arrajj, a partner in the Las Vegas law firm Schreck Brignone, said current regulations have become so cumbersome that the cost of compliance, which is paid for by the applicants, has become a serious problem.

He said the time consumed in meeting regulatory requirements is also a problem for public companies. They are required by regulators to retain key employees, but they have difficulty recruiting executives and board members because of excessive regulations.

Finally, Arrajj said the intrusiveness of the regulations itself is a problem, with many talented people being chased away from the gaming industry simply because of the personal disclosures that are required.

Siller said the industry has to constantly work to strike a balance between the need for strict regulations and the need to support the growth of the industry.

In considering reform, he said it is important to remember that in Nevada and many other states, regulators are required by statute to maintain public confidence in the industry and police strict regulations. Regulators in Nevada are also required to encourage competition and growth.

Siller said regulators face another dilemma encouraging new technology, but regulating new products to maintain public confidence.

While expressing sympathy with Stowe and other industry executives, Siller stressed the fact that gaming is a privilege and private companies have to automatic entitlement to licenses.

"In addition, business has experience major scandals (in recent years). As far as criminal threats are concerned, no threat has endangered us like financial scandals. It had to be dealt with and regulators must not let it happen again," he said.

G2E Attendees Say Regulation of Gaming Could Use Overhaul is republished from