Sleeping in the Same Bed?

An early prediction by a nearly forgotten gaming regulator has come true in today’s world. But is it such a bad thing? Spectrum Gaming’s Michael Pollock (l.) reflects.

Sleeping in the Same Bed?

A Holiday Inn in Trenton is not exactly Independence Hall in Philadelphia, but it still can be considered hallowed ground. That is the birthplace of modern gaming regulation, the spot in 1977 where the newly formed New Jersey Casino Control Commission had its first offices. In that building, a seed had been planted, which has since led to the opening of nearly 1,000 casinos across the United States.

New Jersey was the first state to end Nevada’s nearly half-century monopoly on legal casinos. In setting this new foundation, the state sent a clear signal that the rules would be written and enforced in the state capital, not in Atlantic City, where the casino industry would be located.

I made the first of many pilgrimages to Trenton in 1982 to study this still-emerging regulatory apparatus, meeting with a wide range of present and former regulators in both the Commission and the Division of Gaming Enforcement. The Commission had already moved to more comfortable surroundings in nearby Lawrenceville, but was still in its embryonic, formative stage.

I held a particularly memorable interview with the late Commissioner Martin Danziger. In my 1987 book, Hostage to Fortune: Atlantic City and Casino Gambling, I described Danziger as “lean and beak-nosed, with thinning brown hair and an unwaveringly stern expression. Sitting in his office, Danziger sucked up sections of grapefruit like a coyote swallowing whole chicken eggs.”

In between grapefruit bites, Danziger wagged his finger at me and issued a prediction: The day would come, he said, when regulators and the regulated would move closer together, playing on the same team and singing from the same hymnal. (Danziger did not mix such metaphors; that is my doing.)

In Danziger’s apocalyptic prognostication, the public interest would be cast aside, as the state promoted the industry’s interests.

As a latter-day Cassandra, Danziger is largely forgotten. Yet, like Cassandra, his prophecies have proven to be accurate. I learned this in the summer of 2020 when a speaker in a gaming webinar made the point that regulators should work with the regulated gaming industry to pursue common goals. This speaker believes that effective regulation means establishing rules that encourage capital investment, employment and economic growth.

Who was this speaker who had turned dire predictions into reality? That would be me.

Indeed, I have arrived at the fundamental finding that effective regulation requires finding a foundation of common ground with the regulated, becoming partners that share in robust economic growth.

That finding rests on the knowledge that the modern casino industry has earned a reputation for trust, and the licenses that operators and suppliers have earned in multiple jurisdictions have provided a level of trust in gaming that simply did not exist in the 1970s. The gaming industry, once legal in only one state, is now legal in nearly all, and while it was once somewhat dependent on financing from sources such as the Teamsters Central States Pension Fund, it has long since been able to go to Wall Street for financing.

Give credit for that to effective regulation, particularly in New Jersey, which remains one of the standard-bearers.

Now, it is my turn to issue the warning: Finding common ground between the regulators and the regulated does not mean relaxing or reducing the standards for licensure.

Those standards still mean something, as nearly every major gaming operator and supplier can attest. Licensees have taken great pains, often at the expense of immediate profits, to secure and retain their licenses in multiple states and foreign countries. They recognize that any significant lapse in their efforts to maintain global standards for honesty and integrity could cost them multiple licenses.

That view is not universally shared. The rapid emergence of new entrants in gaming over the past few years has brought forth a different set of ideas that are not effectively grounded in the past. One view is that relaxing the standards for licensure will lead to more entrants in legal gaming, creating more competition and putting a dagger in the heart of illegal gambling.

Not so fast. Yes, the world has changed dramatically over the past half-century, but certain principles should remain timeless. The gaming industry has thrived as regulators have become more understanding and accommodating, but the industry has also thrived by remaining true to the message that legal gaming is operated, owned and financed by individuals who have affirmatively demonstrated their good character, honesty and integrity.

Martin Danziger would surely agree.

Articles by Author: Michael Pollock

Michael Pollock is managing director of Spectrum Gaming Group (www.spectrumgaming.com), which has worked in 40 U.S. states and territories and in 48 countries on six continents. Its clients include 22 U.S. state and territory governments, six national governments and 22 Native American entities. Spectrum serves as executive director for the National Council of Legislators from Gaming States (NCLGS).