Symptoms of Capture: The Nevada Gaming Control Board

How much influence does the Nevada gaming industry have over state regulators? That question has a series of long and complicated answers depending upon the circumstances, but none has been so clear as the reluctance to approve remote funding for sports betting accounts, according to gaming expert Richard Schuetz.

Symptoms of Capture: The Nevada Gaming Control Board

“Who’s your daddy?” —DJ Doug “Greaseman” Tracht

Sports betting is legal in Nevada. It can be consumed in person within the state at a casino sportsbook, at a kiosk, or over the internet by someone located within the state. Nevada adds a particular twist to this model by insisting that a player cannot create and fund an account over the internet. The person needs to enter a casino and handle the transaction in person.

This last step is not necessary for most other states that offer the internet as a delivery system for sports betting. In many of these states, the players can open and fund accounts using their phones, tablets, or computers. Players appreciate this because it is convenient, does not waste time and resources, and leads to more efficient markets. This last point is important because more efficient markets mean the consumers can join more sites and therefore shop more prices. This is a cornerstone to one of the real benefits of markets – and why efficient markets are generally understood to be a public policy goal.

The Nevada Gaming Control Board apparently could care less about things like efficient markets, wasting consumers’ time, and the like, for when one looks at whom the Nevada Gaming Control Board represents, it seems the answer is not the consumer, but rather the big gaming firms. It appears the political contributions the big gaming firms make to the politicians who appoint the regulators and/or the chance of the regulators getting a job with these big gaming firms when they leave the regulatory agency is more important than creating good markets and assisting consumers. It seems to be that simple.

I can set up gaming accounts in several states remotely. I can also open a bank account or a brokerage/investment account virtually. But Nevada will not allow me to open and fund a betting account virtually because, well, their masters do not want it and if the Nevada regulators are becoming known for anything of late, it is serving their masters—and their masters are the big firms, not the consumers. There is simply no confusion in Nevada about the answer when one asks the Gaming Control Board: “Who’s your Daddy?”

If I check into a big Las Vegas hotel I can go to bet at the casino’s book. I can also open up an internet account with this firm and bet through this vehicle, as long as I am in the state. But if I want to open another account with another gaming firm, I need to go there and battle the time and travel expenses of doing so. The big firms like this because they do not want people to have an option on prices or operators, they want people to have to accept the prices on games and events they offer. What they offer may be bad prices and that is cool with the Nevada Gaming Control Board, for they do not seem too anxious to change it.

The Nevada Gaming Control Board appears to believe they exist to help the big firms profit and have little concern about the customers of these facilities. Hell, most of these customers are from out of state anyway. This type of attitude is consistent with regulatory capture.

It is to be understood that the gaming firms are not to be considered at fault here. They are profit-maximizing engines and as they have demonstrated with smoking, they are most willing to do whatever is necessary to maximize profits, even if it involves hastening the health damage and deaths of their customers and employees.

If one is to ask the question as to what types of things turn an agency that once had a great reputation into something less than great, well, here is an example. When the motivation is to benefit the operators at the expense of the customers of a market, the regulatory agency has lost its way.

The good news, I suspect, is the Nevada politicians will continue to get big contributions from these firms, and the regulators will have greased the revolving door to employment with the gaming industry once they leave the agency. In other words, many within the system profit from this type of industry-first decision making—at the expense of the consumer.

That, however, should not be the goal of gaming regulation.

Articles by Author: Richard Schuetz

Richard Schuetz started dealing blackjack for Bill Harrah 47 years ago, and has traveled the world as a casino executive, educator and regulator. He is sincerely appreciative of the help he received from his friends and colleagues throughout the gaming world in developing this article, understanding that any and all errors are his own.