During the last year, the State Gaming Control Board of Nevada has taken several significant steps to address the regulatory challenges that relate to the technology advances in the gaming industry. New gaming technologies, such as systems-based and wireless applications, and the convergence of associated equipment with gaming devices, create an increasing reliance on digital solutions on the casino floor and in the resort.
Preparing for the future now, by fostering an environment where growth and innovation are encouraged, while upholding the regulatory mission of the state of Nevada, is the challenge at hand. The central issue: How do we manage these technologies through organizational structures, statutes, and regulations that take (in some cases) years to update or change?
Examining the Situation
In March 2005, the Gaming Control Board and its staff began the process of analyzing the board’s current organizational structure as it relates to approving new technology. The goals were simple enough.
First, the Gaming Control Board must be able to address the next ten to 15 years of technological growth in Nevada’s casinos. Second, the board should maintain Nevada’s competitive status through technological policy leadership. Third, the board must recognize that stability is one of the cornerstones of Nevada’s leadership position. Finally, the board must execute a tactical plan to steering the state agency toward an infrastructure that allows for changing technology.
Our first step: meeting with licensed manufacturers and operators to understand some of the challenges and concerns that these entities face. These meetings clarified that if the Gaming Control Board wanted to accomplish these goals, several internal and external changes were necessary.
First, an organizational structure, in place since the 1970s, needs to be updated to address a changing industry. Second, additional staffing and resources to meet the increasing and evolving technology submissions would be required. Finally, revising and updating the board’s policy development, associated equipment, and device approval processes needs to begin.
Reorganizing, Funding, and the Future
The task before the board was, and is not, an easy one. However, the first significant step was taken in February of 2006 by creating the new technology division.
The board consolidated all technology functions within one division. The new division now includes the board’s gaming device and systems test lab, the board’s information technology audit staff which approves associated equipment, and the board’s internal information technology staff which supports internal information technology operations.
This reorganization allowed for an alignment of device and associated equipment approval processes. It also allowed the board to share technical resources for both regulatory and operational projects.
In June 2006, the Nevada Legislature’s Interim Finance Committee approved an additional $2 million dollars of annual fee-based funding. The funding will allow the board to double the technology division’s staff and relocate the division’s testing laboratory and offices to be within close proximity to gaming manufacturers in Las Vegas. This further solidifies the board’s and the legislature’s determination that device and system testing are key components to the function of the Gaming Control Board.
Technology Division’s Scope of Responsibilities
While none of these listed responsibilities are new, it is the combination of these functions that offer the most benefit to the regulatory process and the industry. In the past, many of the board’s approval processes were performed in a sequential fashion, elongating approval times.
Now, accounting and technical analyses are performed on “risk” devices and systems with a defined parallel testing process. In addition, many testing procedures and checklists are provided for guidance to both manufacturers and operators. The renewed effort to publish or communicate approval processes and requirements is key to streamlining approvals.
The playing field is level for all manufacturers, operators, and interested parties who now have access to consistent information sets. Please note, this information is posted to the Gaming Control Board’s website for access (www.gaming.nv.gov).
The gaming device approval processes are sound and clearly defined in Nevada Gaming Commission Regulation 14. The technology division continues to meet or exceed industry timing expectations for modification approvals for gaming devices. Moreover, the division will examine and implement best practices used for gaming device approvals and apply them to all approvals requested of the technology division. Finally, the division is also moving as many transactions as possible to electronic mediums, such as e-mail and online forms.
To summarize, the technology division’s responsibilities now include: conceptual gaming device approvals; new gaming device approvals; modifications to gaming device approvals; new associated equipment approvals; modifications to associated equipment approvals; field verification of gaming device configurations; field verification of gaming device EPROM; Nevada Gaming Commission Regulation 14 governance, including such items as the suitability of gaming device themes, patron dispute resolutions, and cashless wagering instrument approvals.
Finally, all internal hardware and software installation, development, and support for all Gaming Control Board employees and six offices throughout the state of Nevada are directed through the technology division.
Regulatory and Operational Change for the Future
Within the scope of the Nevada Gaming Commission Regulations, there are several areas where the technology division is focusing its efforts due to changing technology. For example, system based games bring an entirely new set of regulatory challenges in terms of the people that will have access to traditionally firmware coded applications.
As gaming devices and associated equipment continue to merge, our responsibility to understand the software interfaces and the networks that host these devices and systems will increase. Another example will be the challenges associated with the field verification process for wireless applications.
In addition to the regulatory scope, the technology division has another important “change agent” task. The board is currently updating all internal applications that drive much of the workflow and procedures. To that end, the information technology staff, working in conjunction with all board divisions, are evaluating and rewriting the board’s existing business applications. The application upgrade from DEC COBOL programs to Oracle and Oracle forms application modules will take place over the next four years.
Building the Foundation for the Future
Funding acquisition, agency reorganization, regulatory scope examination, and the “porting” of internal business applications are now in place to begin the process of revitalizing the technology division over the next two years. With any significant organizational change, especially within a state agency, the path may be bumpy and full of surprises.
Clearly, there is much more work to be done. Most importantly, the board is in the process of hiring technical staff to help meet the new requirements and the increased volume of approval requests from the industry. We are also in the process of obtaining new facilities in Las Vegas, which should be completed during the first quarter of 2007.
Technology Policy in a Regulatory Environment
The board, in conjunction with the technology division, is evaluating the process by which we adopt and set policy as it relates to technology. New technology on the gaming floor drives new and old policy matters that need to be considered.
In addition to the case by case items that are vetted on a daily basis, the technology division is exploring questions such as: How can we maintain a stable and safe environment while encouraging innovation and growth through technological policy? Are we setting technology policy at the right pace? What is the best process for setting these policies?
These questions are not easily answered and are to be carefully considered. However, they are necessary components of the board’s ability and responsibility to its regulatory
mission and licensees.
Today
In early October of 2005, board member Mark Clayton and I discussed regulatory issues with members of American Gaming Equipment Manufacturers or AGEM. The main topic we presented to AGEM was the need for major shifts in the board’s handling of associated equipment approvals.
The board understood at that time that while addressing certain approval processes was good, the real challenge was to revamp the organization to better deal with volume, complexity, and time to market issues—for all technologies on the gaming floor.
This October, I had the opportunity to update AGEM to discuss some of the changes that are detailed in this article. No doubt, we have come a long way. With the continued support of visionary board members, the industry, and Gaming Control Board staff, a foundation for dealing with changing technology has been laid for the next ten years.
Current Chief of the Technology Division at the State Gaming Control Board, Bertolone has held management positions at Invensys PLC, Cisco Systems, and VeriFone Inc. He started his career as a staff consultant with Accenture.
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