Nevada legalised casino gambling in 1931 when Governor Fred Balzar signed Assembly Bill 98 into law. The Nevada Legislature voted to legalise gambling to help lift Nevada out from under the impact of the Great Depression, and undid a ban on casino gambling in the state that had been in place since 1909. Gambling has been legal in Nevada for over 85 years.
The definition of 'gambling game' in Nevada is 'any game played with cards, dice, equipment or any mechanical, electromechanical or electronic device or machine for money, property, checks, credit or any representative of value'.2
The definition excludes 'games played with cards in private homes or residences in which no person makes money for operating the game, except as a player, or games operated by charitable or educational organisations which are approved' by the Nevada Gaming Control Board (the Board).3 Under Nevada law, a 'wager' is 'a sum of money or representative of value that is risked on an occurrence for which the outcome is uncertain'.4
In 1949, Nevada began allowing wagering on horse racing and professional sports at 'turf clubs', which were independent from casinos. In 1975, the Nevada Legislature authorised race and sports wagering to be offered in Nevada casinos. Nevada sportsbooks offer a variety of wagering options for patrons. Patrons can place parlay wagers, wagers on point spreads and pari-mutuel wagers (participants wagering with each other).5 Many Nevada sportsbooks offer a mobile wagering application that allows people to place wagers with licensed Nevada race and sportsbooks without the need of going to a betting window in a casino. The registration process for a mobile wagering account must occur in a Nevada race and sportsbook.6 Currently, any wagers made via the mobile sports wagering application must be initiated from within Nevada.7
In 2011, the Nevada Gaming Commission (the Commission; collectively, the Board and Commission will be referred to as the Nevada Gaming Authorities) adopted regulations for interactive (online) gaming in Nevada. By statute, online gaming in Nevada is limited to poker. The first online poker website went live in Nevada in April 2013. In an effort to increase liquidity for the online poker websites in Nevada, the governors of Nevada and Delaware signed a compact in February 2014 to establish a legal framework for interstate poker between players in both states, and the states began sharing online poker players in March 2015.
During the 2015 Nevada legislative session, Chapter 463 of the Nevada Revised Statutes (the Nevada Act) was amended to allow games of skill and hybrid games of skill and chance to be available on casino floors in Nevada. A 'game of skill' is defined as 'a game in which the skill of the player, rather than chance, is the dominant factor in affecting the outcome of the game as determined over a period of continuous play'.8 A 'hybrid game' is defined as a 'game in which a combination of the skill of the player and chance affects the outcome of the game as determined over a period of continuous play'.9
In October 2015, the Board issued a notice stating its position that pay-to-play daily fantasy sports (DFS) met the definition of a gambling game under Nevada law and, therefore, anyone offering DFS in Nevada must possess a licence to operate a sports pool issued by the Commission. The Board defined DFS as a gambling game but did not take a position on traditional season-long fantasy sports.
Section 24 of the Nevada Constitution prohibits the state of Nevada from authorising a lottery. Nevada is one of five states in the United States that does not have a state-affiliated lottery. The other four states are Alabama, Alaska, Hawaii and Utah. In Nevada, a lottery is defined as 'any scheme for the disposal or distribution of property, by chance, among persons who have paid or promised to pay any valuable consideration for the chance of obtaining that property'.10 Nevada allows charitable raffles to be offered by 'bona fide charitable, civic, educational, fraternal, patriotic, political, religious or veterans organization[s] that [are] not operated for profit' to conduct a lottery, raffle or gift enterprise for the benefit of charitable or non-profit activities in the state.11ii Gambling policy
Today, Nevada is home to one of the world's most recognisable skylines – the Las Vegas Strip. The gaming industry is vitally important to the state's economy and the welfare of its residents.12 As such, the gaming industry is heavily regulated at the state level by the Nevada Gaming Authorities to ensure its integrity and longevity.13 Nevada recognises the importance of strict regulation in order to maintain the industry's significance, stating that:
[t]he continued growth and success of gaming is dependent upon public confidence and trust that licensed gaming . . . [is] conducted honestly and competitively, that [licensed gaming establishments] do not unduly impact the quality of life enjoyed by residents of the surrounding neighborhoods, that the rights of the creditors of licensees are protected and that gaming is free from criminal and corruptive elements.14
To Nevadans, the presence of the gaming industry is a part of daily life. A limited number of slot machines can be found on the bar tops of neighbourhood pubs and taverns and in grocery stores, convenience stores and even airports. Casinos are commonplace and offer more than just table games and slot machines. Casinos are home to restaurants, theatres, bowling alleys, convention spaces, spas and salons.iii State control and private enterprise
Unlike other states with state-run lotteries, Nevada does not own any part of the gaming industry. Nevada's gaming industry relies solely on private and public ownership and investment in the operation of gaming establishments. While there is no rule prohibiting the same owner from having an interest in multiple gaming establishments, the Nevada Act and the regulations promulgated by the Commission pursuant to the Nevada Act (the Regulations) are designed to encourage competition. If the same entity or individual wishes to own multiple casinos in Nevada, the Nevada Gaming Authorities consider a number of factors, such as whether such licensing will have an adverse impact upon the public health, safety, morals, good order and the general welfare of the public.15iv Territorial issues
As noted above, gaming in Nevada is regulated at the state level by the Board and Commission. In addition, city and county governments also regulate gaming in Nevada. In general, the Board and Commission handle detailed background investigations for casino applicants, while local agencies primarily focus on the regulation and control of liquor sales and issuing ancillary business licences for the operation of various businesses located in a casino. In Las Vegas, for instance, casinos located on the Las Vegas Strip need to receive licences from the Clark County Department of Business License, and casinos located in downtown Las Vegas need to obtain licences from the City of Las Vegas Business License Department.v Offshore gambling
The Board and Commission have the ability to license gaming operators in the state of Nevada and individuals affiliated with such companies. Those that operate gaming contrary to the laws of the state are prosecuted by the Nevada Attorney General or the appropriate federal authorities.
There may be regulatory consequences for companies that have operated illegally in the past and then apply for licensure in Nevada. A few years ago, the Board and Commission indicated their likely approach when companies that have operated offshore gambling businesses in the United States come before them for licensing. In 2011, the Nevada Gaming Authorities addressed Caesars Entertainment's application to approve its association with 888 Holdings, a company that had offered online poker in the United States before 2006. When the Unlawful Internet Gambling Enforcement Act (UIGEA) was enacted in 2006, 888 Holdings pulled its operations from the United States. By ultimately approving Caesars' business dealings with 888 Holdings, the Board and Commission indicated a general willingness to allow companies that ceased operations in 2006 upon the passing of UIGEA to be able to operate in Nevada going forward if they came forward for licensing.
Legal and regulatory frameworki Legislation and jurisprudence
The Nevada Act and the Regulations provide the primary legal framework for the regulation of gaming in Nevada. The laws, regulations and supervisory procedures of the Nevada Gaming Authorities are based upon declarations of public policy. These public policy concerns include, among other things:
- preventing unsavoury or unsuitable persons from being directly or indirectly involved with gaming at any time or in any capacity;
- establishing and maintaining responsible accounting practices and procedures;
- maintaining effective controls over the financial practices of licensees;
- preventing cheating and fraudulent practices; and
- providing a source of state and local revenue through taxation and licensing fees.16
The Nevada Act provides for a two-tier state regulatory system. The Board is a full-time regulatory agency consisting of two members and a chairperson, all appointed by the governor. The Board employs staff allocated among divisions, which perform various functions related to the regulation of gaming, including investigations related to applications for licences and findings of suitability. The Board makes recommendations to the Commission as to how licence applications should be handled. The Commission is a part-time body consisting of four members and a chairperson, all of whom are also appointed by the governor. The Commission makes the final determination on licence applications.iii Remote and land-based gambling
The Nevada Act and Regulations provide for the Board to license and regulate both online and land-based gambling. On 22 December 2011, the Commission adopted regulations for the establishment of a regulatory framework for the state regulation of internet poker pursuant to Assembly Bill 258 enacted by the Nevada Legislature. These regulations address the licensure of operators, service providers and manufacturers of 'interactive gaming systems', which are currently limited to internet poker. The core components of an interactive gaming system must be located in the state of Nevada except as otherwise permitted by the Board.17iv Land-based gambling
While licensed gambling is legal in Nevada, there are some restrictions as to where a gaming establishment may be located. In 1997, the Nevada Legislature enacted laws to regulate the location of future casinos in counties with a population of 700,000 or more.18 As a result, the laws currently only apply to Clark County, where the Las Vegas Strip is located. One of the purposes of restricting the location of future casinos in Clark County is to concentrate:
the next generation of large gaming establishments along the Las Vegas Strip . . . [to] promote responsible use of financial and natural resources by encouraging urban development in those areas where the transportation systems and infrastructure are best suited for such intensive development.19
New non-restricted gaming establishments20 in Clark County must be located in a gaming enterprise district (GED).21 Clark County publishes a map that indicates where the GEDs are located. Gaming establishments that were not located within a GED when the law was enacted in 1997 are grandfathered, but 'the establishment may not increase the number of games or slot machines operated at the establishment beyond the number of games or slot machines authorized for such a classification of establishment by local ordinance on December 31, 1996'.22 The Commission may approve the placement of a gaming establishment outside of a GED if the petitioner demonstrates that certain enumerated development criteria, such as the enhancement of the local economy and the welfare of the community, have been met.23v Remote gambling
The Nevada Act and Regulations authorise casinos to offer mobile gaming to their patrons. For a patron to participate in mobile gaming, he or she needs to go through an in-person registration process at the casino. Once authorised, the patron is provided a device that allows him or her to gamble remotely on the casino property. The mobile devices should not work outside the property. Additionally, Nevada's race and sportsbooks allow customers to place bets remotely on games and approved events on their mobile sports betting apps (provided the wagers are made in Nevada). Currently there are also two companies licensed to conduct interactive gaming (poker only) in Nevada. While one operates only within Nevada, the other pools customers in Nevada, Delaware and New Jersey pursuant to a Multi-State Internet Gaming Agreement. Delaware and Nevada entered into this shared liquidity agreement in 2014 and New Jersey was added to the agreement in 2017.vi Ancillary matters
The manufacture, sale or distribution of gaming devices without a licence is illegal in Nevada.24 A 'gaming device' is any object used remotely or directly in connection with gaming, or any game that affects the result of a wager by determining win or loss and that does not otherwise constitute associated equipment.25
If a particular device is not a gaming device, it may be considered associated equipment in Nevada. Associated equipment is any equipment used in connection with gaming or mobile gaming, which connects to progressive slot machines, equipment that affects the proper reporting of gross revenue, computerised systems of betting at a race book or sports pool, computerised systems for monitoring slot machines and devices for weighing or counting money.26 Any manufacturer or distributor of associated equipment for use in Nevada must register with the Commission pursuant to NRS 463.665.27 The Commission has the discretion to require any manufacturer or distributor of associated equipment to file an application for a finding of suitability.28
Additionally, Nevada registers certain service providers. A service provider includes any person who:
- acts on behalf of another licensed person who conducts non-restricted gaming operations, and who assists, manages, administers or controls wagers or games, or maintains or operates the software or hardware of games on behalf of such a licensed person, and is authorised to share in the revenue from games without being licensed to conduct gaming at an establishment;
- is an interactive gaming service provider; or
- is a cash access and wagering instrument service provider.29
When the Commission issues a licence to a gaming operator, certain individuals affiliated with the casino licensee and the casino licensee's holding companies need to file applications and be investigated and found suitable. Generally, the Commission will impose a condition on a casino's licence requiring the general manager of the casino to file an application as a key employee of the casino.
For privately held businesses, the licensing requirements vary depending on the type of entity involved. No person may acquire a 5 per cent or greater interest in a privately held licensee or a holding company, nor become a controlling30 affiliate of such licensee or holding company, nor become a holding company of such licensee or holding company, without first obtaining the prior approval of the Commission.31 The Commission may require any or all of a privately held business entity's lenders, holders of evidence of indebtedness, underwriters, key executives, agents or employees, as applicable, to be licensed or found suitable.32 For a corporate licensee, in addition to owners of 5 per cent or more of the equity securities issued by the corporate licensee, all officers and directors of a privately held corporation that holds or applies for a state gaming licence must be licensed individually.33 Owners under 5 per cent must register with the Board.
Publicly traded corporations (PTCs) are treated differently under Nevada law than privately held business entities. The Nevada gaming statutes that deal with PTCs focus on voting control rather than on equity ownership. Each officer, director and employee of a PTC that the Commission determines is or is to become actively and directly engaged in the administration or supervision of, or is to have any other significant involvement with, the gaming activities of the corporation or any of its affiliated or intermediary companies must be found suitable and may be required to be licensed by the Commission.34 A holder of more than 5 per cent of the voting securities of a PTC registered with the Commission must notify the Commission within 10 days after filing notice with the United States Securities and Exchange Commission (SEC).35 A holder of more than 10 per cent of the voting securities of a PTC must file an application with the Commission for a finding of suitability within 30 days after the chairman of the Board mails written notice to the owner.36 Qualified institutional investors can hold up to 25 per cent of the voting securities of a PTC, but they need to obtain a waiver from the Commission in order to do so.37
In March 2016, the Commission adopted Regulation 15C, which created a unique licensing framework for private investment companies. Regulation 15C defines a private investment company as:
any privately held legal entity except a natural person which holds or applies for a license, or owns, directly or indirectly, a beneficial interest in any corporation, firm, partnership, limited partnership, limited-liability company, trust or other form of business organization which holds or applies for a license, and which has the following characteristics: (a) 100% of the economic securities of the company are held, directly or indirectly, by (i) one or more private investment funds that are managed by an investment manager or managers, which investment manager or managers collectively have more than one billion dollars in assets under management or (ii) one or more institutional investors as defined in Regulation 16.010(14) that each has assets of more than one billion dollars; (b) 100% of the voting securities of the company are held by one or more legal entities that is controlled by one or more controlling persons or key executives of the investment managers or institutional investors[.]
A private investment company is regulated similar to a PTC but does not have the burdensome SEC reporting obligations and can maintain the confidentiality of its proprietary financial information.
In January 2019, the Commission adopted amendments to the Regulations pertaining to race books and sports pools. The adopted amendments provide, in part, clarification on permitted wagers. For example, licensed race books and sports pools may accept wagers on professional sport or athletic events sanctioned by a governing body, Olympic sporting or athletic events sanctioned by the International Olympic Committee, collegiate sporting or athletic events and virtual events.38 Wagers may be accepted on other events upon the Chair's approval, so long as the other event has been sanctioned by an organisation included on the list of sanctioning organisations maintained by the Board, or the other event is listed on the list of pre-approved other events.39