Online and remote gaming
What is the attitude of the courts and regulatory authorities to jurisdiction over foreign operators? Where is gaming activity deemed to take place?
Under Nevada law, both the online gaming operator and the player must be within the state of Nevada or in another jurisdiction that has an interstate agreement with Nevada. At present, Nevada has an agreement with the states of Delaware and New Jersey, allowing players in any one of the three states to play poker on sites licensed in Nevada, New Jersey and Delaware. Pursuant to those agreements, the gaming activity is deemed to take place, for purposes of gross revenue taxes, in the state where the player is located. Nevada has no restrictions on foreign operators partnering with Nevada casinos to obtain licences, but foreign operators may not offer online gaming in Nevada without a licence.
Licensing Taxes Loot boxes Cryptocurrency Foreign and unauthorised gaming sites
To what extent is online and remote gaming regulated in your jurisdiction? Are there any notable rules and restrictions in this regard?
In Nevada, interactive (online) gaming (NRS 463.016425) is currently limited to poker (Nev Gaming Comm’n Reg 5A.140(1)(a)). Involvement in online gaming requires a licence for the proposed activity (NRS 463.750 and Nev Gaming Comm’n Regs 5A.030, 5A.060).
A licensed race book or sports pool may accept remote wagers from within Nevada on sporting events and races provided that the chair of the Nevada Gaming Control Board grants administrative approval for the use of such wagering communications technology, most notably apps for smart phones, tablets and computers (Nev Gaming Comm’n Regs 22.130, 22.140).
The following notable restrictions apply to online and remote gaming activity:
- online gaming is limited to certain casinos and their partners (NRS 463.750(3)-(5)); and
- the use of wagering communications technology, including betting apps is limited to the state of Nevada through the use of geolocation software (Nev Gaming Comm’n Reg 22.140(1)).
Are there any licensing requirements for online and remote gaming activities?
In order to be involved in online gaming – as an operator of an interactive gaming system (Nev Gaming Comm’n Reg 5A.020(8)), a manufacturer of an interactive gaming system (Nev Gaming Comm’n Regs 14.010(20), (21)) or an interactive gaming service provider (Nev Gaming Comm’n Reg 5A.020(4)) – the Nevada Gaming Commission must grant a licence for such activity (NRS 463.750; Nev Gaming Comm’n Regs 5A.030, 5A.060).
A licensed race or sports book may accept remote wagering on sporting events and races (provided that the chairman of the Nevada Gaming Control Board grants administrative approval for the use of such wagering communications technology, most notably apps for smartphones, tablets and computers (Nev Gaming Comm’n Regs.22.130, 22.140)).
Do any taxes or duties apply to online gaming activities?
In addition to annual licence fees of $250,000 for online gaming operators, the gross gaming revenues generated from the operation of interactive gaming are subject to taxation at the same rate as land-based casinos, which is a graduated tax that is assessed monthly (NRS 463.765 and 463.370 and Nev Gaming Comm’n Reg 5A.040 and 5A.170). The top rate for the tax on gross gaming revenue is 6.75% (NRS 463.370).
What is the legal status of and regulatory approach to ‘loot boxes’ or other in-game items in online games?
Nevada has not explicitly addressed ‘loot boxes’ or other in-game items. A ‘gambling game’ is defined, in part, by the Nevada Gaming Control Act as a game played for “money, property, checks, credit or any representative of value” (NRS 463.0152). To constitute ‘gambling’ in Nevada, there must be a ‘wager’ which involves at least two parties who each have a risk of loss and a chance of gain (Gaming Comm’n v GNLV Corp, 108 Nev 456 (1992)). The act distinguishes between a ‘gambling game’ and a ‘contest’ (NRS 463.0152 and 463.01463). One of the key distinguishing characteristics is whether a ‘wager’ exists (Op Nev Att’y Gen No 2006-06 (18 August 2006)). Whether loot boxes involve a ‘wager’ will depend on all of the facts and circumstances and how a game is structured.
What is the legal status of and regulatory approach to the use of cryptocurrency in online games?
Regulation 5.225(9) establishes the means by which deposits to wagering accounts may be made (Nev Gaming Comm’n Reg 5.225(9)). Subsection 9(f) allows deposits by “any other means approved by the chairman” (Id). Nevertheless, Nevada has not yet authorised the use of cryptocurrency or other forms of virtual currency for any gaming activity and is unlikely to do so unless anti-money laundering concerns can be addressed to the satisfaction of the Nevada Gaming Control Board.
What measures are in place to block foreign and other unauthorised gaming sites?
There are no specific measures in place to specifically block foreign or other illegal gaming websites. Those operating such online sites are in violation of federal and state law. The Unlawful Internet Gambling Enforcement Act (31 USC §§ 5361-5367) prohibits US banks and credit card companies from funding illegal internet gambling.