Regulators cautious on systems-based slots regulations

By Richard N. Velotta (contact)

Fri, Sep 11, 2009 (3 a.m.)

Gaming regulators are taking a cautious approach toward amending regulations on systems-based slot machines.

The state Gaming Control Board didn’t set a date Sept. 3 for approving amendments discussed by the board and attorneys for groups that would be affected by the proposed regulations.

Monitoring computerized game systems is one of the Control Board’s biggest challenges because innovations in technology are occurring faster than regulators can keep up with them.

Although several minor concerns were raised by Mark Lerner, general counsel for Las Vegas-based Bally Technologies, and Dan Reaser, who represented the Association of Gaming Equipment Manufacturers, the key issue involves how the state would monitor independent contractors who work on a project-by-project basis with equipment manufacturers.

In the draft, the regulation says independent contractors would have to be registered — but not licensed — by the board.

But the lawyers suggested that each licensed company take responsibility for the computer codes that are submitted to the Control Board’s gaming lab staff. They said it would be too onerous to get every contracted programmer to submit registration information.

Travis Foley, chief of the gaming lab, endorsed the registration policy, noting that the lab is suggesting a two-page form. Because independent contractors would not be licensed, there would be no background investigations.

Lab officials want to keep records on programmers because they may be writing computer codes for crucial “control program” software — the part of the computer language that determines wins and losses on systems-based slots. The lab wants to monitor those programmers to be able to identify anyone who writes code that could be compromised.

The attorneys argued that many independent contractors are in other countries. They said that if the manufacturers are held accountable for what is submitted to the labs they would carefully scrutinize the codes to avoid jeopardizing their licenses.

Control Board Chairman Dennis Neilander and member Mark Lipparelli concurred that ordering registration of independent contractors could be too unwieldy. But they also wanted to consider Foley’s concerns.

Regulators are carefully weighing the issue because their most important mission is to preserve the public trust and security of gaming devices in the state.

“It really strikes at the heart of why we’re sitting here,” Neilander said.

Lerner said his company is aware of the importance of maintaining the integrity of the games on behalf of the state, but he thinks holding the company accountable would make them even more secure.

He said Bally technicians carefully monitor the work of independent contractors because they have a vested interest in what they produce.

Bally’s customers also have a vested interest and he said his customers’ slot managers are the first to get on the phone when they think a machine or a slot system is holding too much or underpaying.

Neilander said that by debating the proposed regulations in the Control Board meeting, the Nevada Gaming Commission, which would make the final decision, will be able to evaluate the issues and could raise other questions. By not recommending a date for approval, Neilander said he hopes to give all parties plenty of time to review what’s on the table.