Las Vegas Sun

February 11, 2012

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Gaming Control Board must balance cuts with its reputation, oversight mission

By Liz Benston

Wednesday, March 10, 2010 | 2 a.m.

Sun coverage

The recession has slashed casino profits and taxes, and it has made the job of regulating Nevada’s casino industry tougher.

Many troubled gaming operations simply transfer to new owners rather than go out of business, and manufacturers continue to churn out new products for a global marketplace of increasing numbers of casinos.

And gamblers, also feeling the pressure of the recession, are more suspicious of whether casinos are trying to cheat them. So they are more likely to cry foul to the Gaming Control Board.

So when it came time to cut the board’s budget as part of the effort to cover the state’s deficit, legislators said they worried about how such cuts would affect Nevada’s reputation as the “gold standard” for casino regulation.

The result was that the board took a relatively small cut in its annual budget. It is being forced to trim $1 million, or about 2.3 percent, of what had been a $44 million operating budget. It is losing seven staff positions.

The problem is that the important regulatory agency — one of few “essential services” built into state law — was understaffed from budget cuts in the previous legislative session, its advocates say.

It lost 18 positions in the last round of budget cuts, and its workload continues to grow.

The Control Board, after all, is responsible for ensuring that Nevada has a reputation as a place where casinos are forced to play by the rules.

The agency not only collects the gaming taxes that fund about a third of Nevada’s budget, but it is also responsible for investigating and auditing the companies that pay them.

For gamblers, the most direct effect of the cuts is likely to be slower handling of complaints about casinos.

Nevada’s patron dispute process allows casino customers to dispute any amount of gambling winnings or losses with a Control Board agent, who collects information presented later at a hearing that resembles a private court proceeding. Casinos are required to proactively notify the board in disputes involving at least $500.

Enforcement agents respond to such complaints, in addition to walking through casinos for spot checks and conducting full-blown investigations involving fraud or other gaming violations.

Fewer enforcement agents means longer wait times for dissatisfied gamblers. Rural Nevada, where enforcement coverage is thin, will feel the brunt of those cuts, board Chairman Dennis Neilander says.

The budget reductions will be concentrated in the agency’s departments that generate no fees for the state, such as license investigations and the technology division, which tests slot machines and other gambling games for fairness. This means fewer agents to do spot checks of casinos and initiate investigations of fraud and other noncompliance problems.

The cuts also will affect the audit division, which conducts detailed reviews of gaming operators’ books about once every 2 1/2 years. The board hopes to maintain that average despite the cuts, which are expected to lengthen the time between audits of larger, more complex operations.

Things could have been worse for the agency, however.

Legislators backed off plans to slash 24 more positions because they realized that fewer people conducting license investigations and reviewing gambling games would mean less money for the state in fees collected to perform those services.

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