Casino regulation is malleable enough to flex with the times; it’s the people behind the scenes that snarl the process up

The beauty of casino regulation is that it is a self-correcting mechanism. When those inevitably unanticipated problems arise, regulators and lawmakers respond. Problems get solved. Holes get plugged once they become apparent.

When the modern casino era began in the 1970s, lawmakers and early regulators knew enough to know that they actually knew very little. That is more than a tongue-twister; it is a stark fact of life in the difficult world of casino regulation. Anticipating the future is difficult in any environment, in any industry. In the fast-moving world of gaming, it is impossible. Therefore, regulations must be sufficiently flexible, and they must be entirely apolitical.

The former goal is relatively easy. In various states, regulators have been granted the authority to make decisions that their predecessors never had to grapple with. They must have the ability to make those decisions quickly and comprehensively.

New Jersey offers some great historic examples. In the 1970s, the Casino Control Act listed all the games that could be played in Atlantic City casinos. If you wanted to add Red Dog or Pai Gow poker, elected officials had to vote on legislative changes. Not only was the process cumbersome and expensive, it did not exactly meet the needs of the marketplace. Lawmakers approved Red Dog after some deliberation. The marketplace also deliberated, and decided that Red Dog was to be treated like a real dog: Try finding a Red Dog table in Atlantic City. The game has been relegated to the proverbial doghouse. In the early 1990s, the New Jersey Legislature knew what it did not know and transferred decision-making to people who were much closer to the action, both literally and figuratively. Regulators were granted the authority to make decisions in areas ranging from approving new games to setting the hours for casinos, to determining how many licenses any one entity could hold.

The system has worked well. Arguably, the case could be made that this enhanced flexibility and the willingness to let regulators make decisions has helped boost the image of gaming regulators around the world. The casino industry is one of the few regulated industries anywhere where regulators are considered essential elements of the process that keeps the public coming back for more.

Knowledge is key

Consider comments made by American Gaming Association President Frank Fahrenkopf to the Las Vegas Sun: “We’re an interesting industry because we want tough regulations,” he said.

He’s right. Regulations and regulators are essential elements in the process. In recent weeks, the Pennsylvania Gaming Control Board has been lambasted for a controversy surrounding a casino licensee who has been charged with perjury for lying to the board during the application process. The board has been criticized for, among other things, suspending that individual’s license and appointing a trustee.

Before criticizing regulators, try walking in their shoes for a bit. The board wants to keep the casino open and maintain the jobs and the revenue being generated. To do otherwise would harm innocent people. The decision to appoint a trustee should be considered prudent and just.

Now, Pennsylvania lawmakers are considering legislation to shift the investigative authority from the board itself to state police. The situation may become political, with different sides pointing fingers. Such rancor is not needed, and is more likely to be counter-productive. When fingers are pointed, it often revolves around personalities and political differences. Honest debate falls by the wayside.

Reasonable people can disagree, and can debate issues openly and without emotion. That is likely to happen in Pennsylvania. The statute may be changed to meet changing needs. That is not a sign of flaws, nor does it indicate weakness. It indicates that elected officials and regulators are responsive.

In other words, the system will work the way it was supposed to. Regulators and lawmakers need to recognize that they do not know it all. Once they know what they do not know, they should know enough to do the right thing. Makes perfect sense to me.