When gaming regulators leave government, the institutional knowledge they take with them cannot be easily replaced, and may never be replaced.



What happens when gaming regulators leave government? Sometimes they enter a much-deserved retirement. Sometimes they join the private sector. Sometimes they move to a different government agency. Regardless of where they go, here is what they take: institutional knowledge.

Quite a few New Jersey casino regulators have left the state in recent months, and more will be heading to the exits in coming months. In part, this is the natural course of events. Many of these regulators began their careers in the late 1970s, and they are reaching 25 and 30 or more years in public service. State pensions are set up so that professionals who put in at least 25 years of eligible service get health benefits upon retirement in addition to their pensions. It is natural that many departures would be taking place now, since those regulators have invested more than a quarter-century of their lives. Still, for those of us in the private sector who must deal with regulators every day, we recognize that the institutional knowledge they take with them cannot be easily replaced. Sometimes it will never be replaced.

The veteran regulator understands this industry, how it works, what it does - and the role it plays in our communities. For example, New Jersey’s two regulatory agencies have lost veteran attorneys like Steve Ingis, Dennis Kell, Rick McDonough and many, many other professionals too numerous to mention here.

On one level the state can claim that it is saving money when these professionals retire. Some may not be replaced, and if they are replaced their replacements will almost certainly earn less money. But this is about more than money. These veterans take away much valued experience and judgment. None of these regulators ever lost sight of their true mission: protecting the public interest. No one ever asked them to. That is as it should be, and that is the model that regulators everywhere must abide by. Regulators, after all, are not the Chamber of Commerce. But when they do their jobs well they can be more effective than any chamber in helping their communities attract investment and create jobs.

State governments across the land are experiencing unprecedented fiscal problems, and they have instituted a variety of short-term solutions ranging from salary caps to furloughs. Many of New Jersey’s regulators have been forced to endure furloughs in recent weeks. I do not claim that regulators should be immune from the pressures that other state workers must face. Pain must be shared. But an argument can be made that casino regulators deserve special recognition as, at least in some jurisdictions, their salaries are paid for out of special assessments on licensees and applicants. More important, however, is that regulators play a critical role in periods when gaming communities need capital investment.

Effective regulation equates with confidence, and confidence is a necessary requirement for investors, particularly in periods when affordable capital is scarce. Right now, New Jersey regulators are concerned that legislation may be introduced to consolidate the Casino Control Commission and Division of Gaming Enforcement into one agency, and that is only heightening some individual anxieties. I do not - and cannot, because of my ongoing role as an attorney who deals with both agencies - take a position on whether consolidation is a good idea or not. I am confident, however, that the state will recognize that regardless of the course it pursues it will not sacrifice the integrity of the process.

I just ask them to take one other issue into account: Please recognize that periods of uncertainty could prompt more veteran regulators to consider retirement. We can’t afford to lose too much institutional knowledge at one time. The public interest would clearly suffer as a result.