Nevada is pretty much synonymous with gambling and boasts a wide range of regulated betting activities, including games of chance, games of skill like poker, sports and pari-mutuel wagering, fantasy sports, and bingo. The state is home to a flourishing gaming industry that reached a historical high in 2021 when local gambling revenue hit a whopping $13.4 billion, breaking its previous record from 2007.
The Silver State was not always the gambling mecca we have come to know today. State legislature enforced a blanket prohibition on these activities in 1910 only to lift it a couple of decades later as a means of coping with the economic hardships of the Great Depression. The first legal casinos arrived shortly after but the local gambling industry was initially plagued by organized crime and corruption.
Things have changed greatly since then as Nevada currently enforces some of the most stringent gambling regulations in the country. The sector accounts for a decent share of the state’s total tax revenue and is among the primary drivers of the local economy. While the landbased segment is the main contributor revenue-wise, the state also has legal forms of remote gambling like online poker and mobile sports betting.
That being said, lotteries have been illegal in Nevada since the mid-19th century when an article of the state’s constitution outlawed them. Multiple attempts have been made over the years to reintroduce them, but to no avail. Local industry participants argue against lotteries because they might deflect revenue from the casino resorts, while creating very few jobs and tax money in the process.
Laws That Govern Gambling in Nevada
Gambling made its way to the Silver State during the gold rush in the nineteenth century when prospectors brought it to the area. The first attempts to legalize and regulate these activities came in 1864, but proved largely fruitless. Local lawmakers managed to decriminalize some forms of wagering several years later only to proclaim them illegal again shortly after the turn of the twentieth century.
Assembly Bill 98
The Gaming Control Act of 1959
Assembly Bill 98
It was not until the Great Depression that the state finally reconciled with gambling and decided to use it as a booster for the recovery of its struggling economy. Nevada has legislature member Phil Tobin and his Assembly Bill 98 to thank for that. Tobin’s proposal to legalize and license gambling was met with fierce opposition on behalf of the Public Morals Committee.
Despite this, the bill succeeded in passing the Nevada Assembly with 24 votes in favor and 11 against. It then gained the approval of the Senate with a 13 to 3 ratio. Governor Fred Balzar approved the bill and signed it into law in March 1931 to take small-scale gambling activities out of back rooms and dark alleys.
Also known as the Wide Open Gambling Bill, the legislation made it illegal for any individual or corporation to offer games of chance in the state without having obtained a license first. It contained a schedule for the licensing fees and stipulated that only US nationals were eligible for gaming permits, but did not itself regulate gambling.
Local county authorities had the remit to issue licenses and collect the associated fees, instead. Unfortunately, county governments were not very good when it came to enforcement. Their ineptness eventually provoked the wrath of local lawmakers who instructed the Nevada Attorney General to persuade local district attorneys to administer regulations.
Nevada’s lawmakers created the first state casino permit in the mid-1940s, imposing a 1% tax on gross gambling revenue surpassing $3,000. The Nevada Tax Commission was responsible for taxation and permit issuance but had no other regulatory remit whatsoever.
The gambling industry of the Silver State flourished due to the low tax rates and California’s crackdown on illicit casinos which drove many operators to Nevada. This led to the establishment of the Nevada Gaming Control Board in 1955, which acted as an investigative and enforcement branch of the Tax Commission.
The Gaming Control Act of 1959
By the late 1950s it had already become clear the state’s regulatory framework was in dire need of reforms. Then-Governor Grant Sawyer subsequently approved the 1959 Gaming Control Act, a piece of legislation that governs Nevada’s gambling industry to this date. The new law transferred control over the gambling sector from the Tax Commission to the newly established Nevada Gaming Commission. The previously existing Gaming Control Board became an independent entity.
The 1959 law covers various legal forms of gambling, including casino games, off-course pari-mutuel betting, and sports pools. The legislation provides a broad definition of gambling games, describing them as those that use cards, dice, mechanical, electromechanical, or electronic equipment.
Some of the examples that belong to this category include blackjack, faro, roulette, craps, klondike, poker, pai gow, keno, bingo, baccarat, and slot machines. It excludes card games that take place in private homes provided that the person organizing them does not profit from their operation. On-course horse racing is restricted to small-scale events at local fairs.
As for lotteries, these are largely illegal in the Silver State under Article 4 of the Nevada Constitution, which prohibits their operation along with the sale of lottery tickets. Exceptions are only made for charitable raffles conducted by non-profit organizations.
License Types and Licensing Requirements
The gambling legislation in Nevada distinguishes between two types of operating licenses, restricted and non-restricted. State regulators can issue restricted permits to businesses that wish to operate no more than fifteen slot machines and do not offer any other forms of gaming.
Gambling is not the primary source of revenue for such establishments, with bars, gas stations, and taverns being some of the examples. The application process for restricted permits is less costly and intrusive, although the applicants must still undergo extensive criminal record checks.
Non-restricted licenses are granted to larger businesses that seek to operate more than fifteen slot machines on their premises, alongside other products like pooled sports betting and table games. Such enterprises are subject to more thorough investigative procedures. Their owners and senior management members must go through extensive checks.
Application Process and Requirements
Board Investigation and Public Hearings
Gaming Enterprise Districts
Application Process and Requirements
Floor personnel members, like dealers for example, go through a brief registration process that involves paying a nominal fee and submitting a fingerprint card. Applicants who have committed any felonies within the last five years will be turned down. Individuals who occupy more responsible positions face a far more detailed investigation.
The application process is lengthy and cumbersome. Owners and key management members must file separate applications for evaluation. The same goes for the shareholders who own over 5% in privately held gambling companies. Filing a Multi-Jurisdictional Personal History Disclosure Form is necessary when applying for non-restricted licenses.
The first part (forty or so pages) of this document contains personal information about the applicants, including their education, marital status, residence, and previous employment history. The second part involves mostly financial information like the source of funds to be invested into the gambling venue, insolvency disclosures, personnel salaries, etc.
Board Investigation and Public Hearings
The Gaming Control Board undertakes the investigation of the prospective licensees. After this lengthy procedure, there is a public hearing during which the applicants are approved, rejected, or have their documents returned for further examination. In case of approval, the application is forwarded for evaluation to the Nevada Gaming Commission (NGC), which has the final say on licensing matters.
Applications rejected by the Board are also sent to the Commission, but the turned-down candidates must gain unanimous approval from the NGC members to receive a license. Under the Gaming Control Act, licenses are granted only to persons and entities who satisfy the criteria for probity, good standing, and competence.
Gaming Enterprise Districts
In 1997, the state’s legislators introduced amendments to the local gambling law that limited the development of future non-restricted casinos to counties with at least 700,000 residents. Clark County, where Las Vegas is located, is by far the only area that meets this requirement.
The idea behind these changes was to stimulate urban growth in regions with suitable infrastructure that could facilitate such intensive development. Consequently, newly established casinos in this county should be situated within the so-called gaming enterprise districts (GED).
Gambling venues that were not located in these zones when the amendments were enforced are subject to a grandfather clause, whereby they can continue to operate but without increasing the number of slot machines or gaming tables on their premises. Other than that, gambling permits issued by the regulatory bodies of Nevada have no expiration date. Some licenses like those for gaming equipment manufacturing require periodical renewal, though.
Given the considerable size of Nevada’s gambling industry, some readers would perhaps find it shocking that the Silver State lacks full-fledged remote gambling sites. Only online poker is available to local players thanks to the passage of Assembly Bill 258 in 2011. The first poker site launched in the spring of 2013.
Remote poker operators who seek to penetrate the local market must meet several licensure requirements, including having their servers and database systems located within state borders. Authorized remote poker operators must verify the identities of all registered players and ensure they meet the minimum legal age requirements. Registrants must also provide valid Social Security Numbers (SSNs) and cannot set up accounts if their names are on the state list of excluded individuals.
There are no restrictions on the maximum number of remote poker websites in the state. Players must be physically present in Nevada to join the online action. Nevada entered into a compact with Delaware in early 2014, which allowed the two states to share poker liquidity. Other than poker, Nevada residents also have access to mobile sports wagering.
The local gambling legislation contains a “bad actor” clause, which excludes businesses from remote gambling operations in the state if they had not ceased their services in the US after UIGEA (Unlawful Internet Gambling Enforcement Act) came into effect in 2006.
For those unfamiliar with this legislation, it prohibits offshore gaming operators from deliberately accepting payments from US-based players. Local banks and payment processing systems must hinder unauthorized financial transactions to such websites, which is why credit card payments to offshore casinos often fail to go through.
Gambling Regulatory Authorities in Nevada
Two authorities supervise the gambling industry in Nevada. The State Gaming Control Board administers the local gambling laws and regulations. It consists of a chairman and two board members all of whom are selected by the state governor. The GCB comprises several divisions with distinct functions, including audit, law enforcement, technology, and tax and license arms.
The body undertakes the investigations of businesses that seek to gain gaming licenses and makes recommendations to the Nevada Gaming Commission. The GCB additionally deals with casino-related complaints and acts as a mediator in dispute resolution. Applications for charitable gaming events and raffles are also filed with this entity.
The Nevada Gaming Commission came into existence in 1959 after the Gaming Control Act passed into law. The agency acts on recommendations from the GCB and has the final say on approved license applicants. License approval, revocation, and suspension all fall within its remit. It adopts gaming regulations and has the judicial capacity to decide whether licensees should be sanctioned upon transgression. Headed by a governor-approved chairman, the Commission has five members in total with the chair included.
Conclusion
Nevada was the first state with legal casino gaming in the country and as such, has the most developed gambling industry nationwide. More than ninety years have gone by since the passage of the Wide Open Gambling Bill, but the local gaming sector continues to thrive, reporting all-time high revenue of $13.4 billion in 2021.
Reno and Las Vegas, the state’s largest gambling hubs, attract millions of visitors each year and offer them a rich assortment of regulated gambling products. Lotteries and full-scale online casinos are the only unavailable forms of gambling here, but maybe the legislature of the Silver State will amend this in the future.