Regulators Need More Power to Help Innovate US Casinos

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Sunday, May 21st, 2017 | Written by Charles Washington

As US casinos struggle to bring new patrons through their doors, it’s becoming more and more apparent that new forms of gaming are needed in order to revitalize the industry. The seismic change relates to changing tastes, and the fact millennials aren’t interested in simply pushing buttons on slot machines on their nights out at these venues. With this vertical no longer seen as the cornerstone of a casino’s business model, many large operators have subsequently started scaling back on the number of these machines, and instead have started exploring new revenue streams, such as the accommodation and entertainments they offer, which have a much higher markup and potential for profitability.

New Forms of Gambling

The need to attract younger players to casinos has led to the development of a number of new forms of gambling, including manufacturers devising skill-based slots that combine the traditional slot experience with an element of skill. eSports and virtual reality-based casino games have also been developed and could potentially bring in the younger crowd that casinos are so desperately seeking to attract. There is only one problem–in most states, the existing regulatory framework does not allow for these games to be added to the casino floor.

Legal Difficulties

For regulators, these new forms of gambling are a conundrum. On the one hand, they involve placing bets and are clearly gambling, but on the other they do not fall under the categories outlined in most existing state gambling laws. In the meantime, state governments have failed to deal with these industry innovations by empowering regulators to expand and modify legal language in order to accommodate the new technologies and games that are currently in the works, and may be developed in the future. This means that any hope of the industry progressing are being stymied by legislative red tape, and can always be blocked by conservative legislators that do not understand or support the gambling industry.

Massachusetts Showing the Way

Massachusetts is one of the few states that has made it possible for the casino industry to grow organically and continue to easily integrate new forms of gambling into its line-up of games. This is because in Massachusetts the definition for gambling was purposely set broad, and the power to apply the law to new games was given squarely to the state’s gambling authority. This setup therefore makes it possible for regulators who clearly understand the industry to determine if and when new technologies should be regulated and made available to players at Massachusetts casinos.

Regulation, although unpopular amongst gambling companies, helps to eliminate uncertainty in the industry and provide a clear guideline for casinos to follow. Arguments about the validity of online gambling, and whether poker is a skill or luck-based game serve only to muddy the waters further, with Stephen Crosby, Chairman of the Massachusetts Gaming Commission, calling for online gambling to be legalized so that regulators could then be allowed to get on and do their jobs. As he explains:

“There have been millions of dollars spent litigating whether DFS is a game of skill or a game of chance, and if it’s some skill is it enough skill to make it avoid the regulations of games of chance. That just makes no sense to me. What difference does it make as a matter of public policy whether you gamble on the throw of dice or the throw of a dart? Does it make any difference that one is skillful and one is pure chance? Should they be regulated any different? I just don’t get that.”

Other Factors

At the GiGse 2017 conference, it became clear that regulation isn’t the only thing holding back the evolution of casino gaming. At a panel, a representative for the New Jersey Division of Gaming Enforcement explained that the agency recently changed regulations to allow for skill-based games to be played at Atlantic City casinos. While the area casinos celebrated the move, none of them have subsequently moved forward to add skill-based slots to their floors. In fact, the only game even remotely close to being skill-based was a free-throw shot contest that the Borgata ran. Unfortunately, it seems that even though the desire to move forward is there, many casinos continue to either lack the resources to invest in new games, or alternatively are slow to respond to industry demands when regulations are actually amended to permit new forms of gambling on casino floors.