During the early 1950s considerable negative attention was cast upon the casino industry as a result of the national Kefauver Committee hearings on organized crime. The state responded with regulatory reforms. Legislation in 1955 established a specialized three-member full-time Gaming Control Board, which was administratively located with the Tax Commission. In 1959 the Tax Commission was eliminated from the state’s casino regulatory picture. A five-member Nevada Gaming Commission was created. This part-time group serves as the final voice for the state on gaming matters. In a sense it is the “supreme court” for gaming.
As a result of these changes, Nevada now has a two-tier structure for regulating gambling. The Gaming Control Board acts essentially like a policeman and a tax collector for the casino industry; the Nevada Gaming Commission makes final decisions on licensing casinos and formulating regulations as well as handling disputes that cannot be resolved by actions of the Gaming Control Board.
The three board members are appointed by the governor for four-year terms. One member is designated as chair by the governor. He or she must have five years of experience in public or private administration. A second member must be a certified public accountant or have expertise in finance or economics. The remaining member must have law enforcement experience. Board members may not be engaged in any partisan political activity during their term of service. They may not have any financial ties to casinos, nor may they be employed by any casino for one year following their board service.
The board oversees the work of a staff of over 400 individuals, who are organized into several divisions. The investigations division checks into the backgrounds of persons who wish to have gambling licenses. The cost of this background check process is paid by the license applicant. An enforcement division works in the casinos to ensure that all the games are honest and that all gaming laws and regulations are being obeyed. An audit division checks accounting procedures in the casinos and makes sure that all flows of money are accurately recorded and reported for purposes of taxation. A tax, license, and administration division collects gambling taxes and publishes reports on casino activity in the state. There is also a corporate securities division that monitors the financial condition of casinos that are owned by publicly traded corporations. An electronic laboratory investigates all gaming devices to ensure their integrity.
The five members of the Nevada Gaming Commission are also appointed by the governor for four-year terms. They, too, must not have an interest in any casinos, nor may they be involved in partisan politics. The commission has no staff. It gives final passage to rules and regulations and makes final decisions regarding disciplinary action against any gaming interest – action that can also include revocation of a license. In 1969, the legislature created a seven-member Gaming Policy Board headed by the governor. The board was charged with making recommendations to the legislature for reforms in the gaming law. It has met only occasionally over the past thirty years.
Although the state’s gaming regulatory structure is considered one of the finest arrangements for regulating gaming in the world, local governments (counties or cities) are still involved in the process. They must also license casinos, and they collect fees separately from the state fees and taxes. The state gaming tax has risen to 6.25 percent of the gross gaming win, and casinos must also pay a variety of fees based upon the number of tables and machines in the facility.
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