Nevada became the first state in the US to award online poker licences in June, but months of hard work still lie ahead before the state’s poker players can finally try their luck online. By Richard Weston.
It has been a long time coming but finally, on 21 June, the first online gambling licences anywhere in the US were issued. The historic moment had been highly anticipated ever since Nevada passed egaming legislation in 2011, and now the first legal bet could be just a few months away.
Gaming machine manufacturers and suppliers Bally Technologies and International Game Technology (IGT) were the first to receive the long awaited online poker licences from the Nevada Gaming Commission, and must now navigate just a few more obstacles before facilitating real-money bets in partnership with licensed operators.
“This is a new era for interactive gaming, and we are excited to take our B2B customers to the next level of wager-based play,” says Robert Melendres, IGT’s executive vice president of emerging business. “We fully expect to go through the usual channels to have the technology for our platform approved by the state, as part of routine testing.”
Indeed, the champagne will have to remain on ice for a while yet. The quickest and easiest of these hurdles to overcome is to pay the licence fee. The payment – currently set at US$500,000 for the first year and $250,000 a year for renewal, is due by the time a licence holder goes live.
Standing in between the new online licence holders and the awaiting online poker players however, is a stringent series of certification tests. On the same day as licences were awarded, the fi rst regulated independent testing laboratories (ITLs) were approved by Nevada’s Gaming Control Board (GCB) – BMM North America and Gaming Laboratories International.
As of 1 July, ITLs now perform the inspection and certification services of gaming technology instead of the GCB’s technology division, as stipulated in AB 279, which was passed in last year’s legislative session. Bally and IGT must now choose one of the labs to certify their products. The extensive nature of the testing – which will leave no stone unturned – is expected to last four to six months.
Although testing of the gaming systems has been outsourced to the ITLs, GCB chairman Mark Lipparelli says the Board will continually verify, check and review the procedures. “We’ve set in place a full set of technological standards the labs must meet as part of the process,” he says. “We will constantly ensure the tests are being completed to our requirements. The state is the final authority and we grant the final approval.”
The main responsibilities of the ITLs include inspecting a licence holder’s games, gaming devices, online gaming systems, equipment and cashless wagering system. To give an idea of just how thorough the checks are, testing on a single game can last a whole month. In any situation where the state gaming regulations appear open to some interpretation, the labs will consult with the GCB’s technology division. The labs will record the results of all their tests and submit them in a report to the GCB at the end of the certification process.
There are of course a wide range of technical standards for the games and equipment that the labs will check for. The geographic location verification software will have to ensure that the gaming system does not accept any bets from a player outside of Nevada state borders. This is critical as any bet made from another state or country would be illegal under UIGEA. The control program software affecting the outcome of a bet, such as random game elements or number generation, will also be thoroughly tested.
It doesn’t stop there. Other tests include player authentication processes, authorisation of player system software, anti-fraud measures regarding a player’s age and identity, critical hardware components and the cashless wagering system. The accurate and detailed logging of information, as well as data encryption over public networks, will also be crucial in order to receive certification from the labs and, subsequently, the GCB’s final sign-off.
Anthony Cabot, gaming law practice group leader at Lewis and Roca, warns that companies who have been approved in other jurisdictions will find Nevada’s technical requirements a different proposition altogether: “There’s about a 15% gap between the standards of some major jurisdictions and Nevada standards,” he says.
“One example is that Nevada is far more concerned with geo-location verification software than foreign jurisdictions, so the Gaming Commission has made technical standards related to this. It’s a real process, something most companies will be familiar with, but it’s not a formality. Companies building from the ground up may find it more challenging.”
Going online for the first time
Nevada’s Gaming Commission has set no go-live date for the online poker market. Instead it will be first-come-first-served, which means if Bally and IGT are the first to be certified by the labs, they will be well positioned to be prominent B2B providers.
As Melendres explains, Nevada is one of the main gaming regulators in the US, so receiving an online poker licence could be an important step towards convincing Congress of the merits of federal regulation: “Nevada is such a key market in US gaming. We certainly recognise how the Gaming Commission may potentially play an important role in the future for wager-based interactive gaming elsewhere in the US.”
The other licence applicants yet to have a hearing may fear falling behind in the race for market share, and while most will now have been told by the GCB when they can expect to be on the agenda, some still have not and must simply wait for the phone to ring. Software providers who have never operated in Nevada before can expect to wait a year for a licence hearing while the GCB performs its investigations.
“But if you’ve been licenced before in Nevada, the likelihood is that you’re going to get licensed again,” says Cabot.
While companies are waiting their turn, many more will submit their gaming systems for testing, so they can be certified by the time of their licence hearings. Now that the GCB has set the technical standards and delegated the systems checks to the labs as of 1 July, Cabot adds that “other companies are not restricted from going forward and getting systems tested, they will begin submitting relatively soon”.
It may still seem a long way off and there remain many tasks to complete, but when regulated online poker finally hits the US, the hard work will have paid off. The champagne will stay on ice for the time being but the new online licence holders can almost taste it. It now just remains to be seen if their competitors can catch them up.