On Feb. 10, 2010, the Nevada Gaming Control Board (NGCB) issued a 12-page industry letter providing updates and additional clarification regarding the review and approval process of associated equipment. Unlike the manufacture of gaming devices, persons who manufacture associated equipment (with the exception of cashless wagering systems) are not required to mandatorily be licensed manufacturers in Nevada. [Note: Once an associated equipment manufacturer is registered, it comes under the authority of the NGCB and is subject to discretionarily being called forward for full licensure.]1 Nevertheless, all associated equipment must be reviewed and approved by the NGCB prior to installation and use at any gaming licensee establishment.2 This article, therefore, serves as a guide to the regulatory governance of associated equipment in Nevada in light of the recent industry letter.
Associated equipment is defined in the Nevada Revised Statutes as “[a]ny equipment or mechanical, electromechanical or electronic contrivance, component or machine used remotely or directly in connection with gaming or mobile gaming, any game, race book or sports pool that would not otherwise be classified as a gaming device …” or a computerized system for the recordation of sales for use in an area subject to the live entertainment tax.3 Associated equipment, therefore, is a category of gaming equipment that is distinct from “gaming devices.” As defined, the term encompasses dice, playing cards, links that connect to progressive slot machines, equipment that affects the proper reporting of gross revenue, computerized systems of betting at a race book or sports pool, computerized systems for monitoring slot machines, and devices for weighing or counting money.4
However, “[n]ew innovative and enhancements to existing products present the NGCB with new determinations and categorizations of Associated Equipment on a regular basis.”5 Accordingly, if a manufacturer of associated equipment is not certain whether its product will be classified as associated equipment, the manufacturer should first submit a request for a formal determination to the Technology Division of the NGCB.6 These determinations are made based on the specific operational parameters of the product and the written descriptions provided by the manufacturer. Such determinations are invaluable, as they save considerable time and expense that would be associated with filing an incorrect application, or worse, the failure to even file a requisite application by the manufacturer, should the product not be deemed associated equipment.
Throughout the application and review process, associated equipment is divided into two categories, namely “new” associated equipment or a “modification” to existing associated equipment. Associated equipment will be considered “new” when: (i) the collection of hardware and/or software has not been previously approved by the NGCB; (ii) the function of the associated equipment or use as a component of or with previously approved associated equipment has not been previously reviewed and approved by the NGCB; and/or (iii) the associated equipment incorporates significant modifications that fundamentally alter any functionality, operation or implementation to previously approved associated equipment.7 Such significant changes include changing operating systems, material changes to databases, and/or migrating the associated equipment programming and development from one source code structure to another.8 In contrast, merely implementing changes to previously approved associated equipment will be considered a “modification” to existing associated equipment. The application and review process differs radically between the two.
New Associated Equipment
The review and approval process for new associated equipment starts with the examination of the initial submission package for completeness. The Technology Division strives to review the submission package within 10 business days of receipt. This initial review determines whether the submission by the manufacturer is complete or if additional information may be required. If the submission is determined to be complete, the submission will proceed to the Technology Division’s lab for a thorough review. If, however, the submission is determined to be incomplete, the submission will not be sent to the lab until all deficiencies have been remedied.
The initial submission package requires the manufacturer provide a plethora of documentation to the Technology Division, including, among other things, a manufacturer’s request for Review of Associated Equipment Form signed by an officer who has sufficient authority to bind the manufacturer and sufficient knowledge of the associated equipment being submitted; all applicable associated equipment review checklists9; complete system documentation in both technical and lay language, e.g., schematics and user manuals, which are to be submitted on electronic media; a compliance report that details specifically how the associated equipment complies with regulatory structure; a copy of all executable applications, which will be kept on file with the NGCB and used to verify approved versions that have been installed in the field; and a list of peripheral equipment that must be used as part of the test of the submitted associated equipment in order to evaluate specific functionality, e.g., voucher redemption terminals.10 In addition, the submission shall include a User’s Installation of Associated Equipment Approval Request form.11 This form is prepared by a licensed gaming establishment and simply states that if the Technology Division requires the associated equipment to undergo a field trial, the licensed gaming establishment will host said trial.
The initial submission package also must be accompanied by a deposit of at least $6,000. A more precise review cost will be provided by the Technology Division following its initial evaluation of the proposed new associated equipment.12 Upon notification of the anticipated review cost, the manufacturer must deposit sufficient funds with the NGCB to cover the costs. Furthermore, the Technology Division may require a working model of the system be set up at the manufacturer’s place of business or at the NGCB offices.13 The manufacturer must ensure it has a complete working model of the associated equipment ready in case of such a request.
Finally, new associated equipment must undergo a three-day test conducted by the manufacturer and the results must confirm the associated equipment functions as represented.14 The test must encompass all reports that are required to reconcile revenue and meet requirements of the associated equipment regulatory structure, as well as all transactions that an operator may create during operation of the system, including exception type activities such as voids and overrides.15 The audited results must be presented to the Technology Division before the submission is considered to be complete.16
Upon a determination that the submission package is complete, the Technology Division will arrange a meeting with the manufacturer to go over the approval process for the submission. The aim of this meeting is not only for both parties to familiarize themselves with one another, but also to discuss the target milestone dates and testing requirements and answer any questions the manufacturer has regarding the process.17
Once a submission reaches the lab, the lab technicians will perform the testing and review required to confirm that the proposed new associated equipment meets the requirements of the associated equipment regulatory structure. The goal of the Technology Division is to complete the lab review within 90 days.18 Following the review, if a non-binding determination is made that the associated equipment satisfied the associated equipment regulatory structure, the Technology Division may present the manufacturer and the licensed gaming establishment with written approval to initiate a field trial.19 The notification will not only grant approval to initiate the field trial, but will also contain the trial period procedures to be conducted by the licensed gaming establishment and the manufacturer.20 Upon successful completion of the lab review and field trial, written notification will be sent to the manufacturer either approving or disapproving the associated equipment.
Modification to Associated Equipment
As one would expect, the application and review process for modifications to existing associated equipment is a simpler and less assiduous process. A manufacturer of modified associated equipment is only required to submit to the Technology Division a completed Manufacturer’s Request for Review of Associated Equipment Form, again signed by an officer who has sufficient authority to bind the manufacturer and sufficient knowledge of the associated equipment being submitted; a detailed description of the modification, in both technical and lay language; a copy of all executable applications that comprise the associated equipment to be reviewed; and a deposit sufficient to cover the anticipated review charges as calculated by the Technology Division.21
In addition, in the event the modification includes changes to previously approved or new reports or functionality, examples of the modified or new reports must be included in the submission. Moreover, similar to new associated equipment, the Technology Division has the discretion to require the manufacturer to set a up a working model of the associated equipment either at the lab of the Technology Division or at the manufacturer’s place of business.22
Upon the submission of a complete application to the Technology Division, the lab will conduct the necessary testing to ensure the modified associated equipment meets the requirements of the associated equipment regulatory structure. If the modification is significant but does not warrant the classification of new associated equipment, a field trial may be required.23 This is determined on a case-by-case basis. Based on the results of the review, the Technology Division will issue a written notice to the manufacturer approving or disproving the proposed modification. While not always possible, the goal of the Technology Division is to complete the review of a modification within 30 days of receiving a complete submission. This timeframe may vary depending on such factors as testing requirements, submission deficiencies, a manufacturer’s response time to questions posed, and the individual complexity of the submission. Nevertheless, this timeframe is much shorter than that for the approval of new associated equipment, which is attributable to the fact that, with modifications, the underlying associated equipment has already been approved.
Final Thoughts
While not as arduous as the licensing of gaming devices, due care and attention should nevertheless be paid to the licensing of associated equipment. If done correctly, a manufacturer can expect to gets its proposed associated equipment reviewed and approved within a relatively short timeframe with minimal anguish.
1 The only type of associated equipment that triggers a mandatory licensing requirement is a cashless wagering system as defined by NRS 463.014 and required by NRS 463.650. However, Nev. Rev. Stat. § 463.665 provides that a manufacturer may be required by the Nevada Gaming Commission, upon recommendation of the Nevada Gaming Control Board, to file an application for a finding of suitability to be a manufacturer or distributor of associated equipment.
2 NGC Regulation 14.260.
3 Nev. Rev. Stat. § 463.0136.
4 Id.
5 Nevada Gaming Control Board Industry Letter dated Feb. 10, 2010.
6 The Technology Division is one of the seven divisions of the Nevada Gaming Control Board. The Technology Division, among other things, inspects and tests electronic gaming devices for use in casinos. The Technology Division also is responsible for the inspection and review of all associated equipment.
7 Nevada Gaming Control Board Industry Letter dated Feb. 10, 2010.
8 Id.
9 The Technology Division has previously issued several checklists for specific functionalities of associated equipment. Nevada Gaming Control Board Industry Letter dated Feb. 10, 2010.
10 Nevada Gaming Control Board Industry Letter dated Feb. 10, 2010.
11 NGC Regulation 14.280
12 NRS 463.670(4) allows the board to inspect all associated equipment and systems. Pursuant to the provisions of NRS 463.670(5), the board charges manufacturers of associated equipment a fee for inspections of newly developed associated equipment and modifications of previously approved associated equipment. Pursuant to NGC Regulation 14.270, a manufacturer may be required to provide specialized equipment or the services of an independent technical expert to evaluate the equipment. Manufacturers will be billed for the cost of the equipment or services. Associated equipment inspection fees are charged at a rate for inspection time and for related travel time, as established by the board’s chair. The Technology Division charges $150 per hour. The total cost is based on the complexity of the submission and how the system complies/works when submitted.
13 NGC Regulation 14.270.
14 This is only a cursory overview of the required documentation and a full review of the Nevada Gaming Commission Regulations, the Nevada Revised Statutes and the Nevada Gaming Control Board Industry Letter dated Feb. 10, 2010, is required prior to filing an associated equipment application with the Technology Division. Note also that unlicensed manufacturers (as opposed to restricted and non restricted licensees) also must submit a Personal History Questionnaire and a Request to Release Information Form for each executive, director and/or key employee.
15 Nevada Gaming Control Board Industry Letter dated Feb. 10, 2010.
16 Id.
17 Id.
18 Id.
19 NGC Regulation 14.280.
20 Nevada Gaming Control Board Industry Letter dated Feb. 10, 2010.
21 Id.
22 NGC Regulation 14.270
23 NGC Regulation 14.280