Navada poker bill 258 passed March 10th 2012

REQUIRES TWO-THIRDS MAJORITY VOTE (§§ 7, 13)

A.B. 258

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ASSEMBLY BILL NO. 258–COMMITTEE ON JUDICIARY

MARCH 10, 2011

____________

Referred to Committee on Judiciary

SUMMARY—Enacts provisions governing the licensing and

operation of Internet poker. (BDR 41-657)

FISCAL NOTE: Effect on Local Government: No.

Effect on the State: Yes.

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

AN ACT relating to gaming; requiring the Nevada Gaming

Commission to adopt regulations relating to the licensing

and operation of Internet poker; and providing other

matters properly relating thereto.

Legislative Counsel’s Digest:

1 Existing law authorizes certain gaming establishments to obtain a license to

2 operate interactive gaming. (NRS 463.750) This bill requires the Nevada Gaming

3 Commission to establish by regulation certain provisions authorizing the licensing

4 and operation of Internet poker under certain circumstances.

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

1 Section 1. Chapter 463 of NRS is hereby amended by adding

2 thereto the provisions set forth as sections 2 to 7, inclusive, of this

3 act.

4 Sec. 2. The Legislature hereby finds and declares that:

5 1. Internet poker is widely played throughout the world;

6 2. Laws governing Internet poker have been unclear;

7 3. Technology now exists to limit the conduct of Internet

8 poker to the State of Nevada and other jurisdictions where

9 Internet poker is not prohibited;

10 4. The use of such technology allows Internet poker to be

11 offered by licensees in Nevada in compliance with all applicable

12 laws; – 2 –

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1 5. As a leader in gaming regulation, the State of Nevada has

2 the capability to ensure that Internet poker is operated honestly

3 and competitively and in compliance with all applicable laws,

4 regulations and standards; and

5 6. Allowing licensed Internet poker sites to locate in and

6 operate from the State of Nevada will benefit the economy of this

7 State and assist in protecting consumers from criminal and

8 corruptive influences that may be present in unlicensed and

9 unregulated Internet poker sites.

10 Sec. 3. “Equipment associated with interactive gaming”

11 means any associated equipment used by an establishment or

12 interactive gaming service provider as part of an interactive

13 gaming system.

14 Sec. 4. “Interactive gaming service provider” means a

15 person who acts on behalf of an establishment licensed to operate

16 interactive gaming and:

17 1. Manages, administers or controls wagers that are initiated,

18 received or made on an interactive gaming system;

19 2. Manages, administers or controls the games with which

20 wagers that are initiated, received or made on an interactive

21 gaming system are associated;

22 3. Maintains or operates the software or hardware of an

23 interactive gaming system;

24 4. Provides the trademarks, trade names, service marks or

25 similar intellectual property under which an establishment

26 licensed to operate interactive gaming identifies its interactive

27 gaming system to patrons;

28 5. Provides information regarding persons to an

29 establishment licensed to operate interactive gaming via a

30 database or customer list; or

31 6. Provides products, services, information or assets to an

32 establishment licensed to operate interactive gaming, and receives

33 therefor a percentage of gaming revenue from the establishment’s

34 interactive gaming system.

35 Sec. 5. “Interactive gaming system” means the hardware,

36 software, firmware, communications technology and other

37 equipment that allows a patron to bet or wager via interactive

38 gaming, including, without limitation, Internet poker, and

39 corresponding equipment related to the display of a game, game

40 outcomes or other similar information necessary to facilitate play

41 of the game. The term does not include computer equipment or

42 communications technology used by a player to access the

43 interactive gaming system unless such equipment is provided by

44 the establishment and is involved in determining game outcomes. – 3 –

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1 Sec. 6. “Internet poker” means any of the card games

2 commonly referred to as poker which is played by two or more

3 persons who wager against each other and not against the person

4 operating or offering the game and in which success over the long

5 term is determined by the skill of the player. The term includes,

6 without limitation, games which use community cards that any

7 player may use to make his or her hand and which are played on

8 the Internet with an interactive gaming system that simulates a

9 deck of cards.

10 Sec. 7. 1. The Commission shall adopt regulations and

11 shall, to the extent that the applicants are suitable, grant licenses

12 to operators of Internet poker and to manufacturers of interactive

13 gaming systems, manufacturers of equipment associated with

14 interactive gaming and interactive gaming service providers who

15 provide services, software or equipment to operators of Internet

16 poker.

17 2. The regulations adopted by the Commission must include:

18 (a) Appropriate safeguards to ensure, to a reasonable degree

19 of certainty, that the person placing a bet or wager is at least 21

20 years of age;

21 (b) Appropriate safeguards to ensure, to a reasonable degree

22 of certainty, that players of Internet poker are located in the State

23 of Nevada or another jurisdiction where Internet poker is not

24 prohibited by law;

25 (c) Appropriate safeguards to encourage responsible gaming;

26 (d) Technical standards applicable to Internet poker;

27 (e) Accounting and internal control standards to ensure

28 accurate calculation of state license fees and taxes imposed by this

29 chapter;

30 (f) Standards to encourage compliance with applicable laws

31 relating to money laundering and terrorist financing;

32 (g) Standards to assist in protecting the privacy and security of

33 patrons;

34 (h) Appropriate safeguards against cheating, fraud or

35 collusion and the use of cheating devices;

36 (i) Standards governing the location, surveillance and security

37 of hardware, software and other equipment used as part of

38 Internet poker; and

39 (j) Such other requirements as the Commission may deem

40 appropriate.

41 3. Applications for licenses to operate Internet poker must be

42 filed, investigated and processed in the same manner and are

43 subject to the same application and investigative fees as other

44 applications. The Board shall not recommend denial of, and the

45 Commission shall not deny, a license to an operator of Internet – 4 –

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1 poker or to a manufacturer of interactive gaming systems, a

2 manufacturer of equipment associated with interactive gaming

3 systems or an interactive gaming service provider solely because

4 the operator, manufacturer or interactive gaming service provider,

5 before the effective date of this act, operates, operated or was

6 associated with, in interstate or foreign commerce and while

7 licensed by another jurisdiction, one or more Internet poker

8 operations which were unlicensed in the United States or the State

9 of Nevada and in which bets or wagers were initiated, received or

10 otherwise made by persons located in the United States.

11 Sec. 8. NRS 463.013 is hereby amended to read as follows:

12 463.013 As used in this chapter, unless the context otherwise

13 requires, the words and terms defined in NRS 463.0133 to

14 463.01967, inclusive, and sections 3 to 6, inclusive, of this act have

15 the meanings ascribed to them in those sections.

16 Sec. 9. NRS 463.0148 is hereby amended to read as follows:

17 463.0148 “Establishment” means [any] :

18 1. Any premises wherein or whereon any gaming is done [.] ,

19 or

20 2. The location or locations from which interactive gaming is

21 conducted pursuant to the regulations adopted pursuant to section

22 7 of this act.

23 Sec. 10. NRS 463.016425 is hereby amended to read as

24 follows:

25 463.016425 1. “Interactive gaming” means the conduct of

26 gambling games through the use of communications technology that

27 allows a person, utilizing money, checks, electronic checks,

28 electronic transfers of money, credit cards, debit cards or any other

29 instrumentality, to transmit to a computer information to assist in

30 the placing of a bet or wager and corresponding information related

31 to the display of the game, game outcomes or other similar

32 information. The term [does] :

33 (a) Includes, without limitation, Internet poker.

34 (b) Does not include the operation of a race book or sports pool

35 that uses communications technology approved by the Board

36 pursuant to regulations adopted by the Commission to accept wagers

37 originating within this state for races, or sporting events or other

38 events.

39 2. As used in this section, “communications technology”

40 means any method used and the components employed by an

41 establishment to facilitate the transmission of information,

42 including, without limitation, transmission and reception by systems

43 based on wire, cable, radio, microwave, light, optics or computer

44 data networks, including, without limitation, the Internet and

45 intranets. – 5 –

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1 Sec. 11. NRS 463.160 is hereby amended to read as follows:

2 463.160 1. Except as otherwise provided in subsection 4 and

3 NRS 463.172, it is unlawful for any person, either as owner, lessee

4 or employee, whether for hire or not, either solely or in conjunction

5 with others:

6 (a) To deal, operate, carry on, conduct, maintain or expose for

7 play in the State of Nevada any gambling game, gaming device,

8 inter-casino linked system, mobile gaming system, slot machine,

9 race book or sports pool;

10 (b) To provide or maintain any information service;

11 (c) To operate a gaming salon; [or]

12 (d) To receive, directly or indirectly, any compensation or

13 reward or any percentage or share of the money or property played,

14 for keeping, running or carrying on any gambling game, slot

15 machine, gaming device, mobile gaming system, race book or sports

16 pool [,] ; or

17 (e) To operate, carry on, conduct, maintain or expose for play

18 in or from the State of Nevada any interactive gaming system,

19 without having first procured, and thereafter maintaining in

20 effect, all federal, state, county and municipal gaming licenses as

21 required by statute, regulation or ordinance or by the governing

22 board of any unincorporated town.

23 2. The licensure of an operator of an inter-casino linked system

24 is not required if:

25 (a) A gaming licensee is operating an inter-casino linked system

26 on the premises of an affiliated licensee; or

27 (b) An operator of a slot machine route is operating an inter-

28 casino linked system consisting of slot machines only.

29 3. Except as otherwise provided in subsection 4, it is unlawful

30 for any person knowingly to permit any gambling game, slot

31 machine, gaming device, inter-casino linked system, mobile gaming

32 system, race book or sports pool to be conducted, operated, dealt or

33 carried on in any house or building or other premises owned by the

34 person, in whole or in part, by a person who is not licensed pursuant

35 to this chapter, or that person’s employee.

36 4. The Commission may, by regulation, authorize a person to

37 own or lease gaming devices for the limited purpose of display or

38 use in the person’s private residence without procuring a state

39 gaming license.

40 5. As used in this section, “affiliated licensee” has the meaning

41 ascribed to it in NRS 463.430.

42 Sec. 12. NRS 463.750 is hereby amended to read as follows:

43 463.750 1. Except as otherwise provided in [subsections]

44 subsection 2 and [3,] section 7 of this act, the Commission may, – 6 –

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1 with the advice and assistance of the Board, adopt regulations

2 governing the licensing and operation of interactive gaming.

3 2. [The] Except as otherwise provided in section 7 of this act,

4 the Commission may not adopt regulations governing the licensing

5 and operation of interactive gaming until the Commission first

6 determines that:

7 (a) Interactive gaming can be operated in compliance with all

8 applicable laws;

9 (b) Interactive gaming systems are secure and reliable, and

10 provide reasonable assurance that players will be of lawful age and

11 communicating only from jurisdictions where it is lawful to make

12 such communications; and

13 (c) Such regulations are consistent with the public policy of the

14 State to foster the stability and success of gaming.

15 3. The regulations adopted by the Commission pursuant to this

16 section must [:

17 (a) Establish the investigation fees for:

18 (1) A license to operate interactive gaming;

19 (2) A license for a manufacturer of interactive gaming

20 systems; and

21 (3) A license for a manufacturer of equipment associated

22 with interactive gaming.

23 (b) Provide that:

24 (1) A] provide that a person must hold a license for a

25 manufacturer of interactive gaming systems to supply or provide

26 any interactive gaming system, including, without limitation, any

27 piece of proprietary software or hardware . [; and

28 (2) A person may be required by the Commission to hold a

29 license for a manufacturer of equipment associated with interactive

30 gaming.

31 (c) Set forth standards for the suitability of a person to be

32 licensed as a manufacturer of interactive gaming systems or

33 manufacturer of equipment associated with interactive gaming that

34 are as stringent as the standards for a nonrestricted license.

35 (d) Provide that gross revenue received by an establishment

36 from the operation of interactive gaming is subject to the same

37 license fee provisions of NRS 463.370 as the games and gaming

38 devices of the establishment.

39 (e) Set forth standards for the location and security of the

40 computer system and for approval of hardware and software used in

41 connection with interactive gaming.

42 (f) Define “equipment associated with interactive gaming,”

43 “interactive gaming system,” “manufacturer of equipment

44 associated with interactive gaming,” “manufacturer of interactive – 7 –

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1 gaming systems,” “operate interactive gaming” and “proprietary

2 hardware and software” as the terms are used in this chapter.]

3 4. Except as otherwise provided in [subsection 5,] subsections

4 5 and 6, the Commission shall not approve a license for an

5 establishment to operate interactive gaming unless:

6 (a) In a county whose population is 400,000 or more, the

7 establishment is a resort hotel that holds a nonrestricted license to

8 operate games and gaming devices.

9 (b) In a county whose population is more than 40,000 but less

10 than 400,000, the establishment is a resort hotel that holds a

11 nonrestricted license to operate games and gaming devices or the

12 establishment:

13 (1) Holds a nonrestricted license for the operation of games

14 and gaming devices;

15 (2) Has more than 120 rooms available for sleeping

16 accommodations in the same county;

17 (3) Has at least one bar with permanent seating capacity for

18 more than 30 patrons that serves alcoholic beverages sold by the

19 drink for consumption on the premises;

20 (4) Has at least one restaurant with permanent seating

21 capacity for more than 60 patrons that is open to the public 24 hours

22 each day and 7 days each week; and

23 (5) Has a gaming area that is at least 18,000 square feet in

24 area with at least 1,600 slot machines, 40 table games, and a sports

25 book and race pool.

26 (c) In all other counties, the establishment is a resort hotel that

27 holds a nonrestricted license to operate games and gaming devices

28 or the establishment:

29 (1) Has held a nonrestricted license for the operation of

30 games and gaming devices for at least 5 years before the date of its

31 application for a license to operate interactive gaming;

32 (2) Meets the definition of group 1 licensee as set forth in the

33 regulations of the Commission on the date of its application for a

34 license to operate interactive gaming; and

35 (3) Operates either:

36 (I) More than 50 rooms for sleeping accommodations in

37 connection therewith; or

38 (II) More than 50 gaming devices in connection

39 therewith.

40 5. The Commission may:

41 (a) Issue a license to operate interactive gaming to an affiliate of

42 an establishment if:

43 (1) The establishment satisfies the applicable requirements

44 set forth in subsection 4; and – 8 –

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1 (2) The affiliate is located in the same county as the

2 establishment; and

3 (b) Require an affiliate that receives a license pursuant to this

4 subsection to comply with any applicable provision of this chapter.

5 6. [It is unlawful for any person, either as owner, lessee or

6 employee, whether for hire or not, either solely or in conjunction

7 with others, to operate interactive gaming:

8 (a) Until the Commission adopts regulations pursuant to this

9 section; and

10 (b) Unless the person first procures, and thereafter maintains in

11 effect, all appropriate licenses as required by the regulations adopted

12 by the Commission pursuant to this section.

13 7. A person who violates subsection 6 is guilty of a category B

14 felony and shall be punished by imprisonment in the state prison for

15 a minimum term of not less than 1 year and a maximum term of not

16 more than 10 years or by a fine of not more than $50,000, or both.]

17 The Commission may issue a license as an operator of Internet

18 poker to a person or an affiliate of a person who has been licensed

19 to operate Internet poker by a recognized regulatory body of

20 another jurisdiction with licensing requirements that are similar to

21 the licensing requirements of this State and who has successfully

22 operated Internet poker pursuant to such a license for at least 2

23 years before the date on which the application for the license is

24 submitted.

25 7. The Commission is authorized to enter into compacts with

26 other jurisdictions where interactive gaming is not prohibited,

27 setting forth the manner in which the State of Nevada and such

28 other jurisdictions will regulate and share tax revenues from

29 interactive gaming operations between such jurisdictions and

30 enforce criminal laws related to cheating, tax evasion or

31 unlicensed interactive gaming, and authorizing the commingling

32 of games and pots between such jurisdictions. Such compacts may

33 be limited to Internet poker.

34 Sec. 13. NRS 463.770 is hereby amended to read as follows:

35 463.770 1. [All] Except as otherwise provided in

36 subsections 4 and 5, all gross revenue from operating interactive

37 gaming received by an establishment licensed to operate interactive

38 gaming, regardless of whether any portion of the revenue is shared

39 with another person, must be attributed to the licensee and counted

40 as part of the gross revenue of the licensee for the purpose of

41 computing the license fee required by NRS 463.370.

42 2. A manufacturer of interactive gaming systems who is

43 authorized by an agreement to receive a share of the revenue from

44 an interactive gaming system from an establishment licensed to

45 operate interactive gaming is liable to the establishment for a – 9 –

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1 portion of the license fee paid pursuant to subsection 1. The portion

2 for which the manufacturer of interactive gaming systems is liable is

3 6.75 percent of the amount of revenue to which the manufacturer of

4 interactive gaming systems is entitled pursuant to the agreement.

5 3. For the purposes of subsection 2, the amount of revenue to

6 which the manufacturer of interactive gaming systems is entitled

7 pursuant to an agreement to share the revenue from an interactive

8 gaming system:

9 (a) Includes all revenue of the manufacturer of interactive

10 gaming systems that is the manufacturer of interactive gaming

11 systems’ share of the revenue from the interactive gaming system

12 pursuant to the agreement; and

13 (b) Does not include revenue that is the fixed purchase price for

14 the sale of a component of the interactive gaming system.

15 4. Notwithstanding anything to the contrary in this chapter,

16 to the extent that players of Internet poker are located in

17 jurisdictions other than this State, the licensee shall pay the

18 license fee based on gross revenue at the rate of 4 percent on the

19 gross revenue resulting from the play of players located in such

20 other jurisdictions.

21 5. As used in this section, “gross revenue” does not include:

22 (a) Advertising revenue; or

23 (b) Any other revenue that an operator of Internet poker

24 receives which is not the result of the participation of players in,

25 or the play of, Internet poker.

26 Sec. 14. The Nevada Gaming Commission shall, on or before

27 December 31, 2011, adopt regulations to carry out the amendatory

28 provisions of this act.

29 Sec. 15. This act becomes effective upon passage and

30 approval.