On April 22, 2010, the Nevada Gaming Commission (hereinafter the “Commission”) adopted a number of amendments to Regulation 14 governing the manufacture of gaming devices. A subset of these amendments were promulgated pursuant to changes to the Nevada Gaming Control Act (hereinafter the “Act”) during the Seventy-Fifth Session of the Nevada Legislature. The rules relate to “control programs” and the independent contractors who design, develop, program, produce, or compose software, source language or executable code compiled into the control program of a new gaming device or of a modification to a gaming device submitted for approval. These particular rules became effective on July 1, 2010, and will become fully implemented on June 30, 2011.
The rules themselves may seem relatively innocuous. These regulations and the enabling statutes upon which the rules rely, however, represent a paradigm shift in the historical approach of the Act to regulating the manufacture of gaming devices. The rules signal a change in regulatory focus to independent contractors writing computer code from the central objective of the Act to mandate manufacturer control and responsibility for gaming devices. This shift has implications beyond the mere reporting and registration requirements of the new rules, impacting the broader issue of access to the technology and applications necessary for Nevada’s gaming industry to remain competitive.
This article will summarize the requirements of the new rules. First, however, the article will provide some industry background on the role independent contractors typically play in the product development process and the competition among technology developers. Next, the article will examine the history of legislative policy development on licensing manufacturers of gaming devices, discussing the traditional oversight for the manufacture of computer programs used in gaming devices. The article will then review the legislation that led to the promulgation of the new regulations. Finally, after a synopsis of the rules, the article will present observations on an alternative approach to achieving necessary regulatory objectives.