A Practical Guide for the Registration of Manufacturers and Distributors of Associated Equipment in Nevada
09/01/2016

Overview

Nevada Revised Statutes 463.0136 defines “Associated Equipment” as:

1. Any 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, including dice, playing cards, links which connect to progressive slot machines, equipment which 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; or

2. A computerized system for recordation of sales for use in an area subject to the tax imposed pursuant to NRS 368A.200. Unlike the approval process for many aspects of Nevada gaming, manufacturers and distributors of associated equipment are not required to be found suitable or licensed by the Nevada Gaming Control Board (“Board”) and Nevada Gaming Commission (“Commission”). Instead, manufacturers and distributors of associated equipment must first register with the Board and Commission prior to having such associated equipment made available to Nevada’s casinos. The lack of mandatory licensure does not infer a lax approval process. Manufacturers and distributors of associated equipment are still subject to a background investigation and the associated equipment is thoroughly reviewed by the Board. Additionally, the Board and Commission have the discretionary authority to require a finding of suitability for the manufacturer/distributor of associated equipment pursuant to NRS 463.665. To register as a manufacturer and distributor of associated equipment, an applicant should complete the following three steps: (1) attend an introductory meeting with the Board’s Technology Division (“Technology Division”) to discuss the proposed service and ensure compliance with Nevada’s Gaming Control Act, Regulations, Technical Standards and Minimum Internal Control Standards; (2) register with the Board and Commission as a manufacturer/distributor of associated equipment (the “Registration”); and (3) register the associated equipment with the Technology Division (the “System Review”). This guide examines steps two and three, namely Nevada’s Registration and System Review process. Due to the highly regulatory nature of the Registration and System Review process, manufacturers and distributors commonly retain a gaming attorney to be actively involved in both processes. The attorney’s primary responsibility in preparing the application forms is to guide the applicant through compiling the required information and reviewing the application for accuracy, completeness, and consistency. Any untrue or incomplete statement is grounds for a denial and could result in disciplinary action. Therefore, it is important to have an experienced gaming attorney determine if any potential regulatory concerns exist or if the information provided requires further explanation in a supplemental exhibit to an application. Once application materials are prepared, the gaming attorney serves as the main contact for the Board’s investigation and guides the applicant through the investigation process and System

Review process.

Registration Process Filing Requirements

A company that seeks to manufacture and distribute associated equipment (“Applicant”) must file an array of documentation with the Board. This information is divided between information specific to Applicant and information specific to the associated equipment which assists with the System Review Process, as detailed below. Documentation specific to Applicant includes: (I) an application for Registration by an Individual Associated with a Manufacturer/Distributor of Associated Equipment for each corporate officer, manager, or equity holder of 10 percent or more of Applicant (collectively “Principal”); (II) an application for Registration of a Manufacturer/Distributor of Associated Equipment on behalf of Applicant; (III) a personal history questionnaire for each Principal; (IV) an Affidavit of Full Disclosure submitted by each Principal; (V) a Release and Indemnity of All Claims submitted by each Principal; and (VI) a Request to Release Information submitted by each Principal; and (VII) a fingerprint receipt (or three standard FBI fingerprint cards1) is to be submitted by each Principal. The application packet must be accompanied by an application fee of $1,0002 and a registration fee of $1,000. The lengthiest form is the personal history questionnaire, which gathers information regarding each Principal’s character and fitness. Any misrepresentation or failure to disclose requested information may be deemed sufficient cause for the Principal to be called forward for a finding of suitability or for denial of the Registration. The disclosures include, among others, any arrests, detentions, or litigation, as well as any privileged or professional licenses the Principal holds or

1 Due to the FBI’s chain of custody requirements, the completed fingerprint cards must be mailed by the certified printing facility directly to the Nevada Gaming Control Board, Attn: Applicant Services, 1919 College Parkway, Carson

City, NV 89706.

2 If the Nevada Gaming Commission decides to call forward a person for a finding of suitability, additional application and investigation costs will be incurred. has held, including gaming licenses. It is important to note that current Restricted and Non-Restricted Licensees are not required to submit such registration materials. However, such licensees must submit for approval associated equipment of internally developed products and related modifications; the same applies even when the licensee holds a Manufacturer’s License. In circumstances where a Restricted or Non-Restricted Licensee contracts with a third-party to develop associated equipment, the Board has the discretionary authority to require the third-party to submit registration materials.

The Approval Process

Once the application for Registration has been filed, the Board will conduct a background investigation of Applicant and its Principals. After completing the investigation, the gaming agent completes a report and submits it to the Board. At that time, the Board will schedule the application for consideration at a public hearing and send notice of the scheduled hearing to Applicant by letter. The Board and Commission both hold monthly meetings. The purpose of the Board hearing is to make a recommendation to the Commission. About two weeks after the Board hearing, the Commission will hold a separate hearing for final consideration of the application. Applicant may be requested to attend these meetings and to testify as to matters of interest to the Board or Commission. Simply because Applicant must appear does not necessarily signal that the application has problems. In many cases, the regulators simply need additional information that may be relevant to their consideration of the application. Still, Applicant would be wise to be well prepared and ready to answer any questions that may be posed. Failure to appear and testify, unless excused, constitutes grounds for denial of the application.

How Long Does the Application Process Take?

The timeframe from filing a complete application to appearing before the Board and Commission is approximately 6 months. To save time, Applicant should request that the System Review, which is detailed below, be conducted concurrently with the Registration process.

How Long Is Registration Effective?

Registration is effective for three calendar years from the effective date of the registration or renewal. At the time of renewal, Applicant is required to file a completed application, as detailed above, along with any required additional information or documents requested by the Board. Additionally, Applicant must pay a renewal application fee of $1,000 and renewed registration fee of $1,000.

Are There Ongoing Reporting Requirements?

Each registered associated equipment manufacturer or distributor must inform the Board in writing of any changes in the ownership, officers, or directors within 30 days of occurrence.

System Review Process Filing Requirements

A new associated equipment submission to the Technology Division must contain the following forms and deposit: (I) a completed and signed Manufacturer’s Request for Review of Associated Equipment form;3 (II) a completed and signed User's Installation of Associated Equipment Approval Request form (if the Board allows or requires the new associated equipment to be trialed at a licensed gaming establishment, such establishment must submit a User’s Installation of Associated Equipment Approval Request form indicating that it is going to be the trial location); and (III) a deposit sufficient to cover the anticipated review charge.4 The initial deposit must be no less than $6,000. After evaluation of the submission package and determination of the scope of review, Applicant will be notified by the Technology Division of the anticipated review cost and will be required to make any additional deposit sufficient to cover the review cost. The submission package also must contain the following items:

a. Complete system documentation

The submission must contain thorough documentation in both technical and lay terms detailing the implementation, operation, and intended use of the associated equipment. The documentation is to be submitted on electronic media such as, a CD or DVD ROM. Examples of the required documentation include:

i. An overview of the associated equipment in lay terms outlining functionality of the product along with its intended method of operation and use;

ii. Schematics;

iii. Topology Diagrams;

iv. Release Notes; and

v. User Manuals.

b. A comprehensive compliance report

The submission must contain a report detailing how the associated equipment complies with the associated equipment regulatory structure. The report must list each Nevada Revised Statute, Regulation, Technical Standard and Minimum Internal Control that is applicable and state specifically how the product complies with the requirement.

c. A copy of all executable applications that comprise the Associated Equipment to be reviewed

This includes all executable applications such as, .exe, .dll, and .jar files. These files must be placed in a folder on the root of the media named “images” (e.g. D:limagelapp.exe). This software will be kept on file with the Board and will be used to verify approved versions that have been installed in the field.

d. A list of peripheral equipment

A list of equipment that must be used as part of the test of the submitted associated equipment in order to evaluate specific functionality. Examples of peripheral equipment include Voucher Redemption Terminals and Currency Counters.

e. Completed Associated Equipment Review Checklists

The Technology Division has issued several checklists for specific functionalities of associated equipment. The applicable checklist for the associated equipment must be completed and submitted by Applicant.

f. The audited results of a three-day test performed by the manufacturer

The results of the three-day test must confirm the associated equipment functions as represented. The three-day test must include all reports that are required to reconcile revenue and meet the requirements of the associated equipment regulatory structure. The three-day test must also encompass all types of transactions that an operator may create during operation of the associated equipment. Including exception type activities such as, voids and overrides.The reports from the three-day test must be audited. Any and all amounts impacting reportable revenue and statistical revenue must be traced across all reports. Source documents such as, vouchers or jackpot slips must be referenced and traced to detail transaction reports. Detail transaction reports must be traced in total to summary reports.

g. A working model of the Associated Equipment to be reviewed

The Board may require new associated equipment to be set up at the Technology Division’s test lab or at the manufacturer’s place of business. The manufacturer must have available, at the time of submission, a complete working model of the associated equipment. For some applicants the Technology Division will require remote access to the associated equipment.

h. Any additional information, programming, equipment or other items deemed necessary by the Technology Division in order to evaluate the new associated equipment Initial Review

The review and approval process for new associated equipment begins with the evaluation of the initial submission package for completeness. The Technology Division aims to review the submission package within 10 business days of receipt. Upon determination that a new associated equipment submission is complete, the Technology Division will coordinate a meeting with Applicant to discuss the approval process for that submission. The objectives of this meeting are to confirm the contact information, discuss the targeted milestone dates and testing requirements, and to answer any questions presented by the manufacturer.

Testing

The associated equipment will undergo testing to ensure it meets the requirements of the associated equipment regulatory structure. Testing will be conducted by an independent laboratory. When complete, the Technology Division’s staff will evaluate the results and provide Applicant with a written list of issues observed during the test period. Applicant will be required to correct the deficiencies and provide the Technology Division with the corrections necessary to meet the requirements of the associated equipment. The goal is for the Technology Division to recommend field trial for successfully tested and reviewed new associated equipment within 90 days of receipt of the completed submission package. The actual amount of processing time, however, will be dependent upon a number of factors including testing requirements and the individual complexity of the submission.

Field Trial

When a non-binding determination has been made by the Technology Division that the submitted associated equipment meets the requirements of the associated equipment regulatory structure, the Board may allow or require that the associated equipment be tested at licensed gaming establishments for not more than 180 days. If a field trial is required, written instructions will be given to Applicant and the licensed gaming establishment designated as the trial location. The instructions will contain trial period procedures to be conducted by the trial location and the manufacturer. During the trial period, an interim review of the associated equipment will be conducted at the trial location in order to evaluate the operation of the associated equipment. A final review of the trial period procedures will be conducted at the trial location prior to the completion of the field trial.

Final Approval/Disapproval

Upon the successful conclusion of the field trial and review period, Applicant will receive written notice of approval or disapproval of the associated equipment. Subsequent changes to the implementation of or modifications to the approved associated equipment will require additional approval by the Board.

Installation

Prior to the installation of associated equipment, a licensed gaming establishment must comply with certain statutory and regulatory requirements–including amending their internal controls.

How Long Does the Process Take?

The timeframe for the System Review can be broken down as 90 days for review by the Technology Division, from the date of filing a complete application, and up to 180 days for a field trial with a Licensee.5 As noted above, Applicant should request that the System Review, be conducted concurrently with the Registration process, which is detailed above.

How Much Does the Process Cost?

Typically, an initial deposit of no less than $6,000 must be made to cover the System Review. The Technology Division charges on an hourly basis so the System Review may be less or more depending upon the complexity of the associated equipment and cooperation of Applicant. Any modifications to the System would be subject to review by the Technology Division.

Lewis Roca Rothgerber Christie LLP has one of the largest dedicated gaming law practices in the world. The attorneys in our practice group have extensive experience in gaming law that spans several decades, which includes experience in casino gaming (commercial and tribal), Internet gaming, sports betting, pari-mutuel racing, sweepstakes, lottery, bingo and compliance. Our gaming practice group is nationally recognized across the industry and has been at the forefront of all major gaming developments for the past quarter century. We represent casino operators, gaming manufacturers and distributors, management companies, tribes, entrepreneurs, investors, and governments in a variety of matters including licensing, compliance, transactions, restructuring, and regulatory adoption. As legalized gaming continues to proliferate across the United States and the world, the laws governing the gaming industry continue to evolve. Lewis Roca Rothgerber Christie’s gaming practice group closely monitors activity in this unique industry to provide our clients with sound and timely advice.

Click here to view a PDF of the original article