Schuetz: Untangling The Regulators’ Web

“Your site is your brand.”

— Larry Becker, Rimm-Kaufman Group

I believe I have strong credentials to complain about regulators, as I have been subjected to their scrutiny for most of my life, which is a significant amount of time.

I started working in regulated gaming in Nevada in 1971. Moreover, I have submitted over 120 gaming license applications globally during my career and, to date, have not had a license application declined or had to withdraw one with prejudice. But the process has often been a gigantic pain and has done little to instill confidence in me.

Oh, and the stories.

I had an investigator fly to Las Vegas for part of my background investigation. I was in Minnesota. My assistant tracked me down late one evening and said that there was something important that the investigator needed to talk to me about. These types of messages were always important.

When I finally tracked the investigator down, she said she wanted to go to a particular show in Las Vegas and asked if I could get one of my friends out there to comp her.

Just the facts, ma’am

It was also interesting to go through the investigatory process in a new gaming jurisdiction, where investigators were generally sourced from law enforcement. A simple thing like an interview over the application would be treated like I had just robbed a 7-Eleven, and he (it was almost always he) would be looking for all kinds of body language and other tells. It was as if Joe Friday were doing his Dragnet thing. Lots of drama for a reasonably normal and boring background interview.

I have been blessed over the years by having some people want to publish my opinions and observations about the regulatory process, so it is no deep, dark secret that I do have an attitude. Not only have I been regulated, but I have also been a regulator in two different jurisdictions, so I have been in the belly of the beast.

As an aside, I have also worked offshore — both a little offshore and a lot offshore — but I don’t talk about it much, for there are so many people in the gaming space who have not worked offshore who are more than happy to lecture the world on what that is all about, that I really do not need that annoyance.

I can defend my criticisms of gaming regulatory processes, and I frame them as opportunities for improvement. Topics such as the economic concept of capture, regulators with little understanding of the industry they regulate, and broader inefficiencies within bureaucratic institutions have given me much to whine about over the years.

One can choose to believe this or not, but my goal has always been to improve the product — nothing more.

I recently was rummaging through the websites of those regulatory agencies in different jurisdictions. The most obvious thing was that some jurisdictions seem to take this whole website thing seriously. Others, not so much.

So, bear with me, for I want to discuss regulatory websites rather than follow the crowd and throw another article on the prediction market pile.

My oath is my word

I do understand that the website is not the end of the story, for it is important to evaluate whether what the regulatory agency says on its website can be taken seriously. When I became a regulator in California, I had to take an oath. And then sign it. Moreover, when I was done reciting the oath, the governor’s office sent over a signed copy of the oath I took, along with the governor’s signature. I had it framed so I could hang it conspicuously in my office. It was important to me, and I was proud of it.

During my long tenure working within casinos, I had some great mentors. One of the critical lessons that takes place on a casino floor is the importance of one’s word — that is, if a person has great mentors, as I have had. For that reason, I took my oath very seriously. It was my word.

Several years ago, I became curious about whether the Nevada gaming regulators take an oath, so I logged on to the agency’s website and found a contact link. I did not hear anything back, so I sent another message a few months later. That was all well over a year ago. I am still waiting to hear back on either message.

For this reason, if you are in leadership of a regulatory agency, test your website; if it makes a real or implied promise … keep it.

When I was a senior executive in hotel/casino environments, I was a tester. I did not want to hear from the hotel manager that our reservation system was great; I wanted to test it. How many rings did it take before my call was answered? What was the level of friendliness of the people on the line? How well did they answer a question about comps? I wanted to know the real experience, for it mattered in real dollars.

I also made a point of staying overnight in a hotel suite on many occasions. It is one thing to do a suite walk-through and be impressed. I wanted to experience the mattress, brush my teeth in the sink, and use the facilities. What I generally discovered was that things were not always perfect in the hotel world. Test it yourself or have your friends test it.

If you have a website, trust but verify that it does what it is supposed to do.

Is it safe to complain?

I think one of the most valuable tools available in a regulatory environment is the qui tam and other whistleblower-type processes. Qui tam is short for “Qui tam pro domino rege quam pro se ipso in hac parte sequitur,” or “who sues in this matter for the king as well as for himself.” In other words, a method of providing confidential information with a potential reward.

Any agency that does not use or advocate for these types of processes is, in my opinion, fighting a losing battle.

When I ran casino departments, my two eyes were not enough to monitor the large number of transactions occurring at any given time. Sure, I had surveillance and all of that, but there was nothing more important than somebody whispering in my ear that something was amiss. To protect a casino, one needs thousands of eyes, and whistleblowing and related programs can provide them.

When I use the search feature on the Nevada regulatory assets website and enter “whistleblower,” “tip line,” “confidential tip line,” “qui tam,” and damn near every other way I can think of to address the issue, I get nothing. And that is weird, for the state has a variety of approaches to such things.

When I go to the website for Massachusetts and input “confidential tips,” I immediately get an answer, and not only is it an answer, but the Massachusetts gaming regulators have developed a special program called the Fair Deal to address situations of providing confidential information.

A weakness of the Fair Deal program, in my opinion, is that it does not address a possible payment to the tipster. Given that most instances of inappropriate activity have a negative impact on the state’s tax revenue, such a payment would be entirely appropriate. Massachusetts does have an aggressive approach to whistleblowing and related issues.

Another feature of the Massachusetts site I appreciate is that it lists the commission members’ email addresses. Clearly, this was not designed as a gateway to facilitate ex parte conversations, but public servants should be available to the public. Most regulatory sites create a maze to get to leadership. Pennsylvania has an ex parte log, which is a nice touch. That state’s complaint process appears to be directed toward the casino patron. It does not embrace a whistleblowing effort, per se.

One feature I admired while at the California Gambling Control Commission was the Gaming Policy Advisory Committee. It is an honorable attempt to encourage people to participate in debates shaping gaming policy. California regulators do not, per se, embrace a whistle-blower effort; they direct such complaints and the like to the Department of Justice.

The point I am trying to make is that most gaming websites seem to be an afterthought and are not perceived as a strong tool to help the entity realize its mission. I think this is a mistake. I think leadership needs to embrace a committee and look around at what others are doing. 

Creativity is a wonderful attribute in leadership, but I have always found that simply looking around at what others are doing is a great teaching aid, both for what to do and what not to do. I would suggest that leadership visit or revisit this communication tool to see if its potential is being realized, or that there may be something that someone else is doing that just may make sense.

I have always found it easier to steal good ideas than to come up with them myself.

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Richard Schuetz entered the gaming industry working nights as a blackjack and dice dealer while attending college and has since served in many capacities within the industry, including operations, finance, and marketing. He has held senior executive positions up to and including CEO in jurisdictions across the United States, including the gaming markets of Las Vegas, Atlantic City, Reno/Tahoe, Laughlin, Minnesota, Mississippi, and Louisiana. In addition, he has consulted and taught around the globe and served as a member of the California Gambling Control Commission and executive director of the Bermuda Casino Gaming Commission. He also publishes extensively on gaming, gaming regulation, diversity, and gaming history. Schuetz is the CEO of American Bettors’ Voice, a non-profit organization dedicated to giving sports bettors a seat at the table.