Home Navigating Gaming Regulations to Save Time/Money and Reduce Risk

Navigating Gaming Regulations to Save Time/Money and Reduce Risk

The gaming industry is one of the most highly regulated private industries in the United States. State lawmakers and regulators enact laws and promulgate regulations with the primary purpose of protecting the public. Generally, legalization of gaming activities—or expanded gaming activities—through regulations and policing by gaming agencies takes gaming out of its unlawful status and subjects it to the scrutiny and regulation of a state and/or tribal government. Other objectives of legislation include maintaining the integrity of regulatory control and legislative oversight over the operation and play of slot machines and table games, enhancement of the live horseracing industry, creating jobs, raising additional tax revenue and encouraging economic development.

In new or expanding jurisdictions, it is not uncommon for the architectural planning process to begin even before regulations have been promulgated. In competitive licensing jurisdictions, the pitfalls that exist in a speed-to-market situation can result in the failure to be awarded a license, delay and cost overruns in construction, setbacks for future remodeling or expansion, and operational difficulties. Even for experienced owners, operators and developers of gaming facilities, navigating the gaming regulatory environment while planning an initial or expanded gaming project or proposal can be time-consuming, expensive and challenging. Careful planning and the development of relationships among owners, developers, regulatory counsel, architects, consultants and regulators are paramount in the execution of a successful project or proposal that can result in saving time and money, creating flexibility for the future and enhancing project efficiency.

In the gaming environment, it is even more important to have the right people on the team.

For more than 75 years, JCJ Architecture has been serving as architect and planner on multi-staged projects dealing with regulatory code compliance and ADA-compliance issues in several market sectors. Regulations, as they pertain to education, mixed-use commercial, residential and even complex healthcare projects, are straightforward and fairly predictable, and most professional architects are trained to accommodate them. However, when it comes to planning and designing for the gaming industry, there is no “standard” body of regulations, and each jurisdiction has its own unique and diverse requirements. These can include overlapping and sometimes conflicting local, state and federal regulatory concerns. In the 25 years JCJ has been working in the gaming industry, the firm has seen the need to encourage development of the early stages of planning and design to better equip owners, tribes, operators and developers with the resources they need to meet regulations. Clients are encouraged to retain and involve regulatory counsel and consultants at an early stage in the process and foster an open dialogue with regulators, if appropriate, to maximize efficiencies.

JCJ is currently working with clients on developing projects in several states—such as Massachusetts, New York, California and Pennsylvania—as well as tribal jurisdictions and internationally. In these jurisdictions, regulations are either newly developed or revised as jurisdictions expand casino gaming opportunities as part of comprehensive programs of economic enhancement for various stakeholders.

Clients take considerable financial risk and put their reputation at stake when developing a new or expanded gaming facility, so it’s important to get it correct from the beginning. By conducting research to assemble the best team of regulatory counsel, architects and consultants, clients gain trusted advisers to guide them through the ever-changing regulatory environment. Some clients, especially those new to the gaming industry, may be surprised to discover the level of research, design and documentation required in the pursuit of a license to operate in the casino gaming environment. These prerequisites can be particularly intimidating in jurisdictions in which there is competition for a limited number of licenses or the requirement for a proposal stage for a project. Typically, at a minimum, a concept master plan and concept floor plan are necessary, and often more developed architectural plans are needed that show full casino gaming layouts, surveillance system designs and operational narratives.

Navigating this complex scheme with its myriad pitfalls can be an expensive proposition and is one of the many reasons why it is so important to engage an experienced architect for a gaming project. Early design costs necessary for approval stages alone can range from a modest $100,000 to 35 percent of the full architect/engineer design fees. These fees are typically all at risk, as design teams are not usually, nor do they desire to be, in an equity position with the development that would enable them to reap long-term benefits from the operation of the gaming facilities. Add this to the typical and often necessary costs for other planning items—entering into land options; retaining firms to provide legal expertise and guidance; conducting feasibility studies; entering into financial and service commitments with host communities; engaging in preliminary marketing endeavors and exploration of branding; establishing support through a public relations campaign and a host of other communications; and responding to regulatory requirements and concerns—and these project costs begin to take on exorbitant proportions.

Tribes Face Similar Risks
Tribal governments seeking to establish or expand gaming opportunities on reservation land face similar risk factors as nontribal clients, although perhaps in a more controllable and predictable environment. For a tribal entity, it is important to engage regulatory counsel as part of the team during the early stages of planning to draft and negotiate a tribal-state gaming compact. The team can also provide guidance to the tribe throughout the federal government’s review and approval of controlling documents, as well as the development of inter-governmental regulatory agreements during, and sometimes in response to, design planning. In a tribal gaming endeavor, design teams are often involved in land-into-trust issues, environmental impact studies and reviews by the Bureau of Indian Affairs and other federal agencies, including state planning and reviews, depending on the negotiations and agreements with the state and surrounding communities.

The team’s involvement prior to the tribe’s establishment of its gaming regulatory body will certainly affect the design planning. It is therefore desirable and even necessary to use the services of an experienced design team that can leverage prior familiarity with gaming projects to guide experienced and inexperienced stakeholders and regulators during the creation and review of developing agreements and regulations. The team’s expertise in developing the proposed project plan, again, proves to be critical in maintaining cost efficiencies and keeping the project on schedule.

New Models Make Planning Even More Important
In the old days, casino gaming facility design parameters were derived from the Las Vegas or Atlantic City model, even for certain sections of the building codes when a casino “use group” was not defined. Now there are so many diverse regulatory environments that even regulatory agencies have difficulty evaluating the best examples and often feel the need to start from scratch, which tends to make all parties somewhat anxious.

Current gaming regulations, whether federal, state or tribal, typically establish guidelines for the operational aspects of casino gaming at the property. These regulations often address health and safety concerns, impact the formation of contracts and regulate the authority to retain the team members including the design professionals, contractors and vendors. Team members are typically subject to a licensing/registration process and required to prove their good character, honesty and integrity in order to meet the regulatory requirements for licensure or registration. Such requirements often include investigations of the background of the individuals and the financial stability of the company. This has an impact on the gaming project’s cost and schedule.

Clients must be aware of, and plan to allow for, the time required for these reviews to occur during bid and award and the potential cost of the process. Because of the licensing/registration standards set by many gaming regulatory agencies, when assembling the team, clients should be aware of the potential that the pool of qualified team members may be restricted to those who may come at a higher value, based on their ability to obtain and maintain licenses/registrations in the applicable jurisdictions.

Gaming regulations often dictate parameters about building program elements and adjacencies, as well as operational constraints and infrastructure. An experienced team member should know not just the most desirable manner in which to design and build the project, but also the right questions to ask of respective team members.The questions need to be asked and addressed while regulations and guidelines are being developed, if possible, so that the team may utilize its collective expertise to guide regulators in the development of regulations and guidelines and provide a clear path to a desirable and efficient project in the event of a dearth of specific and/or satisfactory guidelines.

The Team Approach Works
The perspective we have gathered from our distinct viewpoints on the gaming industry is that a facilitated team approach on planning and design efforts allows clients to adjust to changing and/or developing regulations.This type of collaborative method helps successfully develop gaming facilities in jurisdictions with unique issues such as diverse as legislative building mandates based on U.S. Coast Guard regulations for riverboats or designing to meet inexplicable legislative regulations mandating separate armored car bays for racing and casino funds. For example, we have seen the team approach help clients recognize significant financial gains, as well as more efficient operations, by using the regulatory specifications to their benefit in order to increase slot machine and table game counts permitted.

Whether guiding clients through the regulations approved by state lotteries or racing commissions, tribal law, state alcohol and firearms, U. S. Coast Guard or gaming boards, we have seen such diverse and varying regulations affect more than is initially understood. By leveraging a carefully crafted team of regulatory and design experts, clients can:
• Maximize the time, effort and expense of all members of the development team;
• Help ensure future opportunities for expansion and renovation;
• Maximize gaming counts, gaming manufacturer identity and mix on the gaming floor;
• Establish the manner in which cage and count rooms should be designed and operated;
• Determine whether armored car bays are required or not and if so, how they are configured;
• Agree upon the level of surveillance system requirements and layouts; and
• Verify the types of door hardware permitted within the facility.

Suffice it to say, involving a strong team while planning an initial or expanded gaming project or proposal in order to navigate the gaming regulatory environment streamlines the process of meeting regulations through design, saving time and money in the short term and creating flexibility for the casino facility in the long term.

Leave a Comment