The need for regulatory reform nationwide has been reinforced by the American Gaming Association’s (AGA) 2011 White Paper that outlines 10 suggested reforms that would greatly benefit states, casino owners, manufacturers of gaming machines and shippers/receivers of gaming equipment. Two of these 10 suggested reforms address the filing requirements for shipping of gaming machines and parts. The bottom line here is that unnecessary shipping paperwork clogs the systems, is not cost-effective, and requires excessive time and human resources to create, use and process.
The Problem in Brief
Consider just a few pertinent facts about these areas of reform. These points demonstrate the extreme impact of the current problem nationwide, and how it might affect your company:
- 365 sets of shipping jurisdictions
- The high numbers of variations by jurisdictional expectations and rules
- 61,000 regulatory filings for five gaming machine manufacturers over 12 months
- A million or more different combinations of shipping requirements can apply to the shipment of a single gaming machine today
AGA Suggested Reforms
New York regulators can enhance the state’s pro-business stance by implementing the following AGA reform recommendations. Reducing the shipping restrictions in just these two areas of regulation would help to make New York more business-friendly to all companies involved in shipment of casino gaming machines and equipment.
Recommendation #9: Eliminate Prior-Notice or Pre-Approval of the Shipment of Electronic Gaming Machines
This eliminates useless paperwork all around. Regulators rarely deny a pre-approval request and shippers have to deal with variable time frames and with deadlines that mean multiple prior-notices for each machine shipped. Coordination of unnecessary paperwork, along with normal time and attention needed for pure logistics and penalties for missed deadlines only adds to company costs.
Recommendation #10: Reduce the Number of Pre-Approvals for Electronic Gaming Machines
Electronic gaming machines and machine modifications already are tightly scrutinized by state regulators and testing labs. The complex nature of electronic gaming machines and the constant industry quest for meeting consumer demands results in regular modifications of existing machines.
We believe a system of manufacturer certifications could easily replace at least one quarter of the high number of pre-approvals required today. This would reduce manufacturing time and shipping costs, and relieve overall paperwork and human resources burdens. In the highly competitive entertainment industry, it is essential to avoid deadening initiatives or loading unnecessary costs on the primary players within that industry to keep it vital and profitable.
Suggested Industry Reforms
In 2014, the AGA published a White Paper dedicated solely to bringing about reform in this area entitled Streamlining Shipping: Recommendations for Regulatory Reform (David O. Stewart, Ropes & Gray, LLP) in which there are seven recommendations for rule changes designed to successfully address shipping problems while simultaneously enhancing consumer protections. These suggested changes to shipping rules ensure that regulatory approval has been met for games and machines installed in a jurisdiction, and that those electronic machines and games are not tampered with during shipment.
Regional or national standardization of shipping regulations would speed delivery of new products to the gaming public and create important efficiencies for regulatory agencies, manufacturers and operators of electronic gaming machines. At the same time, reduction or elimination of unnecessary paperwork would also cut costs for regulators without reducing the effectiveness of industry regulation.
The AGA suggests these specific reforms:
- Allow Shipment of Complete Machines – Factory assembly is superior to on-site component assembly. Reduction of delivery requirements, paperwork and errors.
- Establish a Uniform Advance Notice Period for Shipments - Reduces costs of doing business, simplifies delivery process without reduction in regulatory effectiveness.
- Allow Shipments Directly to Customers and to Multiple Customers – Reduces shipping costs and delivery times.
- Allow Shipment Without Express Prior Authorization – Reduces variable authorization delays, eases coordination of shipments, and does not reduce regulatory effectiveness.
- Exempt Non-Gaming Components from Prior Notice Requirements – There is little reason to fear tampering with non-gaming machine components.
- Remove the Requirement of Prior Notice for Removing Slot Machines – Facilitates shipment scheduling, reduces administration burdens. Post-shipment notification to regulators is sufficient for monitoring active game inventories.
- Allow Shipment Notices to be Delivered Either Electronically or Via E-Mail to a Single Regulatory Official – Electronic and e-mail notifications can easily be collected and stored for later use if needed or forwarded to other officials.
Changes suggested by New York regulators offer some relief and hopefully will influence other states and jurisdictions to make similar changes. The best outcome would be to see changes in shipping requirements instituted nationwide, for simplicity, cost-effectiveness and highest benefits to gaming/casino companies, gaming machine manufacturers and shippers. The suggested New York changes make doing casino business in New York more profitable for everyone, including the state.