Associated equipment manufacturers (“AEMs”) who do business in Nevada are soon going to be subject to a whole new level of gaming licensure requirements. Thanks to the recent passage of Nevada Senate Bill 38, the Nevada Gaming Control Board (the “Board”) has been granted expanded power to regulate and license AEMs.

Most gaming jurisdictions lump all gaming equipment manufacturers into a single “manufacturer” licensing category. Nevada is an exception; it classifies manufacturers into two groups: gaming device manufacturers and AEMs.

In Nevada, gaming devices, which include slot machines, are defined as those devices or objects used in connection with gaming that affect the result of a wager by determining win or loss. Associated gaming equipment is anything other than a gaming device that is tangential to the gaming operation. Examples include dice, cards, items that report revenue, and equipment used for counting money.

Under the current Nevada regulatory scheme, gaming device manufacturers are required to go through the full gaming licensure process with the Board and the Nevada Gaming Commission (the “Commission”). AEMs on the other hand, are not required to have a Nevada gaming license but are subject to generally much less rigorous discretionary licensing approvals.

Now, with SB38, the licensing for AEMs will move from discretionary to mandatory. This does not mean that every AEM will need to undergo the full licensing process like a gaming device manufacturer. What the Board envisions is a tiered system for AEM licensure and approvals, which will consist of different classes of regulatory approvals or licensure depending on where on the scale an AEM falls, from full gaming licensure to nothing at all.

This change is also intended to shift the burden for the cost of any licensing investigations from the Board to the AEM applicant. This is because in Nevada the gaming applicant is required to pay the cost of the licensing investigation in cases of mandatory licensure, but the Board must bear the cost of investigation when it calls forward an entity or person who is subject only to licensure on a discretionary basis. Therefore, those AEMs that will be required to undergo the mandatory full licensing process will also be required to pay the substantial costs of that licensing investigation. The rate currently charged by the Board’s investigative staff is $135 per hour, and the gaming laboratory agents, who are charged with deciding into which classification or tier an AEM will fall, are now billing their time at $155 per hour.

Finally, the employees of an AEM are now deemed to be “gaming employees” and subject to regulation as such.

What this will mean for AEMs will be dependent on the type of equipment they manufacture and where that type of equipment may fall within the tiered structure that the Board and Commission will be crafting. The Board will be hosting workshops where members of the AEM industry will have the opportunity to provide input.