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Watching The Watchdogs
It’s no secret that the glitz and glamour of casinos and gambling have made Las Vegas a bucket list destination for people all over the world.
A little less flashy are the jobs of regulators tasked with ensuring that gaming companies follow the law. But the work is of special interest to Melissa Rorie, an assistant professor of criminal justice who recently completed a fellowship at the UNLV International Gaming Institute. Rorie, who studies white collar and corporate crime, set out to find out more about the relationship between gaming watchdogs and their industry counterparts.
Her paper, Regulating a “Pariah” Industry: The Need for a Responsive Approach in Gambling Markets, appeared in the UNLV Gaming Research & Review Journal in 2017.
What turned your interest to gaming regulation?
I grew up on the East Coast in Washington D.C., where there’s a big focus on federal agencies like the Environmental Protection Agency. Then I moved out here, and realized that there is this interesting dynamic between the gaming regulators and gaming companies. Let’s face it, there’s a reason why we’re able to live here relatively cheaply and not pay income tax. How successful we are as a state relies on the proliferation of gambling to a certain extent. But regulators also have to protect people.
How is gaming regulation different from other types of regulation?
Gambling is a vice similar to tobacco, alcohol, or prostitution. For a lot of people these products are fine, but for some they’re inherently problematic. With gambling, the potential for harm is just as direct, but can be much more fast-paced, and has physical as well as financial consequences that people don’t really think about. If you smoke cigarettes, you’re not likely to experience major physical consequences for, like, 20 years. With gambling you can lose all your money in a few days, which can then lead to bigger and bigger problems. The consequences are a little more obvious than for many other vice industries, and are often related to other vices as well.
One of your papers compared the approach of gaming regulators in Las Vegas to that of their peers in Atlantic City. How do they compare?
What I see in my research implies that Las Vegas regulators are taking a very responsive approach, where they work with corporations to motivate them to be in compliance. That said, when corporations are engaging in particularly egregious behaviors, regulators will start fining and punishing them in other ways. In New Jersey, regulators seem to be a bit more adversarial, willing to sanction corporations for more “minor” incidents.
A phrase seems to crop up in your research a lot, “responsive regulation.” Can you describe that?
The idea is that regulators don’t need to have this adversarial relationship with the people that they’re regulating. Instead they can assume that corporations want to be in compliance, that they are interested in protecting their consumers, and that they’re interested in operating in a socially responsible manner. It’s kind of like parenting, where at first you do gentle corrections, motivating your kid to be a good person for the sake of being a good person. Then when your kid keeps screwing up, that’s when you start grounding them.
Are there dangers to responsive regulation? For example, financial regulators could become too cozy with Wall Street during a financial crisis.
Responsive regulation, in theory, is actually fairly punitive. In practice, however, regulators are often unable to escalate sanctions, because of political pressures, industry power, etc. Interestingly, in my research (covering regulatory actions between 2009 – 2016), it seems that Las Vegas regulators are actually more punitive than New Jersey regulators when they have to escalate sanctions.
How do the different approaches affect the industries themselves?
Atlantic City has been said to have been economically stagnant because of regulatory approaches up there. The casinos up there are not really allowed to do much more outside of a fairly standardized approach to gaming. In Nevada, casinos have become much more than gaming. They’ve become entertainment centers. These days, our non-gaming revenues are better than our gaming revenues. Regulators impact the shape of the industry. And it comes back to that conflicting goal of, ‘are you trying to make money off the industry or are you trying to protect people from the industry,” and how you find that balance.
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