Nevada Gaming Control Board with Chairman Mike Dreitzer

Good morning, Dan. How are things in the silver state this morning?

They're wonderful. It's good to see you, Nick. In honor of the Olympics, we've been celebrating. We had a Tuesday Mardi Gras snow dusting here in the Vegas valley.

Oh, you're kidding me. So you actually have snow on the ground now?

No, no, just-

Oh, it's already gone.

Just the dusting. Yeah.

Okay.

And I know we're audio only, but I know you've been celebrating. I see you're in your Orange Holland speed skating suit this morning.

I'm really, really into it. Yeah, actually they're bummed. The Dutch are always bummed when the entire podium is not orange. So that's the issue. There's an American who's given them some hell this year, as I understand. All right, so Dan, let's see. So the listener question I pulled this month really tees up this month's news item and part about what we'll be discussing with today's guest. So I'm going to lead with that. Before I jump into it, let me say we love to tackle any questions that anybody listening may have. So if you have a question about what we're presenting or something you'd like us to present, please drop us an email at reelcast@reelmetrics.com. Again, that's R-E-E-L-C-A-S-T @reelmetrics.com, our policy is to keep all questions anonymous, so please speak directly and don't worry about us revealing our identity. That's not something we do.

So this question comes from a Spanish operator who asks, hello gentlemen. The industry news, and I include your podcast in this, is filled with so many stories about prediction markets. I understand that governments want to tax these companies, but your episode with Mr. Bussmann left me with the feeling that this is more like a fight to the death than a simple tax issue. Can you explain this for us, Europeans? Why are Americans so worked up about this? So very good question. Many thanks to the listener for that one, and I'll do my best to summarize this as succinctly as possible. So this matter is a very big deal in that it's really a case as most fundamental of the national, or as we call it, America, the federal government, challenging the sovereignty of state and tribal governments.

So the US Constitution is very specific that unless power is explicitly granted to the federal government by the constitution, that power is reserved for the states. So gaming regulation is not a power granted explicitly to the federal government by the constitution and has therefore been squarely in the hands of the states for better part of 115 years. So the only real challenge to that was in 1988 with the passage of the Indian Regulatory Act regulatory Act, which established that tribal nations themselves, sovereign entities, also have the right to regulate and tax gaming within their sovereign territories. So that's really the foundation on top of which the world's largest and one of the healthiest, most vibrant and best regulated gaming industries has been built.

And the laws are on the books, the licensing procedures, enforcement infrastructures, everything's in place properly empowered and extremely effective. It's also, you have to say, pretty adaptive and that as new technologies have entered the fray, like sports betting things of this nature, the states and tribes have done really impressive job of folding them into their regulatory and tax framework. So the headline just there is that the system is anything but broken. So as we mentioned in the previous episode, roughly 90% of the trades that are occurring on these prediction market apps relate to the outcome of sporting events. So as is their right, the state and tribal governments have defined this as bookmaking and they've moved to license and tax those providers within their sovereign territories.

The federal government, however, is using some extremely convoluted and bizarre logic to argue that sports related trades aren't sports bets, but free market valuations of information that has the potential to impact, for example, the valuations of sports related industries or companies. And if that sounds logic, it's because it is. I think what it has everybody really concerned in America or reason it's such a big deal is really the slippery slope. So if you take the federal government's logic to its ultimate conclusion, it can be expanded to encapsulate virtually any form of gambling. And if that's permitted to stand, I think there's no doubt that it's going to plunge the entire American gaming industry into unbridled chaos. And as an industry, it's not like we require incremental proof that chaos and gaming don't mix. It's not a recipe for success. It's a core reason in fact that these regulators exist in the first place.

So to the listener who asked that question, thanks again. I hope I've answered it. It's a very serious dispute and indeed a lot hangs in the balance. Now, Dan, we had some fortunate timing on this topic and that yesterday you sent me this Wall Street Journal that was published on Tuesday and entitled States Encroach on Prediction Markets. So I encourage everybody listening to read it. It was written by Michael Selig, who's the chair of the Commodity Futures Trading Commission. That's the agency that's currently regulating prediction markets, and he's the official who's leading the charge for the federal government. So in this article, he lays out his argument, and to be honest, passages of that, I had to reread three or four times, and I'm not entirely certain that I could summarize it. Dan, you want to give it a shot?

Oh, that's a tough one. I mean, I think what you're getting to, and people will have to read it to believe it, but I mean, effectively, he said essentially everything is unrivaled that falls under their jurisdiction, literally with the exception of onions. So the fear is, I think you're saying is scope creep here. So we just had Super Bowl a few days ago in Vegas, and some of the early states published sports betting handle numbers, and two in particular that publish it. Nevada was down 12% year over year. Pennsylvania, I want to say it was down more than 40%. And folks are obviously attributing that to prediction markets. But when I say scope creep, two things I think about. I think about in several states, iLottery was approved a few years ago.

People have in their mind what a lottery ticket is. Well, in states like Pennsylvania and elsewhere, iLottery, if you go on the site looks like slot machines, it looks like online slots. And the other, which is a perfectly regulated industry and legitimate is HHR. HHR is taking sports events results of horse races and using it to replicate a slot like experience. So the theory products coming to market that, okay, it looks like this today, and the impact is 12% or 40% on sports betting will all of a sudden, if down the road, if there is a slot like experience that's used as a sports future contract as the engine to generate the outcome, what impact could that have on either online casino or brick and mortar casino? So in my mind, that's the bigger fear.

And certainly there is the other thing, so we were talking a bit before we started recording today about one of the more vocal critics who's come out about this is Spencer Cox, this Republican governor of Utah who is saying this logic, this guy's putting forward is crazy. And somewhat asked, well, why is he doing it? Well, because if all of a sudden this falls under the purview of the federal government, for example, then we have a big issue with keeping gaming out of Utah, for example. So it could go the other way. So anyway, it's yeah, quite a messy thing and I think it's a good segue to introduce today's guest because it's definitely a person who's involved in this. So this gentleman is a New York native and a graduate of both Cornell University and Emory Law School. He began his career with a three-year stint as Nevada's Deputy Attorney General.

From there, he moved on to serve as EVP and general counsel at MyCon/Progressive Gaming, co-founder and COO at Global Gaming Group, COO at BMM Test Labs and CEO of Gaming Arts. In April of 2025, he was appointed as a chairman of the Nevada Gaming Control Board, a post that he began in June of last year. He's incidentally a former Leiden resident, an old friend of the podcast who visited us in our third season and we're absolutely thrilled to have him back here today. So I'm referring of course to NGCB Chairman Mike Dreitzer. So Mr. Chairman, how are things with you today, sir?

I'm doing well. Doing well. Thanks Nick and Dan, always good to be with you. Feel free to call me Mike if you'd like, however that works is fine. And yes, how is the weather in Leiden today?

Take a guess.

Cold.

Yes, and rainy.

And rainy, yeah. Some things don't change, I suppose.

By the way, where did you live? Were you on Rapenburg when you lived here?

Oh, boy. So this goes back a long time. And so I was near one of the arches, if that makes sense. One of the ports near the Morspoort.

Oh, yes. Morspoort.

Is that a thing?

Okay. Yeah.

Yeah, I was-

Absolutely

... half a block from the Morschpoort as I recall.

Okay. Yeah, so you're just around the corner from where our office is, so yeah.

Oh, great.

Very cool. Very cool. All right, so Mike, I thought we'd just kick off just on a personal note. So the NGCB chairmanship has obviously been held by some big names. So you have the big Nevada names for sure. Robbins Cahill, Phil Hannifin, Bill Bible. These are huge names in Nevada, and it's a role steeped in quite a sensational history and certainly plenty of industry-defining standards and precedents. So I'd imagine that on a purely personal level, the gravity of the office is pretty huge and a little bit daunting in terms of responsibilities. So can you talk to that initially here?

Sure. So I moved to Nevada in late 1994, so I've been here for 31 plus years and have been a participant in the gaming industry since the late '90s as one of the Deputy Attorney General representing the Nevada Gaming Commission and Control Board. So yes, I fully understand the gravity of the office and the importance of what the control board does. And at that time, Bill Bible, who you mentioned was chairman of the Nevada Gaming Control Board. And so in that time period, there was of course a lot of growth, a lot of interesting things going on, issues of the day that were just fascinating. And I always thought that if I ever had the opportunity to come back in particular in this position, that that would be something I'd be very interested in doing. And I was very fortunate to have the trust of Governor Lombardo when he asked me to assume the role beginning late June, as you indicated.

So it really is the professional honor of my life to be able to do this in an industry and in a city that has meant so much to me and my family personally, but also an industry that I know is critical of the state of Nevada. So certainly an opportunity to, I think, bring experience to bear industry experience and do what we could to make some changes and potentially leave this role a little bit better than we found it. So yes, iconic, very humble to have the opportunity, and I have a very specific game plan about the things that we hope to accomplish over the course of the next months and years.

And let's talk about that because, so well, as you mentioned, as everybody knows, you spent a lot of time in the industry thus far. And then during a panel at last G2E, you mentioned that regulating at the speed of business is a theme that you'll be pursuing at NGCB, a statement that the industry really interpreted as addressing regulations, policies, and procedures that perhaps haven't aged well or no longer really serving the state's best interest. So can you unpack this a bit and discuss where you feel perhaps some modernization or refinement is required?

Yes, I can. So let me go back to a time before I was in the seat. So Governor Lombardo, when he came in in '23, talked a lot about modernization of regulations and consistent with the governor's mandate, the idea was to streamline and remove regulations that didn't make sense anymore. And my predecessor, Kirk Hendrick, who has been a great friend and mentor to me for many years, began that process and did a wonderful job of starting to look at many of the regulations that existed in our space, the Nevada Gaming Commission Regulations and thought about and made significant headway in modernizing some regs, removing some regs. And I picked up that baton and kept going. And so I do feel as if there's any number of areas that required us to modernize, simplify, or in some cases remove the regulations. So you can change regulations for a few reasons.

Number one, you can change regulations if the legislature has made a change to the statutes, which happened at the last legislative session in a few areas, namely Gaming Salon as an example, disseminators a few others. So we had to make reg changes to support the statutory changes that were made at the last legislative session in 2025. And then there's a number of areas such as technology, which I'm happy to talk about, and certain other aspects of regulation, specifically anti-money laundering, some enforcement stuff, a number of other areas that we felt required updating, modernization. And that concept of regulating at the speed of business makes a lot of sense from our perspective. Obviously we don't want to, and we will not sacrifice security, we will not sacrifice safety. We will not short circuit or shortcut the process, but there are ways in 2026 to make things make sense so that we can move faster and really be accountable and support the licensees as they are accountable to us.

It's a two-way street, and I certainly have learned that in my time, the industry. And so we have gone about the business over the course of the last, I would say six months to engage in a series of rather substantial reg changes across different areas. And so that's what we mean by the speed of business. We want to give our licensees the full opportunity to have regulations that are fair, that are transparent, that are consistent, and that are meant properly for 2026. And so we've done a lot of that in some key areas. One super highlight was in the area of gaming technology, which certainly I'm happy to talk about, but this idea that people wouldn't bring product to Nevada or if they had properties in multiple states or countries, they would bring product to Nevada last. I mean, that is a condition that we would not stand for. I couldn't abide it. And so we needed to make some changes not only to the regs but other areas to make sure that Nevada State at the forefront of gaming technology as well as other areas.

Mike, is Nevada, is it currently working with test labs? I've been updated on this.

So we have registered test labs that do the testing of product for our licensees. And then those products get, once they make a letter recommending approval or whatever the requirement is, it then gets sent over to the Nevada Gaming Control Board lab to approve. And so that's the process. And I felt as though there were things that could be done to that process to modernize it and to improve it. Most notably that we would work with the labs as effectively as their registrants, but they're agents of ours and they work hard to view product to get it right. They have vast resources. And so I think it's important for our licensees to work in conjunction closely with the labs and in turn work closely in conjunction with us for technology on an ordinary basis, but also importantly Nick, for new technology, we want to be at the forefront of that.

We want to offer a path for new and interesting and compelling technology to come to Nevada in ways that, of course follow our regulations and allow for the product to be reviewed fully. But we want to be at the front side of that. And so we're very open to do technology, and it's important that our licensees from my perspective, have the opportunity to have the latest and greatest when it comes to product offerings, the best technology, the newest technology, the most compelling technology for their players. And so we want to do everything we working not only with our licensees, but to your point with the labs as well, to make sure that we're bringing these products promptly. We're bringing them in a way that's transparent, where they understand the path they have to take to get the things approved and that we're bringing it so that in 2026 moving forward, our licensees can offer the best of the best to their players.

Mike, morning and thanks again for joining us. You brought up technology obviously a few times. We'd love to dive into it just a little bit more. Because I think this is one of the areas that the industry has been really excited about seeing someone from the supplier side move into the chairman role. Slot themes are approved very quickly in Nevada compared to many states, but as you mentioned, many folks in the industry felt there's an opportunity to be at the forefront of testing and implementation of other leading tech solutions over the last few years, whether it's cashless gaming, which has been front of mind, there have been various focuses on things like facial recognition and more recently a lot of buzz around, whether it's with AI or not, real-time data and personalization of the player experience. You've obviously touched on this, but would love to hear your thoughts on how you'd love to see Nevada evolve on this front specifically. Are there any adjustments to either the field trial process in the state or are there specific technologies that you're hearing from the licensees that are of most interest?

Absolutely. So as you correctly point out, Dan, I've been in the industry a long time and I certainly take the philosophy and the view that having been in the industry, I can certainly be an effective regulator of the industry. I believe that that can go hand in hand. I believe fundamentally that licensees want to do the right thing. And obviously there's always going to be a need for addressing issues where people do things they shouldn't and we have a full robust enforcement procedure and approach, but by and large licensees and participants in the industry, they care for it and they protect it and they want to do the right thing and they need to be shown what the rules are. There needs to be consistency, there needs to be transparency. So I think the lab is a very important case to discuss in this context.

I felt as though when I came here, we lacked certain of that consistency, certain of that transparency. People wanted to bring technology, many of the technologies you describe and others, but they didn't know how to do it. It was, "Hey, do a white paper and we'll get back to you." kind of thing. And so we needed to show leadership. We needed to provide guidance to explain not only how of course as you indicate what I would call everyday game approvals, but also newer technology, cutting edge technology, interesting technology, compelling technology. We needed to show a path to licensees and others in terms of how it could be reviewed, tested, and ultimately adopted for use in the state of Nevada. And so that started with the way that we went about the lab and went about that business. So the first thing was leadership. I was very fortunate to have Jeremy Eberwein who agreed to come on as the head of the test lab.

Jeremy had had a lot of experience both with an independent test lab, but also more than a decade I believe, in the state of Nevada as well. So he totally understood the space and his orientation was that there are ways to do all these things. There are ways to stay in the forefront. There are ways to keep our gold standard while at the same time maintaining the proper levels of security and safety and doing all the proper things, checking all the boxes. So he agreed to come on, which was a key point to review all of that. Now, in addition to that, once you had good leadership, we looked at our regulations and we determined that our regulations were in many cases dated, in many cases, significant departure from what made sense in 2026. So we had to go about the business of making what I believe to be substantial changes to Reg five, Reg 14 and some other related regulations to be able to have newer technologies come in.

In addition to that, we have changed our standards, not in a backwards way, but in a forwards way to again reflect the need for 2026. We've made some adjustments to field trial in this process and the need for field trial. There are certain circumstances where it won't be needed. There are certain circumstances will be modified. So we really have paid attention to all the things that are necessary to bring the latest and greatest technology to the state of Nevada. All the things you're describing more. In addition to that, we need to be more, for lack of a better term, customer service friendly in terms of technology. By that, I mean an updated website, which we're in the process of doing, making it easier for submissions to happen, for licensees to understand the status of submissions. So we're doing all of that. And then it really is comes down to a matter of leadership and leadership philosophy, which Jeremy and I very much share.

I invite licensees and others who seek to participate in the gaming industry in Nevada, particularly on the technology side, to come and talk to us. And that will yield, it's our goal and priority that will yield a very specific response about what needs to be done, about how the product is on the right track or might need this or might need that or where it's deficient. And so that the potential entrant with the new product can understand where they stand right away and have a reasonable goal and timeline expectation about getting a product through the lab. All things that were frankly in the past somewhat opaque. And so we're just clarifying a lot of this. And I think the process of doing all that, which we are underway with, we had what's called a workshop where the control board hosted stakeholders to talk about their view on some of the potential changes.

And obviously the stakeholders had some concerns, some things that they wanted us to look at, which we were happy to engage with them on. But by and large, there was a lot of agreement not only in the manufacturer's segment, but all throughout the industry that this was something that was needed and this was something that would help catapult and reestablish Nevada as the gold standard. And the standard we're looking at is Nevada leads the way so that we're getting these technologies first. It's good for the manufacturers, it's good for the operators, it's good for the industry. So there's a lot of agreement around that, which we were grateful for, made some changes. And then ultimately this month, later this month, the way our system works is the Nevada Gaming Commission. It's our expectation and we're presenting regulations for final approval in the technology area. So that's the next step to have that ingrained.

And then we're seeing beyond the words and the rhetoric, Dan, we're seeing substantial changes. We're talking to people in and around the Nevada gaming industry. We're saying, "This is great. We can bring our technology in areas like AI, other areas, we want to see it. We want to promote the evaluation and ultimately implementation of these things." So it's not just a matter of, "Hey, here's what we think's going to happen." We're already seeing tangible results where new and novel products where in the past they felt discouraged or uncertain about how it could go in Nevada and therefore didn't do it. We're not talking to CEOs who say, "Yeah, we're going to come to Nevada first or amongst the first." And these are the kinds of things that we like to hear. These are kinds of things that are fixing that which needed to be fixed, that we should have the latest and greatest in Nevada, and it shouldn't be able to go up the road to California, Arizona, nothing against those fine jurisdictions, but we too should be having a seat at the table to get the latest and greatest.

So yes, there's all kinds of fascinating technologies, some of which you describe and certainly others that we're taking a look at. And we want to be at the head of the table where they can come here, test them. In some cases we'll adopt them and straight away in others, and we want to be at the forefront of that. And circling back, that is very consistent with the governor's vision for streamlining regulation, bringing regulation to the speed of business. We have other examples that we're working on and have worked on in the areas of money laundering, which has been a big topic. Other enforcement topics, audit topics, cybersecurity. So we're doing this in a number of areas, but most certainly a very impactful one is the technology area where we are seeing already in these few short months, big, big changes and hope and expect to build on it.

Great. Cool.

That was a long answer, but that's the topic.

That's right. It's perfect, Mike. So as you heard and as we were opening the episode today and that opening segment, over the last couple of podcast episodes and whatnot, we've devoted a fair amount of time to discussing prediction markets and how by circumventing state and regulatory tax regimes, they really present challenges to the regulated gaming model generally. So you're one of the few regulators who's taken a very firm stance on topic, not only issuing cease and desist notices, but also filing a civil enforcement action against Polymarket's parent company in January of this year. Now, there's obviously active litigation on this, and I know that you're very limited in what you can say here, but I was hoping to explore your general thoughts on the matter. And I guess I'll just kick that off by posing the question that we keep asking ourselves. And that is if 90% or more of your revenue is derived from propositions, pegged to the outcomes of sporting events, how exactly are you not a bookmaker?

So I guess, let me start with what you'd understand to be the necessary caveats. Obviously, we are in substantial litigation with multiple parties around this topic, so I need to be very careful and adhere to the general policy, which is that we don't talk about litigation.

Absolutely.

Now, having said that, I'm definitely happy or willing to talk about prediction market and my general view of it as a regulator and the state of Nevada and what all of that means. So we also, as you know, I'm sure have issued several statements through notices provided to public about our position. So I can give my opinion and I can stick to those and be able to give some thoughts on this, maybe some things that you haven't been thinking about and folks haven't been thinking about. But I think a big part of this, Nick, is education. I think in every corner of this, not only the stakeholders, but the general public needs to understand what this is and what's going on in a full way.

Totally agree.

So first and foremost, if you are risking your money based upon the uncertain outcome of a sporting event, that's betting and that is the state of Nevada's belief. And we've said that many times that it's gambling. And if you're going to do that and you're going to offer these things you need to do so when properly licensed, now I want to talk about this and some of the things that I heard you talk about before, but there's I think more to it. So first and foremost, in betting you need to have a license and you need to come under the proper regimes, not only in Nevada, but elsewhere or importantly, those states that have opined specifically that they don't want it. Those should be respected too.

Absolutely.

And there are laws on the books in these states that they make conduct of bookmaking illegal and that should be respected. So yes, most certainly, it's a preemption issue, the notion that this should be left to the states and should be allowed to be properly taxed and all the things that have long been discussed up there. But then there's this notion that this is a regulatory overreach for the states to step in on this. And obviously we disagree, but I think it's important in addition to the preemption issue, which will work its way and have the result it has, I think that this needs to be seen properly through the lens of a really important consumer protection lens. Even setting aside, again, the preemption state versus federal. And that's been talked about and obviously we've made clear where we stand and others have made clear where they stand, but I think it's really important to look at these other issues that are frankly very concerning. So Nevada Gaming Control Board in July of last year celebrated its 70th anniversary. We're approximately, I think a couple of weeks older than Disneyland, which is interesting.

Wow.

1960, 1955. And so we've been doing this a really long time as of other states, not quite as long as us, but we've been doing a long time. And there are reasons why you have protections and there are reasons why you have regulations. They don't just exist to be regulatory overreach. They exist because they protect players and they make the industry safe, and they make the industry fair. And so you need all of these things. And I think in any respect, the regulation is important because it addresses things that must be addressed. What do I mean by that?

There's real questions here around a number of areas. Number one, know your customer. We have very strict regulations around that, and for good reason, we want to know that the players who are playing at our casinos or anywhere are 21 or betting on our apps are 21. That is the law. And so 21 is the age. And so when we see very real cases where people are on these prediction sites and they're 18 or sometimes younger, that's a concern. So the need to be consumer protection around making sure that that is understood, your customer. Issues of problem gambling, are those addressed at all? Obviously in land-based casinos and in many jurisdictions, online casinos, what we have and then what other states have, they address these issues. Now, are these being properly addressed, problem gaming and responsible gaming? In addition to that, you have money laundering concerns.

We have very strict rules and regimes around that as do other regulated jurisdictions. What, if anything, are prediction markets doing about money laundering? What about insider betting? We have very strict rules around insider betting. Many of the scandal that arose, arose because they were caught by licensed sports books. And there's policies and procedures like what's being done there. So these issues, who do you call if there's a problem? And will your problem get addressed as a player? If you're playing And then there's an issue, yeah, you might get a number, but are you really getting redressed for your concern? These are all things that are part and parcel of a robust, responsible, safe regulatory system that we need to make sure exist. And frankly, in the prediction space, we question the existence of these, the real existence. I mean, you can talk about marketing, potentially window dressing around the issues, but are the consumer protection issues that I just outlined, are they in place? Are they real?

And so these are all issues that we have wrestled with and addressed over the course of the last 70 years. Other jurisdictions have done it for a very long time. The question is, what is the reality? Are consumers being protected? And I would suggest that potentially that's something that should be looked at. I understand that prediction markets have been around for a very long time, and there's all these claims about all these topics, but let's look at it. Let's talk about it because that's a real question. So it's not just a preemption issue in states versus federal, which is a very real thing which the courts will address, but are these other issues being properly addressed in the way that we do it? And it's not, again, overreach. It's necessary. It's necessary regulation to make sure that it's fair. And so these are questions that should be asked and are fairly asked.

And so that's part of it too. The other piece too is the question of whether prediction markets are truly peer-to-peer as they claim. There's a real question as to who has the other side of any given prediction contract? How do they truly establish that? And that's been well considered in the courts and this sort of thing. But is Nick doing this in, let's say you're in Iowa, takes one side of the Super Bowl and then Mike in Las Vegas takes another side of the Super Bowl and you do a prediction of New England, and I do a prediction of Seattle, and is that truly peer-to-peer? And that's what they claim. That's what the claim is, that it's just peer-to-peer. You're not betting against the house. You're betting against Nick in Iowa. And so you really need to make sure that that's the case. And there's some significant question about whether that's really the case and these are all things that are out there.

I guess my point is it's not, again, it's not just a preemption thing and state's rights, again, all valid and all part of our position, but it is a customer and a industry security thing. And whether what we do and what we have done for many years, we have real tangible regulations and requirements. We actively work in conjunction with our licensees to make sure that they're adhering to all of these rules to ensure that the gaming is fair and the gaming is safe, and there's redress if necessary and AML procedures are being followed. Obviously, things come up, but insider betting, we have rules around when we stop taking action on some things to avoid insider betting. And that's always a concern. We don't do peer-to-peer in Nevada, but we definitely are transparent about how it's a true book and others the question as to whether they are. So these are all things that people need to ask in this larger context.

And of course, the thing that Dan alluded to earlier, quite correctly, which is where does this go from here? There are products that exist that utilize prediction outcomes to create or fold it into a random number generator. And as a result, you have online prediction, slot possibilities or brick and mortar prediction slot possibilities or prediction casino possibilities. You can turn a lot of different games into prediction type games utilizing prediction outcomes in an RNG. And so that is a very real concern, and I look at that concern two ways, all of that concern. Number one, obviously in Nevada, I think it's pretty clear how the chairman of the Nevada Gaming Control Board will see these things on behalf of in protecting a robust gaming industry. But what about the states that don't or specifically have said in regulation and in legislation that it's illegal that these things are being imposed on them.

So there's two sides of the coin, and therefore it's properly kept as a state's issue. I think if you talk about historic horse racing, as Dan, I think mentioned earlier, that at least the states decided that they wanted it. And if a state speaks and says, our people have voted or whatever the mechanism is, and they accept this and they do it, that it's based on horse outcome or whatever the case may be, then more power to them, but it's not being imposed on them when they have otherwise expressly stated that they didn't want it, which is certainly the case across many states in the US. So again, I just want to have that full picture. The other piece that I'll mention is this. This position has been accused of being anti technology. We don't want the new technology, we want the older technology. As I said earlier, our position is consistent that we want newer technology and that if there's a product that is in the prediction space that wants to come to Nevada, they subject to of course, seeking a license and suitability, which everybody must go through.

And then the product getting fully reviewed ultimately by our technology division like anybody else, if someone wants to go through those processes, they're more than welcome. And we would welcome the technology, we would welcome the innovation most certainly. So we're not these old school regulators trying to stand fast against new technology. We welcome new technology, but the individuals doing it have to pass our suitability criteria as they would in other states, as they do here, as they have for many years. And then the product itself needs to meet our standards. So I want to make that point clear too. So it's much larger than just federal versus state. That of course is central it. But these other pieces are very, very important. And it's not a protectionist issue in terms of the state of Nevada or the state of Massachusetts. It's a consumer issue and it's fairness that really need to get examined here.

And I would say I would put the state of Nevada's record in each of these areas up against any other regulatory body, and I think we would compare very favorably. I think that many states have done a great job of a lot of the areas that I've outlined, and there's certainly claims that these protections do exist within and related to these markets. But I think it's a fair question to challenge those and ask ourselves the facts and do they really provide the level of protection and fairness that is found at the level of state regulatory bodies?

And Mike, does that, I mean, is the slippery slope in these arguments? I mean, I would assume this is absolutely fundamental to your longer term concerns, is it not? In terms of just where this could go? It really does just seem like the federal government all of a sudden decided to redefine sports betting as a non-gambling activity in a way.

Well, yeah, I don't know. I can't speak to what the federal government has decided or how they decided that I can just say in my lane, which is that we have done a very good job for a very long period of time properly regulating gaming of all types. Obviously, Nevada has different types of gaming and different approaches. We have the in-person signup requirement, which is part of our approach and our heritage and our public policy. So we regulate that, and other states have other approaches, and that's at least it was decided by the state. But yes, there is a concern as I've described it, an existential concern related to where this could go, I believe. I think certainly as Dan has correctly pointed out, HHR is one example, but again, at least in that case on a state-by-state basis, the states decided that they wanted it. And that's fair enough.

But also we, there's a history as we all well know, class II gaming, the use of the entertaining display in conjunction with the bingo outcome, and that you can now look at devices, and Dan probably knows far better than I, but you can look at devices that sit side by side and you can't tell the difference in many cases between a Class II device, a historic horse race device, and what we call a Class III casino device and soon a prediction device. That technology exists, and there are really people who understandably will look for loopholes and try and create a product and put it out there. So this is opening the door for that and for the reasons I described, that's unacceptable unless all of these questions are answered. So again, I don't speak to the federal government said this or that. I'm just saying these are some significant questions that need to be addressed on the legal side, preemption and otherwise, but on the consumer protection side, on the technology side, and it's critically important that we as a country get it right.

And the other piece I'll say is relative to other countries, as you indicated correctly, other countries are looking at this issue with great interest, which fair enough, but there's talk that prediction market from the sports side might go to other countries. And again, different countries have different regulations and everything's all different, but a lot of smart folks out there and there's talk that it could hit the shores of, I've heard Brazil, I've heard countries in Europe, so the world better get in front of this because it's coming. And again, prediction is not a bad thing. We're not anti prediction. We just think that it needs to be done in such a way that it's fair and safe and accounts for all of these intricate things that we have learned through the years really matter.

Yes.

So that would be my points about this, my general points and comments on prediction.

Thanks so much. I just wanted to follow up a little bit on a couple of the licensing implications because you spoken publicly, and I don't want to misstate what you've said, so please correct me about how you as a regulator view a licensee's involvement in prediction markets, not only in Nevada but elsewhere as something that you're going to consider as part of future attempts of companies and individuals to gain Nevada licensure. The audience of this podcast historically is mostly land-based operators. Many of them overseas, but many of them US-based as well. So many of the listeners either work for licensed operators in Nevada or may be licensed in Nevada or elsewhere today. It just seems like such an intertwined and complicated landscape that one of the things that I think about is what are potential second order impacts of companies moving into these, what I'm going to call unregulated markets.

For example, there are casino operators in Nevada today that are multi-state operators that have market access deals for skins in other states, companies that have launched prediction markets. You have employees of multi-jurisdictional operators who may or may not be licensed in Nevada themselves, who used to focus solely on regulated traditional gaming that today now also have prediction markets as part of their jobs. I may be overthinking this, but I'm just curious, many of these companies and people are evaluating their own future potential licensing needs in Nevada or elsewhere. Is this a topic that's being raised from licensees to you or is it something that you think about on what are the potential implications to not just companies being regulated in Nevada, but individuals as well?

I mean, there's no question that as with all areas of this issue and other issues in our space, it's very complicated and it has downstream potential effects to related companies, individuals, all the things that you suggest. And so we have said publicly that direct involvement in the prediction markets is incompatible with an entity or an individual's ability to participate in Nevada's gaming industry. We meant that and we want to make sure that there are no unintended consequences for licensees, most of whom, many of whom they're all doing the right thing. They're all trying to do it as best they can. And so as with a lot of issues in what we would call gaming law, administrative law, this question, so yeah, we're in regular dialogue with individuals, and I invite on a regular basis because I certainly, and I don't think anybody could have considered all of the hypotheticals or the things situations.

So one of the things that I do and have made a hallmark of my time here and will continue to do is have a dialogue with the industry. So all these situations could not have been contemplated. And so yeah, we have a regular dialogue with individuals who want to understand what it all means. And I think what I'll leave this podcast with is if there are those listening who are concerned about a particular scenario that they're involved with and they're concerned about or thinking about what this means for either current or future Nevada licensure, I would invite them to contact the board and we will have that dialogue with them. Let's have a good faith discussion in open air about what the situation is and let's see where it comes out. We want to have those good faith dialogues. So yeah, open to it, happy to do it.

I mean, there's other areas where the board, we want to be in that conversation and hear ahead of time in good faith what's going on. We recently, for example, Dan in January issued guidance around online gaming in terms of the expectation of our licensees doing online gaming, B2B, and as aggregators in other jurisdictions. And so we have expectations, but then yes, even in that policy we say, come talk to us. We want to talk about it. We don't want to visit on any licensee undo burden or harm, but at the same time, we have the interest to protect and we understand there's ongoing litigation and it's rather complex. So I guess the short message would be, please come talk to us, come out of the cold, so to speak, if there's a question or ambiguity, I think they will find our approach to be quite understandable and reasonable, but we can't know what the concern is unless it's brought to us. We don't want to hear about it later, come to us and let's talk about it.

Gotcha. Mike, I wanted to move back to the technology front for a second here. You mentioned AI earlier and it obviously poses some pretty perplexing challenges for regulators and test labs in that relationships between system inputs and outputs, which regulators want very fixed and tightly controlled for obvious reasons are within AI, very much obscured. So really, I have two questions here. So thus far, what kind of AI apps, if any, are you really seeing on the submittal front and what's looking interesting? And then from a policy perspective, how are you approaching this dilemma of controlling tech that's by its nature, defies control?

So of course AI, until I think prediction markets knocked AI off the cover in terms of topics, AI was a big one. It continues to be a big one. I think long-term it'll be a major topic, not only of course in gaming, but in other industries. And I think certainly we are in early days, we are still, as a policy matter, as many are trying to figure out the proper uses of AI. I think generally, and some of the things that we're seeing in terms of some of the products, AI, one of the big benefits of AI is its ability to make order of digest and interpret large bodies of data in ways that are almost instantaneous and it's very efficient.

And I think when you talk about things, for example, like money laundering and identifying areas of concern among certain players and certain play as a good example, I think AI can play a big part in that because the amount of transactions are so voluminous that they can go through a huge amount of data and decipher patterns that should be looked at to try and pick up if there's a concern with money laundering in a certain circumstances. So that's just one example, the big data example. I think AI has a really big role there, both for the products that use as well as some of the products that we will use at the board.

So early days on that. I think that we're going to continue to have dialogue. We've seen some products that incorporate some types of AI consistent with the earlier statements about how we're open to do new technologies. That's certainly no different. We want to do this, we want to work with the licensees to the extent that they think AI can be used to make things more efficient. I know for example, Nick, you and I have had many conversations about how most of the vast majority, I think you gave the shocking statistic, was it 85% of games that go out there and never hit house average?

Yeah, around that.

Something like that?

Around 80. Yeah.

And so I think that inherent in that is the need to use AI to speed up game development in a way that is responsible and effective because it's a numbers game in terms of making that many titles. So I think the manufacturers will continue to use AI as well, and we are certainly open to that. We understand that that concept goes with the speed of business. If you need to come up with titles that work, invariably you're going to use AI in certain ways. I will say this as a regulator and as a Nevadan, I'm concerned about job loss. That's always going to be another part of this.

Sure.

And making sure that there's a balance there. And it's not just a Nevada thing, of course, it's a nationwide worldwide thing. So we're going to look at that too, but I can't give you more specifics than that because it's early days. But I would say the early opportunity is in large data sets and in doing production pieces around game design that we're starting to see, which we're open to. And I spend a good bit of time, people will say, "Hey, I've got this new technology or this new thing and we want to bring it to Nevada." We're going to have that conversation. And AI is no different. We will do what we can to bring it forward.

And in regulatory circles, I mean, are there technical standards being written for AI apps now to your knowledge? I haven't seen any, so I'm just curious.

There's some policy drafts, there's a lot of discussion about it. Still, I think the emphasis should be on the fact that it's still early days on that.

Sure.

They're wrestling, regulators are wrestling. I think that generally speaking, there's good uses of AI that are all agreed to make things easier. I think, again, the big data thing is a good example of that. And then I think there are areas that you, I think slightly alluded to that maybe not so good that could cause some problems. And I think we're in the early days trying to separate the wheat from the chaff on that issue of good uses versus uses that shouldn't be allowed. So it's an evolving thing. I think that it's, regulators do talk to each other on a regular basis, and this is one of the things that's coming up in topic, not only obviously prediction and this and that, but technology is a big thing. And I think we're going to have a really good input from regulators and technologists around the world about how this goes. But it's early days and I expect a robust conversation over the next few years.

Chairman Dreitzer, we've hit the hour mark. You've been incredibly generous with your time. Before we wrap up, we wanted to give you a chance, are there any speaking engagements, events, or initiatives that you wanted to plug?

I appreciate that. I mean, from time to time I get asked to do different panels. I can't think of anything specifically here, although I do believe I'm on, I don't have the dates in front of me, but I'll be on a panel at the East Coast Gaming Congress, which maybe you can figure out what day it is. I think it's in April. Roger Gross, our friend Roger Gross is moderating a panel that I'll be on. I apologize, I don't know the exact date, but do that. And again, I think it's important that we all talk about these things, that we're mindful of these things, and again, in particular the prediction stuff, that we all have a full, open, honest, good faith dialogue about what it means.

And I think the Nevada, going back to your first question, Nick, I think the Nevada regulatory body that is, as the chairman of that, I have a role I believe in that conversation. So again, while we are in litigation and all of that, and that'll take the course it takes, I think generally, certainly without referencing any particular party or circumstance, these policy considerations that I outlined are important to talk about and important for everybody to understand that it is broader than just the, hey, tax it. Regulate and tax it. I mean, it's much more complex than that.

Absolutely. Absolutely. Well, thank you so much. Mike, it's always lovely to speak with you. I really appreciate you giving us the time today. So I wish you all the best and in that litigation and everything you're doing there at NGCB. Yeah. Well, thanks so much for your time. Really appreciate it.

It's my pleasure. And I think that podcasts such as these, you guys have both been in the industry doing it well for a very long time. I think you have a significant place as influencers and leaders, unless you provide safe spaces, so to speak, to talk about these issues. And I think it's important that people understand all of them. And so please keep doing the good job you're doing. So I'm always happy to join you and look forward to seeing you again soon.

All right. Well, thanks so much, Mike. Okay, take care guys.

Great.

Thank you.

Bye.