Nevada Gaming Commission Approves Prepaid Cards

by Snell & Wilmer

At its meeting on February 20, 2014, the Nevada Gaming Commission adopted amendments to NGC Regulation 1–Issuance of Regulations: Construction; Definition–and NGC Regulation 14–Manufacturers, Distributors, Operators of Inter-Casino Linked Systems, Gaming Devices, New Games, Inter-Casino Linked Systems, On-Line Slot Metering Systems, Cashless Wagering Systems, Mobile Gaming Systems, Interactive Gaming Systems and Associated Equipment; Independent Testing Laboratories–permitting the use of prepaid access instruments at gaming devices in conjunction with approved cashless wagering systems.

The adopted amendments added two new defined terms to NGC Regulation 1: (1) “debit instrument;” and (2) “prepaid access instrument.” See NGC Regulation 1.092; NGC Regulation 1.146. While NRS 463.01469 already defines “debit instrument” as “a card, code or other device with which a person may initiate an electronic transfer of money to a game or gaming device,” NGC Regulation 1.092 takes a more expansive view of a “debit instrument” and expressly includes a “prepaid access instrument” under its definition.

Prepaid instruments are growing in popularity as a way of holding cash for consumers by allowing access to funds that have been paid in advance and can be retrieved or transferred in the future through an electronic device or vehicle, such as a card, code, electronic serial number, mobile identification number or personal identification number. See 31 C.F.R. § 1010.100(ww). NGC Regulation 1.146 defines “prepaid access instrument” as “a card, code, electronic serial number, mobile identification number, personal identification number or similar device that allows patrons access to funds that have been paid in advance and can be retrieved or transferred at some point in the future through such a device. To transfer funds for gaming purposes, a prepaid access instrument must be used in conjunction with an approved cashless wagering system, race book or sports pool wagering account, or interactive gaming account.” Notably, the Commission eliminated proposed language requiring that a prepaid access instrument “be distributed by a licensed gaming operator or its affiliates and only Prepaid Access Instruments distributed by the licensee or its affiliates may be used to fund a wagering account at that licensee's location or the location of its affiliates.” The rejection of this proposed language suggests that prepaid access instruments need not be restricted to gaming uses in order to meet the regulatory requirement, but when funds are transferred for gaming purposes, prepaid access instruments may only be used in conjunction with an approved wagering account or system.

Prior to the adoption of these amendments, casinos and casino patrons could not take advantage of the benefits and conveniences of using credit, debit or prepaid cards at gaming machines. Although NRS § 463.3357 still explicitly prohibits the use of credit cards at gaming devices, pursuant to amended NGC Regulation 14.260(4), prepaid access instruments may now be used to transfer money directly to a game or gaming device in conjunction with approved cashless wagering systems. In addition, casinos may now seek approval for the use or installation of gaming equipment with features that allow for patrons’ use of prepaid access instruments. See NGC Regulation 14.290(2). These new provisions are consistent with NGC Regulations 5A and 22, which already permit the use of debit instruments in conjunction with interactive wagering accounts and race book and sports pool wagering. See NGC Regulations 5A.120(4)(d) and 22.160(1)(e).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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