Main Aspects of “New Jersey” Approach to Casino Gambling

It was accompanied by the establishment of a strict and comprehensive regulatory structure, with few areas free from government oversight and approval. Significantly, even after two decades, casino gambling has not been allowed to expand beyond its original base of Atlantic City. As a result, it has never reached its economic potential, but neither has it been woven into the state’s social fabric.
These two approaches can be seen in other states. Most states with riverboat casinos adopted the “New Jersey” approach, employing gambling for purposes of targeting economic development to a finite number of specific communities or to a finite number of communities along specific waterways. According to this approach, casino gambling is akin to enterprise zones intended to deliver economic benefits— in the case of casinos, these benefits are job creation, capital investment, public sector revenue, and increased tourism— to a finite number of specified locations. These states have subjected their gambling industries to relatively strict controls: The fact that gambling was confined to riverboats, symbolically and physically separate from the surrounding communities, underscored the desire to employ gambling for relatively narrow purposes while mitigating perceived potential negative effects. In these states, the limited number of approved licenses has meant that gambling remains confined to a handful of cities.

Mississippi, by contrast, adopted more of a “Nevada” approach, although in fact the approach is something of a Nevada/ New Jersey hybrid. There are limits on where casinos may be located (in counties along the Mississippi River or on the Gulf Coast), but there is no limit on the number of permitted casinos either within a particular county or statewide. This regulatory climate has proved favorable: Mississippi’s casino industry now ranks among the state’s major industries in terms of revenues, taxes, and employment.

Administrative Structure In some jurisdictions, the gambling board or commission exercises final administrative authority. Other jurisdictions, most notably Nevada, have adopted a two-tiered system in which one body (the Nevada Gaming Control Board) exercises administrative authority, subject to a separate entity (the Nevada Gaming Commission) that serves as the due process oversight body. 17

Much of casino regulation is concentrated on the day-to-day operations of casinos. Typically, each casino is required to adopt and adhere to a comprehensive set of state-designated procedures, commonly termed the “Minimum Internal Control Standards” (MICS). These MICS focus on the range of gambling-related activity, including the conduct of games, the movement and handling of cash and cash equivalents, and the accounting and record trail of all transactions. State regulators often rely upon the casinos to maintain logs that document irregularities and to “self-report” violations.

In addition to internal control and surveillance, casino regulatory agencies direct and review audits of casino operations. In some states, private sector audit firms are engaged by the regulatory body (usually at the expense of the casino) to conduct compliance audits. The audits measure operator conformity with MICS requirements. These audits are in addition to required annual financial audits conducted by certified public accounting firms that are selected by casino operators, subject to regulatory approval.

Furthermore, the regulatory structure of most states includes statutory language that restricts gambling by those under 21. The state levies fines and other punishments for the failure to adhere to this code of conduct. The casino industry itself self-regulates with regard to underage gambling in an attempt to ensure that its patrons and employees understand that only those 21 and older are permitted to gamble. Some casinos perform this function more effectively than others; those that do not tend to be the recipients of fines and sanctions. In addition, many states have gambling statutes requiring casinos to address pathological gambling.

There is considerable variability across the states regarding the scope of the individuals and entities subject to licensure to work in casinos.