Wyoming lawmakers passed four pieces of draft legislation Wednesday morning tightening regulation on companies that offer gaming machines in the state.
The legislation was partly inspired, Rep. Bob Nicholas, R-Cheyenne, said, by a directive from the FBI to the Legislature’s Appropriations Committee that it prefers states to enforce stricter gaming regulation with specific language.
One of the bills passed by the Appropriations Committee requires all people who have access to skill-based gaming equipment be licensed through the state’s gaming commission. The licenses require individuals have background checks performed by the FBI.
Under state law now, only vendors and operators of gaming equipment must complete background checks for skill-based amusement games in Wyoming. The legislation would add lower-level employees that change out money from gaming machines to the list of those who need to receive licenses with the state and federal background checks.
State Rep. Tom Walters, R-Casper, expressed his preference that the legislation not include lower-level “route runners,” many of whom make barely above a minimum wage income and solely collect money out of the machines. He said it is the responsibility of vendors to hire trustworthy employees, as they will bear the losses of any fraud associated with the machines.
“We kind of felt that the vendor carries the responsibility to make sure their employee is one of operating necessarily in a good fashion,” he said.
Skills-based games in Wyoming brought in $4.8 million in total revenue in 2021. That’s a tiny fraction of the $1 billion in gambling wagers of all types made his year, said Charles Moore, executive director of the Wyoming Gaming Commission.
The overall industry in Wyoming is “setting records and precedences day-by-day,” he said, adding that more than 2,500 people are licensed to offer gambling services in the state.
The employee licenses will cost $50 per year. Adding the new category of licenses would bring in about $2,500-$5,000 additional annual revenue for the state.
Vendors and operators of skill-based games are already subject to background checks.
Although there were no examples of fraud that have happened in Wyoming presented Wednesday, Terry Armitage, representing the Wyoming Association of Sheriffs and Chiefs of Police, said that “people can be very devious” and gave his guarantee that it would be possible for corrupt activities to take place.
“Ultimately, money scammed out of the system, the state might not get the amount they’re required to receive, winning gamblers might not even get the correct amount,” Armitage said.
Moore said although there hasn’t been a publicly documented case of fraud involving these activities, he said the potential for fraud exists under current regulations.
“It’s a proactive type of situation,” he said.
As part of the licensing process, the Appropriations Committee added language requiring software manufacturers and vendors ensure that only they can alter their gaming software and not operators pulling money out of the machines. Currently, it is illegal to make any changes to gaming software without Gaming Commission approval.
Multiple gaming lobbyists testified Wednesday that on-the-ground employees working for the vendors don’t have the capability to alter the software related to these games.
Rep. Lloyd Larsen, R-Riverton, agreed and saw this aspect of the bill as a non-sequitur, as these employees don’t have access to the software in the first place.
Walters agreed, saying that, “Yes, cash may disappear, but that’s a vendor issue, not a state issue.”
This line of thought did not resonate with Sen. Dave Kinskey, R-Sheridan, who advocated the state take a proactive approach.
The committee voted 7-5 to keep this part of the bill.
Moore supports licensing all employees of vendors involved with gaming machines, a number he estimates at 50-100. He mentioned how every person who has access to machines at the Wind River Casino in Riverton already is put through background checks. He said this will elevate the integrity of gaming in Wyoming.
“Going across all the activities we regulate, people are licensed,” he said.
Under the legislation, gaming manufacturers will also now be required to pay an initial license fee of $10,000, followed by a $5,000 annual renewal fee to issue a license to construct skill-based amusement games and software or sell skill-based amusement games and software in Wyoming. Currently, there are only fees assessed for the vendors and operators.
Walters said his working group on gaming activities studied similar licensing fees in other states and found the proposed fees aren’t higher than what is being charged in most other states.
The committee also passed legislation clarifying gambling license laws in state statute. These laws now are only promulgated through rules enforced and established by the Gaming Commission. Moore also supported this legislation.
Rep. Bob Nicholas, R-Cheyenne, who chairs the Appropriations Committee, said the FBI’s guidance that state statute must identify “the specific category of applicants/licensees falling within its purview” conflicts with current state law that allows Wyoming to enforce licensure through Gaming Commission rules.
“They’re telling us we don’t care about what your state laws do,” Nicholas said.
The bill passed 11-1.
The committee also passed draft legislation clarifying permitting and licensure for online sports wagering in the state and tabled a bill that would have added new definitions for disposition and distribution of certain funds for pari-mutuel wagering machines that begin operation after March 15, 2023.