On December 22, 2022, the Nevada Gaming Commission (NGC) adopted regulations creating new cybersecurity requirements for certain gaming operators. This action joins agencies in other jurisdictions moving quickly to protect consumers and their personal information in the gaming industry. The NGC adopted the October 17, 2022 version of the regulations, which become effective January 1, 2023.
Below is a summary of the new rules:
- Gaming operators must take “all appropriate steps to secure and protect their information systems from the ongoing threat of cyber attacks,” including satisfying the requirements of chapter 603A of Nevada Revised Statutes (NRS).
- The obligations apply to the operators’ own information, as well as the “personal information” of their patrons and employees as defined in NRS 603A.040.
- In general, the rules apply to certain covered entities – those that hold:
- a nonrestricted license as defined in NRS 463.0177 who deal, operate, carry on, conduct, maintain, or expose for play any game defined in NRS 463.0152 (e.g., games played with cards, dice, equipment or any mechanical or electronic device or machine such as monte, roulette, keno, bingo, blackjack, poker, baccarat, or slot machine
- a gaming license that allows for the operation of a race book, a sports pool; or permits the operation of interactive gaming.
- Covered entities must document in writing all procedures taken to comply with this section and the results thereof, and must maintain all such records for a minimum of five years from the date they are created. Such records must be provided to the Nevada Gaming Control Board (Board) upon request.
Risk assessment and adoption of cybersecurity best practices.
- Covered entities must conduct an initial risk assessment and develop the cybersecurity best practices they deems appropriate. Examples of such best practices include, without limitation, CIS Version 8, COBIT 5, ISO/IEC 27001, and NIST SP 800-53.
- After the initial risk assessment, covered entities must continue to monitor cybersecurity risks to their business and make appropriate modifications.
- For the initial assessment and ongoing monitoring, covered entities may use affiliated entities or third parties with appropriate expertise in cybersecurity.
- Covered entities have until December 31, 2023, to fully comply with these assessment and best practice requirements.
- Provide written notice to the Board as soon as practicable but no later than 72 hours after becoming aware of a cyber attack to the covered entity’s information system resulting in a material loss of control, compromise, unauthorized disclosure of data or information, or any other similar occurrence.
- A “cyber attack” means any act or attempt to gain unauthorized access to an information system for purpose of disrupting, disabling, destroying, or controlling the system or destroying or gaining access to the information contained therein. Notably, under these regulations, a cyber attack is not solely an incident resulting in unauthorized access or acquisition of personal information.
- Covered entities must investigate the cyber attack (or engage a third party to do so), prepare a report documenting the results of the investigation, inform the Board the report is completed, and provide a copy to the Board upon request. Reports must include, without limit, the root cause of the cyber attack, the extent of the cyber attack, and any actions taken or planned to be taken to prevent similar events in the future. Many such investigations are performed at the direction of counsel and designed to be privileged. Covered entities need to think carefully about how they structure their investigations and related activities.
Additional requirements for Group I licensees under subsection 8 of regulation 6.010.
- Designate a qualified individual to be responsible for developing, implementing, overseeing, and enforcing the covered entity’s cybersecurity best practices and procedures described above.
- Perform at least annually observations, examinations, and inquiries of employees to verify compliance with cybersecurity best practices. The annual review may be performed by internal auditors or independent third parties entity with expertise in cybersecurity. Documents prepared by the internal auditor must be retained as described above.
- Engage an independent accountant or other independent entity with cybersecurity expertise at least annually to (i) perform an independent review of the covered entity’s best practices and procedures and (ii) attest in writing that those practices and procedures comply with the requirements of Section 5.260 Cybersecurity of the NGC’s Regulations. The covered entity must retain the written attestation and any related documents as described above.
Gaming is not the only industry seeing a strengthening of regulations concerning privacy and cybersecurity. A few years ago, for example, we discussed an uptick in state regulation of the insurance industry with several states adopting the NAIC’s Model Security Law. Today there are over 20 states that have adopted the NAIC model law. Finance, healthcare, professional services, etc. all are seeing an uptick in industry-specific regulation, which shows no sign of slowing.