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As virtual access to records becomes even more critical to monitoring gaming activity than physical access, the Nevada Gaming Commission (NGC) has approved changes to how regulatory officials can access records held by registered hosting centers and cloud computing service providers.

The amendments approved by the NGC last week were originally prompted by two sections within Senate Bill 14, a gaming reform bill that was passed by the state legislature in 2023.

“These amendments gave the commission authority to define what portions of a registered hosting center and registered service provider premise the [Nevada Gaming Control Board (NGCB)] would have access to,” Edward Magaw, Nevada deputy attorney general, told commissioners.

Magaw explained that the proposed changes within SB 14 limit the NGCB's and NGC’s access to those areas of the respective facility which specifically host gaming equipment or equipment that processes gaming-related transactions.

The new regulations also include clarifying language regarding the virtual access of gaming information by Nevada regulators.

The amendments to hosting centers regulations affect NGC Regulation 5.231, while those related to service providers amend NGC Regulation 5.240.

“The reason for this is these hosting centers and service providers provide services to multiple companies, some of which are highly sensitive and could be the federal government [or the] military that the board and commission have no interest or need to access those areas,” Magaw said.

Magaw stressed that regulators will be able to “access any areas in which gaming activities take place” or any areas that are subject to registration with the control board, but the facilities can seek a waiver of the access requirements provided such requests are “consistent with the public policy of the state regarding gaming”.

Previously, the NGCB’s chair could waive the requirement for gaming officials to have unfettered access to a facility that hosts gaming transactions only if the hosting center could demonstrate to the chair’s satisfaction that certain parts of the premises did not host gaming operations and access to the premises caused an undue burden on the hosting center or its tenants.

In addition, the amendments add a new subsection to NGC Regulation 5.231 that states it is an unsuitable method of operation for a registered hosting center to deny Nevada Gaming Control Board agents or members of the board or commission access to the premises.

It is also considered unsuitable if the facility denies regulators the opportunity to inspect any aspect of its operations or to fail to disclose any aspect of its operations to Nevada gaming regulators.

“So, we still have all the powers and authorities to seek disciplinary [action] including and up to revocation of the registrations,” Magaw added.

As for cloud computing service providers, Magaw said the proposed amendments to Nevada Regulation 5.242 allow a licensed gaming operator to seek a waiver to house equipment at hosting centers that are not registered with the control board.

“Any non-registered hosting center utilized by cloud computing service providers must meet all the requirements of a registered hosting center, so there is no risk of harm for the use of a non-registered hosting center,” he said. “They will still be scrutinized by the board.”

Magaw said the reason for the change is that Nevada regulators have encountered situations where a reputable cloud computing service provider used hosting centers operated by third parties that would not register with the board.

The amendments also clarify language concerning physical and virtual inspections of cloud computing facilities.

Commissioner Rosa Solis-Rainey asked Magaw why the waiver authority of the commission or board regarding cloud computing services and hosting centers was being broadened.

“In the past, [there have been times] where they have requested something, and the waiver provision wasn’t broad enough to give that authority, but the request was very reasonable and didn’t pose any risk to the gaming policy of the state,” Magaw replied.

Solis-Rainey also asked if it was wise to waive the rights of gaming regulators to have physical access to a facility.

Jim Barbee, chief of the NGCB’s technology division, said regulators were not waiving their right to access, but changing the type of access they have.

“Right now, it is physical access that we have unfettered,” Barbee said. “With this language that would allow us to waive physical access if there were compensating controls where we could get virtual access to the equipment.”

Commissioner Brian Krolicki asked if regulators already have virtual access to records.

“We do but the language as it stands right now is unfettered and physical,” Barbee said. “For some of those companies that is a stark term, when you start talking to Amazon and Microsoft that you could come in and physically seize equipment that may contain other entities' information.”

“So, if we can virtually access just that information that is relevant to whatever our case,” Barbee said, “that puts them in a much more comfortable position and encourages them to participate in the application process.”

Barbee said the goal was to encourage these companies to come to Nevada to provide supporting services to the regulated gaming industry.

“We have had some incidents in the past where these major cloud computing service providers see the very general, liberal, ultimate authority clause in there where we have unfettered access, and it has given them pause. I think this language will help reduce that.”

Barbee said they can accomplish what they need to accomplish without “laying hands” on the servers.

All the approved on Thursday (May 16) became effective upon adoption by the commission.