New harassment and discrimination regulations change compliance requirements for Nevada casino industry

By Anthony Cabot

On Thursday, the Nevada Gaming Commission adopted regulatory revisions conceived and drafted by the Gaming Control Board that address workplace discrimination and sexual harassment in the casino industry. 

Some changes restated existing law, while others are systemic changes to the way casinos must comport themselves. As an example of the former, casinos (and other licensed companies) always faced regulatory penalties if they violated any federal, state, or local law. The changes emphasize that these laws include workplace discrimination or harassment based on race, color, religion, sex, sexual orientation, gender identity or expression, age, disability, or national origin. 

The new regulations wisely stay clear of creating new discrimination or harassment standards beyond what is already in federal, state, or local law. Stated a different way, the casino industry is not subject to a new set of standards for workplace discrimination or sexual discrimination different from other non-casino employers or industries. For example, what constitutes sexual harassment is the same, whether a room attendant works at a casino or a non-casino resort. This conclusion recognizes that lawmakers at the state or federal levels and not gaming regulators should be defining consistent community standards for workplace behavior. 

The regulations, however, make systemic changes to the way the Nevada casino industry must assure compliance with these standards. The regulations create a reporting and investigative system where incidents that may put the casino industry in a bad light are investigated, acted on, and reports to the regulators before they make headlines in the national press. Casino owners and executives should no longer be able to sweep bad behavior under the rug with concealed settlements, employee intimidation, or otherwise.

Historically, sexual harassment and employment discrimination fell under the authority of the casinos’ human resources departments. These regulations expand the scope of the major casinos’ existing compliance plans so that the casino’s compliance committee serves as a second review of discrimination claims with a focus on meeting gaming regulatory goals. Smaller casinos or licensees (any business with 15 or more employees), without mandatory compliance plans, also must have written policies and procedures. 

For background, the purpose of compliance plans is to prevent possible regulatory violations and monitor activities impacting the casino’s continuing qualifications as a licensee, inform and advise senior management and the board of directors of regulatory problems and to communicate these issues and any corrective steps to the gaming regulators. Historically, compliance plans were meant to prevent the involvement of criminals or other unsuitable persons in casino operations and avoid unethical or unlawful business practices. The scope of compliance plans gradually expanded since the 1990s and these regulations add a significant category of review: workplace discrimination or harassment. 

Late last year, the Gaming Control Board issued proposed criteria for sexual harassment policies and procedures. These criteria will likely be expanded to include workplace discrimination. Casinos will need to amend their compliance plans or adopt policies and procedures to meet the minimum standards. The policies will require a statement that the company is committed to diversity, inclusion, and respect and will not tolerate sexual harassment or workplace discrimination. The policy must describe prohibited conduct and give relevant examples. The casino must have a reporting system for filing complaints. The complainant and any witnesses must receive whistleblower protections. The procedures must include immediate and proportionate corrective action, and the company must inform the complainant of any sanctions imposed on violators. Compliance training, plan evaluations and periodic reports to the regulators also are part of the minimum criteria.

Notably, employees can file complaints concerning customers’ or vendors’ bad behavior. The focus on customers addresses a familiar problem in the casino industry where indiscretions have been tolerated, particularly where they involve high-value players. This is an area that will likely receive the most attention as the new procedures should augment the seriousness and consequences of unacceptable behavior on the casino floor. Management and supervisory employees should be aware that tolerance of player’s bad behavior will impact their licenses or employment.  

Once a complaint is filed, then the casino must investigate. Here is where the incorporation of the discrimination or harassment reviews into the compliance plans has a significant benefit not present in smaller casinos without compliance committees. Compliance plans involve both a compliance officer that receives and investigates claims and a compliance committee that reviews the claims and makes recommendations to management and the Board of Directors. Most compliance committees have three or more members, including senior management and an independent member, although some companies will have moved toward having more or exclusively outside members that exercise independent judgment. All members are sensitive to the concerns of the gaming authorities and can determine what is an unsuitable situation that could adversely affect the reputation of the gaming company. 

Moving responsibility for harassment claims under the compliance plan is useful and is a missing element where the casino does not have a compliance committee. A company (or a company owner or executive) cannot treat a claim solely as a civil matter that can be resolved through settlement or litigation. At least one independent person on the compliance committee will be reviewing the allegations and their disposition. The committee will be relaying their review on harassment claims to management and possibly to the Board of Directors.  With such deliberation at multiple levels, the casino will make a reasoned decision that will avoid an unsuitable work environment. The compliance committee recommends, and the company carries out reasonable faith efforts to stop repeated problems should they exist. Moreover, the company will be aware that the information garnered through the investigation and deliberations of the compliance committee will be reported to the regulators and subject to periodic review.

These regulations should go a long way to preventing high-profile allegations of sexual harassment and workplace discrimination by owners and top executives and provide reasonable procedures for general policing. The casino industry is changing dramatically from its male-dominant, chauvinist past. The Gaming Control Board deserves credit for working through the policy and politics of this issue. These regulations are a significant step forward.  The industry appears to recognize this as the commission passed the regulations without opposition. 

Before joining the Boyd School of Law as a Distinguished Fellow in March 2018, Anthony Cabot practiced gaming law for 37 years and was a former chair of the gaming law practice and executive committee member at Lewis Roca Rothgerber Christie LLP.