Proposed Budget Cut to Problem Gaming Services in Nevada Draws Ire from Advocates

Posted on: July 9, 2020, 10:10h. 

Last updated on: July 9, 2020, 12:43h.

Nevada lawmakers gathered in Carson City Wednesday to begin a state legislature special session. As government officials look to address a $1.2 billion budget shortfall, they heard from proponents of problem gaming services who are critical of a proposed cut in the program’s funding.

Nevada problem gaming
Nevada lawmakers started gathering Wednesday in Carson City for a special session to handle a $1.2 billion budget shortfall. Advocates for problem gaming services fear programs for those in need may get cut disproportionately. (Image: KLAS-TV)

Gov. Steve Sisolak (D), who ordered the special session, is seeking to take $1.6 million earmarked for gambling addiction and other problem gaming services from the state Department of Health and Human Services. Previously, lawmakers approved $2.1 million for the services.

When the state Senate gathered for a public comment period, several people called into the session to express concern about the roughly 75 percent cut in funding for problem gaming services.

Alan Feldman — a longtime MGM Resorts International executive who chairs the state’s advisory committee on problem gambling — called the move “extremely troubling,” and said state officials did not consult with them on it.

He also said an assertion by DHHS that health insurance plans could pick up payment for problem gaming services was untrue and that community health centers don’t have the staff or resources to help those individuals.

“The state is the payor of last resort currently,” Feldman told senators. “No state funds can be distributed unless the treatment provider has first exhausted any private insurance or Medicaid reimbursement. In fact, only a small number of patients seeking services would qualify for Medicaid.”

Nevada: The ‘Gold Standard’

Advocates for problem gaming said they understand the need for a cut, given the current budget situation. But they called for a reduction of between 20 to 30 percent, the same that other programs are facing.

Bo Bernhard, the executive director of the UNLV International Gaming Institute, told legislators that Nevada’s reputation for addressing problem gaming helps casino companies based in the state expand into other states and abroad.

“With remarkable consistency, they have a single question when contemplating whether to allow Nevada’s businesses to open up casino resorts in their backyards… Their question is this: ‘What are you going to do about problem gambling,” Bernhard said.

For many years, Nevada’s taken pride in its status as the gold standard in the global gaming industry, Bernhard continued. “But if this legislature enacts a stunningly disproportionate 75 percent cut to the problem gambling fund while making 20 percent cuts elsewhere, we are ensuring that our reputation takes a major hit.”

Former Las Vegas Mayor Jan Jones-Blackhurst told lawmakers she doesn’t envy their position. But she urged them to maintain enough funding so the state program can not only provide care but also conduct important research.

Jones-Blackhurst — a former Caesars Entertainment executive who now serves as the IGI’s chief executive in residence — added that providing proper problem gaming resources is a critical component of the gaming industry in the state and needs to be maintained.

New Taxes Could Restore Funding

Gaming, or the lack thereof for more than two months, is a major reason why Nevada faces such a shortfall. In March, Sisolak ordered all casinos to shut down in the state because of the spread of the COVID-19 virus.

The state expected to generate more than $809 million in gaming taxes for the 2020 fiscal year, which ended last month. However, that was before the pandemic kept casinos closed for nearly three months. In addition, projections for FY2021 were based on pre-COVID-19 projections, which did not take into consideration both reduced gaming capacity and depressed travel.

In his budget report to lawmakers, Sisolak said it may be time to reconsider how the state generates revenue.

Nonetheless, the structure itself has repeatedly demonstrated vulnerability, with significant overreliance on casino gaming and other tourism-related taxes,” the report stated.

“This unbalanced structure is important to note as a primary reason the COVID-19 pandemic caused the Nevada economy to retrench in such dramatic fashion, resulting in substantial budget shortfalls, the highest unemployment rates of any state in the US, and the need to call for a special session of the Nevada Legislature,” the report continued.

Tax increases, or the creation of an income tax, could allow the state to restore funding to problem gaming and other services. But just as problem gaming advocates made their presence known Wednesday night, so, too, did those who oppose any effort to increase taxes.