I haven't been there yet, but the stories I've read about Red Rock Resort in Las Vegas indicate their slots and VP machines are all server based. The smarts of the machines are all in a central location; the machines just serve to accept money and the players' button pressing and display the results.

I believe the RNG's are still controlled in the server just as they would be in the physical machines. Gaming approves them and the casino can't mess with odds. They can however, swap any game and approved RNG they want to any physical machine and change limits based on casino conditions.

No negatives for the player that I can see. In some other venues (like Indian casinos) the casinos can already mess with odds as much as they want and the players never know. Strong oversight by a third party is necessary to keep players' confidence over the long run. Nevada's Gaming Control is the model for that.