CasinoLawyer SHAPING THE FUTURE OF GAMING LAW SHAPING THE FUTURE OF GAMING LAW VOLUME 9 NO. 1 SPRING 2013 INTERNATIONAL MASTERS OF GAMING LAW PUBLICATION The Compulsive Gambler Working in the Gaming Industry Gaming Lawyers & Ethics: Current Ethical Issues for the In-house Gaming Attorney Ethical Musings of a Casino Lawyer TRIBAL GAMING: Effects of Patchak ■ Indian Gaming Looking Up PLUS: The state of Gambling in the United States, United Kingdom, Greece, the EU and beyond NEW DEVELOPMENTS GLOBAL GAMING IN
Transcript
CasinoLawyerSHAPING THE FUTURE OF GAMING LAWSHAPING THE FUTURE OF GAMING LAW VOLUME 9 NO. 1
SPRING 2013
INTERNATIONAL MASTERSOF GAMING LAWPUBLICATION
The Compulsive Gambler Workingin the Gaming Industry
GamingLawyers& Ethics:Current EthicalIssues for theIn-house GamingAttorney
Ethical Musings ofa Casino Lawyer
TRIBAL GAMING: Effects of Patchak � Indian Gaming Looking Up
34The Compulsive GamblerWorking in the Gaming IndustryBy Arnie and Sheila Wexler
5 Members in the News
Gaming Law & Regulators
7 IAGR Creating Multi-JurisdictionalBusiness Form to StreamlineApplication ProcessBy Susan Hensel
New Developmentsin Jurisdictions:
International
8 European Commission—Is There Regulatory ChangeAhead?By Tony Coles
12 UK ReformsProposedchanges ingambling lawmay yieldunintendedconsequencesBy ThomasLogan
United States
14 Kentucky Update: Instant RacingBy Kerry O. Irwinand Laura D’Angelo
16 New Jersey:‘Let’s Make A Deal’By Cory Aronovitz,Robert Foltman andKeenan Ballo
Native American Gaming
18 Update: Effect of Patchak onTribal Trust LandsBy Heidi McNeil Staudenmaierand Harsh P. Parikh
20 Indian Gaming Looking UpBy Alan P. Meister, Ph.D.
Gaming Lawyers & Ethics
23 Current Ethical Issues for theIn-house Gaming AttorneyBy Barth F. Aaron
28 Ethical Musingsof a Gaming LawyerBy Cristina Romero de Alba
Departments
Columns
4
6
30
31
30Casinos In Greece:Where the games beganBy William Thompson, Ph.D.
34
12
16
Message from the President
4 CASINO LAWYER • SPRING 2013
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On The Forefront of Gaming Law
“Shaping the Future of Gaming Law” is not just aslogan. The members of the International Mas-ters of Gaming Law are on the forefront of de-velopments in gaming law as the gaming industry
continues to evolve throughout the world far beyond the tradi-tional bricks andmortar casinos of twenty-five years ago. Cur-rently with 285 members from thirty-eight countries andthirty-three states and territories of the United States, theIMGL, as the preeminent gaming law education and network-ing organization in the world, continues to grow. The IMGLMembership Committee currently is in the process of vettingapplications of strong candidates from around the world whowish to join our roster of distinguished members.
PAST EVENTS
IMGL Autumn Conference in LondonLast October, the IMGLhosted 167 delegates from twenty-fourcountries (Australia, Bulgaria, Canada, Curacao, Cyprus, Den-mark, France, Germany, Greece, Italy, Ireland, Isle of Man,Luxembourg, Malta, Netherlands, Norway, Singapore, Slove-nia, Spain, South Africa, Sweden, Taiwan, United Kingdom,United States). The conference offered a stimulating exchangeof ideas by our distinguished panelists and moderators fromthirteen countries, as well as those in the audience, with respectto topics ranging from online gaming and social gaming to theimportance of branding in driving consumer interest and en-hancing outside investment in the gaming industry.
IMGL Member Reception at ICE—Co-hosted with Jeffrey Green Russell LimitedAn important benefit of being amember of IMGL is themanyevents that the organization hosts for its members and guestsat international gaming expositions around the world. The im-mensely popular IMGL Member Reception at ICE, co-hostedwith Jeffrey Green Russell Limited and the future receptionsdescribed below are ones not to be missed if possible.
As I mentioned in my January message, invitations to thejoint IMGL - JGR reception in connection with ICE are highlysought after. This year’s reception at the Haymarket Hotel wasno exception with over two hundred guests from many of thetwenty-four countries represented at the LondonAutumnCon-ference as well as Aruba, Belgium, Gibraltar, Israel, Mexico,Netherlands Antilles and Peru.
FUTURE EVENTS
IMGL Spring Conference in MontrealMay 8-10 at the InterContinental Montreal
Conference Co-Chairs, Cookie Lazarus of Lazarus Charbon-neau andMurrayMarshall, General Counsel, KahnawakeGam-ing Commission and the planning committee are activelyengaged in developingwhat promises to be an outstanding con-ference with speakers from around the world. I am pleased thatIMGLwill be returning to Canada for its Spring Conference. Ialso am excited about the host hotel. Located in historic andbeautiful OldMontreal, the InterContinentalMontreal was thewinner of the Ulysses Trophy for best hotel in Montreal in2010 and 2011.
IMGL Member Reception at G2E AsiaMay 22 from 5:30 pm–7:00 pm at the Portofino Restaurantat the Venetian Macau—Co-hosted with GLICo-hosted with Gaming Laboratories International (GLI), allIMGL members and their guests are invited to attend our re-ception at the Portofino Restaurant at the VenetianMacau. Thisreception has proven to be an excellent means to enhance thereach of IMGL in this part of the world where the gaming in-dustry has experienced unprecedented growth.
IMGL Member Reception at G2E Las VegasSeptember 24An always festive andwell-attended event, the IMGL receptionduringG2E provides an excellent venue for leaders in the gam-ing industry to get together.
J. Kelly Duncan
By J. Kelly Duncan
CASINO LAWYER • SPRING 2013 5
IMGL Autumn Conference in OsloOctober 1-4 . Co-located at the Grand Hotel with the InternationalAssociation of Gaming Regulators (IAGR)At the request of the International Association of Gaming Regulators(IAGR), IMGLwill be co-locating its conference with that of the IAGRAnnual Conference in Oslo, Norway. The IMGL Autumn Conferencewill immediately follow the IAGRAnnual Conference andwill take placefrom October 1 - 4, 2013. Both the IMGL Autumn Conference and theIAGRAnnual Conferencewill be held at themajesticGrandHotel inOslo,which is the site of the annual awarding of the Nobel Peace Prize. TheIMGLAutumnConference, whose Co-Chairs are JoakimMarstrander ofDeloitte in Oslo, Norway and Henrik Hoffman of Anderson Partners inDenmark, will provide its attendees an unprecedented opportunity tomeetwith gaming regulators from around theworld in both social settings andduring conference sessions.
IMGL Member Reception at EiGOctober 8, 2013. Co-hosted with GamingLaw.EUIMGL once again will co-host in Barcelona with members ofGamingLaw.EU a reception in connection with the European iGamingCongress & Expo (EiG). This annual reception closely follows ourAutumn Conference, thereby facilitating attendance by IMGL mem-bers from around the world.
IMGL PublicationsAnother significant benefit afforded the members of IMGL is theopportunity to publish in and receive the following IMGL publica-tions: UNLV Gaming Law Journal, Casino Lawyer, European GamingLawyer, La Ley del Juego and Canadian Gaming Lawyer. These outstand-ing publications target gaming jurisdictions globally and each provide avehicle by which our distinguished members further gaming educationwhile enhancing their own reputations in the gaming industry.
IMGL WebsiteFinally, I would be remiss if I did not talk about the robust IMGLWebsite found at: www.gaminglawmasters.com. This is an importantresource for anyone involved in the gaming industry. Please make surethat you send to our Executive Director (at [email protected])your profile and photo for posting on your individual member listing aswell as articles you have written and information about your practice andactivities for posting in our Member News section. I encourage you toexplore our Website. You will find it most useful and, with initiativescurrently in the works, it will only be getting better.
I look forward to seeing many of you in May at our Spring Confer-ence in Montreal. �
MEMBERSIN THE NEWS
�
Santiago AsensiSantiago Asensi of Asensi Abogados in Spain washonored at the IMGL Autumn Conference in Londonon 12 October. He was presented with the President’sAward by J. Kelly Duncan. The President’s award isgiven by the IMGL President to an individual who isnot an IMGL officer in recognition of the awardee’soutstanding service to the IMGL. Mr. Asensi chairedthe Madrid Autumn Conference in 2010 and is theco-editor of IMGL’s Spanish language magazineLa Ley del Juego. He has also assisted in the planningof numerous IMGL Member Receptions at EiG as amember of both IMGL and GamingLaw.eu. Uponreceiving the award, Mr. Asensi thanked Mr. Duncanand also Dr. Wulf Hambach of Hambach & Hambachin Germany for being his mentor and encouraginghim to join the IMGL.
Galanda Broadman, PLLCGalanda Broadman, PLLC, has received a prestigiousTier 1 ranking in the 2013 Edition of U.S. News -Best Lawyers “Best Law Firms,” in the arena of NativeAmerican Law, a ranking determined from a combina-tion of Galanda Broadman’s “clients’ impressivefeedback” and “the high regard that lawyers in otherfirms in the same practice area have for [the] firm.”
In addition, named partner Gabriel S. Galandawas named to The Best Lawyers in America in thepractice areas of both Gaming Law and NativeAmerican Law, based on an exhaustive and rigorouspeer-review survey comprised of more than 4 millionconfidential evaluations by the top attorneys in thecountry. “ Gabe has now been selected to The BestLawyers in America from 2007 to 2013.
Todd F. McTavishTodd F. McTavish, the former General Counsel ofVideo Gaming Technologies, Inc., has moved toMultimedia Games, Inc. in January 2013 and is nowMultimedia Game’s Senior Vice President, GeneralCounsel & Chief Compliance Officer. In his new role,Mr. McTavish will oversee the company’s legal affairs,licensing function and all compliance matters.
Roger ParkesRoger Parkes left his position as Betfair’s director ofgroup compliance to establish a consultancy businesswith former colleague Malcolm Bruce. The two haveset up Gambling Integrity Services to provide advice,expertise and training in all aspects of consumerprotection, including compliance, AML and corporateresponsibility.
Continued on page 13
Letter from the Editor>>
New Developments in Jurisdictions
International Masters of Gaming Law andthe editor of Casino Lawyer thank its mem-bers and others who support IMGL publica-tions with timely and educational articles, as
well as through advertisements. With your con-tributions, our stellar publications continue to pro-vide information and updates to the gamingcommunity on important legislation, jurisprudenceand market developments.
The gaming world recently lost a leadingscholar and dear friend, Professor William Ead-ington. Professor Eadington’s contributions tothe gaming industry are immense. Notably, he de-veloped the University of Nevada’s InternationalConference onGambling and Risk Taking, a gath-ering of scholars from around the world on rele-vant issues in gaming jurisdictions. ProfessorEadington will be missed, but his legacy in the ac-ademic studies of gaming will continue.
The spring issue features jurisdiction profilesfrom the United States, Europe, and Indian gam-ing. A pair of articles addresses ethical issues facedby gaming lawyers. The first article includes anexcellent and thought-provoking discussion ofethical issues faced by in-house gaming counsel.The second article has an international bent, con-sisting of personal reflections on ethical issues en-countered by a gaming practitioner in LatinAmerica and Spain.
Continuing with international topics, imme-diate past IMGL president Tony Coles provides anupdate on the European Commission and regula-tion of online gaming. Casino Lawyer includes an-other excellent article on reforms in the UnitedKingdom related to remote gambling regulationsand consequences of abolishing certain jurisdic-tional exemptions afforded to licensees. ProfessorWilliam Thompson continues the internationalvoyage with an historic overview of gambling de-velopments in Greece, where the games began.
Returning to the United States, the springissue includes two articles relevant to Indian Coun-try. The recent Supreme Court decision inPatchakhas considerable impact on efforts to take land intotrust for Indian Tribes. ThePatchak decision is thesubject of an article by IMGL past president Heidi
McNeil Staudenmaier. Dr. Alan Meister offers areport on his popular yearly economic study of In-dian gaming.
Casino Lawyer also has a thought-provokingarticle on a creative means to transfer a right toallow sports betting from a jurisdiction that pos-sesses an exemption from the federal ban on sportsbetting to a jurisdiction that wishes to use that ex-emption. As they say in the industry, the proposaloffers a “win-win” alternative.
A feature article from the International Asso-ciation of Gaming Regulators for the spring issuediscusses IAGR’s efforts to streamline the applica-tion forms for gaming licenses inmultiple jurisdic-tions. IAGR will also provide an update on thisprocess at its September conference in Oslo, Nor-way, which is immediately followed by the IMGLautumn conference.
Finally, IMGL members Arnie and SheilaWexler discuss the challenges facing industry em-ployees who have or develop a gambling problem.Editor’s note: The information in the Wexler article isbased on the diagnostic criteria in DSM-IV, soon to bereplaced inMay of 2013 by DSM-Vwhich will add anew category of behavioral addictions, comprised solelyof gambling disorders. The effects- if any- of thischange to the diagnostic manual on suits filed againstthe industry by gamblers who have behavioral addictionsremain to be seen.
Again, the editor of Casino Lawyer appreci-ates the contributions to the spring issue andwelcomes future articles and advertisements in yourcontinuing support of IMGL’s publications. �
Sue McNabb
Sue McNabb has worked with the Louisiana legislature, servedas an Assistant Attorney General for the Louisiana Departmentof Justice and currently works with state government. She hasan extensive background in corporate law in the private sectorwhere she worked as General Counsel of an INC 500 Companyand as Vice President of Administration with a national not-for-profit corporation. Prior to that, she taught at LouisianaState University in Baton Rouge.
She has served as vice chair of the Governmental Sectionof the American Bar Association and served on multiple com-mittees with the Baton Rouge Bar Association. She served on theboard ofdirectors of the National Council on Problem Gambling.
Business entities often find themselves facinga myriad of application forms to be filedwith various gaming jurisdictions whenapplying for gaming-related licenses.
To streamline the application process for busi-ness entities, in early 2012, the International Associ-ation of Gaming Regulators (IAGR) established aMulti-Jurisdictional Business Form (MJBF) Work-ing Group to develop a form whichwould standardize the categories ofinformation to be provided by busi-ness entities. Once the MJBF is im-plemented, we envisage thatbusiness entities will only need tocomplete a single form (with rele-vant riders that are specific to par-ticular jurisdictions) for submissionto IAGR member jurisdictions thataccept the MJBF.
TheMJBF initiative builds onMulti-Jurisdictional Personal His-tory Form that is currently availableon the IAGR website atwww.iagr.org. That form is com-monly used by numerous gamingjurisdictions throughout the world.
“One of the most frequent re-quests I have received from our members and the in-dustry is for the creation of a Multi-JurisdictionalBusiness Form,” said Susan Hensel, President ofIAGR and Licensing Director, Pennsylvania GamingControl Board. “We havemade great progress towardthat goal in the last year and are looking forward to in-troducing a form that will improve the application ex-perience for both the business entity submitting thedocument and the regulator receiving it.”
The working group, which is led by Lau PeetMeng, IAGR Vice-President and Chief Executive,Singapore Casino Regulatory Authority, has devel-oped the current draft of the MJBF as an electronicsmartform which allows the applicant to completethe form at any stage without the need for Internetaccess. The draft MJBF will allow applicants toprovide new information where required, and hasan encryption feature ensuring that confidentialinformation within the form remains secure.
While many IAGR member jurisdictions havecontributed to the form and some industry feedbackhas been provided, in order for the MJBF to beaccepted and used, it will be crucial for regulators inadditional gaming jurisdictions to work together onthe information to be presented in theMJBF. We arealso seeking to obtain expanded feedback fromindustry representatives on the usability of the form.
To that end, wewould like to inviteall interested parties to email theCasino Regulatory Authority ofSingapore which is consolidatingfeedback on behalf of IAGR [email protected] to obtain acopy of the current draft ofthe MJBF and to provide yourcomments.
Once a final draft has beencompleted and adopted by regula-tory jurisdictions, IAGR plans todevelop an independent, confiden-tial database system which IAGRwill make available to operators tosecurely hold the operator datanecessary to generate applicationforms. Operators would have solecontrol of access to their own data.
“We envision creating a system that will allowa company to generate a customized application formfor different jurisdictions using the data it has lodgedin the various data categories specified in the MJBFand any jurisdictional riders. Equally important, thecreation of the database will enable operators to keepregulators up to date with relevant changes auto-matically rather than more cumbersome individualnotifications jurisdiction by jurisdiction each time,for example, there is a change in key shareholders orpersonnel.” said Hensel. “We are working to havethe MJBF operational by 2014 and the database inplace shortly thereafter so that countries such asGreat Britain can use the MJBF and database as anintegral part of their proposed remote gamblinglicensing reforms.”
An updated version of the form will bepresented for discussion at the IAGR Conferencein Oslo, Norway, in September 2013. �
>>
IAGR Creating Multi-Jurisdictional BusinessForm to Streamline Application ProcessBy Susan Hensel
We envisioncreating a system
that will allow a companyto generate a customized
application form fordifferent jurisdictionsusing the data it haslodged in the various
data categories specifiedin the MJBF and anyjurisdictional riders.
—Susan HenselPresident of IAGR
and Licensing Director,Pennsylvania Gaming
Control Board
“
”
CASINO LAWYER • SPRING 2013 7
Susan Hensel
Susan Hensel is the Director,Bureau of Licensing,Pennsylvania GamingControl Board, & President,IAGR; and Birgitte Sand isDirector, Danish GamblingAuthority, & Trustee, IAGR
By Tony Coles
8 CASINO LAWYER • SPRING 2013
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BackgroundIt may be useful, especially for readersunfamiliar with the structures of theEuropean Union, to set the scene. Thescene involves the twenty-seven MemberStates of the European Union, each ofwhich is a sovereign nation in its ownright. It also involves the relationshipsbetween those twenty-seven MemberStates as governed by the Treatiesestablishing the European Union and thedirectives and other utterances emanatingfrom the European Commission, let alonethe jurisprudence of the Court of Justiceof the European Union (see CJEU).Thus, it is not surprising that the scene isa complicated one. As the Commissionitself writes in its paper, each of theMember States is, in principle, free to setits own regulatory policies for onlinegambling, but these policies must always“comply with EU law and InternalMarket principles and rules”. This
freedom arises as a consequence of theTreaties establishing the EuropeanUnion,and in particular Article 56 of the Treatyon the Functioning of the EuropeanUnion (which relates to the freemovement of services across theEuropean Union) and Article 49 (whichcovers the freedom for businesses toestablish themselves throughout the EU).
The development of online gamblinghas imposed significant pressures on therelationship betweenMember States’ owndesires for control over gamblingregulation, and their desires for controlover gambling taxation, and their Treatyobligations as members of the EU. Thishas resulted in significant jurisprudencefrom the CJEU where, in a variety ofcases initiated in a number of individualMember States, the compatibility of aMember State’s national rules with theTreaty obligations of that State has beenchallenged. In a series of judgments, the
CJEU has provided general guidance onthe interpretation of the fundamentalprinciples of the EU Internal Market, sothat the national courts in the relevantMember States can then assess what theCommission describes in its paper as “thecircumstances under which restrictivenational gambling laws are justified ongrounds related to the general interest”.
Given these EU pressures, and giventhe fast pace of the development of onlinegambling, and the fact that sites can easilyoperate from the EU, with consumers/players reaching across nationalboundaries to identify sites which attractthem both in terms of the products onoffer and the potential economic benefits,it is not surprising that the EuropeanCommission is involved.
Thus, as stated above, theCommission adopted aGreen Paper in theSpring of 2011 which was followed by aperiod of public consultation so as toenable it to seek to understand both theexisting situation in the industry, the wayin which Member States seek to regulateonline gambling, and how the individualpublic policy objectives of each MemberState can be reconciledwith its obligationsto the EU so as not to undermine theInternal Market. The Commission hasalso sought to identify whether differingnational regulatorymodels could co-exist,or whether action is needed at the EUlevel. Because, interestingly, although theonline gambling industry is one of thefastest growing service activities in theEU
European Commission—Is There Regulatory Change Ahead?
NEW DEVELOPMENTS IN JURISDICTIONS: EUROPEAN UNION
EUROPEAN UNION
In October of last year the European Commission issued its paper
on the regulation of online gambling under the title “Towards a
Comprehensive European Framework for Online Gambling”. This
paper was eagerly awaited by many in the online gambling industry
and followed the Commission’s Green Paper consultation document which
was published in March 2011. Since the release of the Commission’s paper
there has been much industry comment on the initiative, along with an
opportunity to reflect on what might happen in the future and what, if any-
thing, this Commission initiative will really mean for the industry.
CASINO LAWYER • SPRING 2013 9
it, unlike other service activities, has not hithertobeen the subject of specific pan-EU regulation. Thattheremay be a number of reasons to explain this didnot deter the Commission from grappling with theproblem and proposing what it sees as the wayforward.
The European Commission’s Action PlanIn its October 2012 paper, the Commission
identified the need for an improved regulatoryframework governing online gambling serviceswithin the EU as well as the need for greater co-operation betweenMember States and between EUinstitutions. The Commission accepted that issuesraised in online gambling cross Member States’borders and need to be addressed by harmonisedregulation, but not necessarily by regulation at theEU level.
Thus the Commission’s paper, issued with anaccompanying Commission Staff WorkingDocument, identified “the key challenges posed bythe co-existence of national regulatory frameworkswithin the Internal Market” and answered thosechallenges by identifying five priority areas where itsays that action is required.
Broadly put those six initiatives are:
• Ensuring compliance of Member States’regulatory frameworks with EU law.The Commission is to seek, or perhaps morecorrectly will continue to seek, to ensure that theregulation in each Member State complies with EUlaw. To achieve this objective the Commission plansto take enforcement action against those MemberStates which in its opinion do not currently comply,and it will do this by continuing, or initiating,infringement proceedings. Such infrequent
proceedings are, of course, taken by the Commissionitself where it believes that an individual MemberState is not complying with EU law. The processcan be time consuming since it involves theCommission requesting an individualMember Stateto provide information regarding its regulatory lawand an explanation of justification where there isapparent inconsistency with EU law. Often thisprocess can lead to a reconciliation between theCommission’s views and those of theMember State,with changes to its regulations being instituted bytheMember State without further formality. But, inthose cases where exchanges between theCommission and the Member State result in animpasse, the Commission may take proceedingsagainst theMember State in the Court of Justice ofthe European Union and seek a ruling. Failure by aMember State to comply with a CJEU ruling isexpensive both in terms of the financial penaltiesimposed on aMember State by the Court and also interms of that Member State’s “loss of face” with itsEU partners as a “good European”.
In regard to online gambling regulation theCommission currently has a number ofinfringements proceedings outstanding againstMember States, including Sweden, Germany, theNetherlands, Finland, Hungary and Greece. Itproposes to further accelerate its investigations intothe complaints it receives and to take enforcementaction before the CJEU where necessary.
In its paper the Commission says that it willundertake an on-going review of Member States’licensing systems to gauge their transparency so asto ensure the absence of any discrimination againstoperators from outside that State.
• Establishing an expert group on gambling.The Commission is creating an expert group ongambling with representatives from all MemberStates. The plan is for those experts to share theirexperiences, to identify what are the best practicesand to provide advice and expertise on futureinitiatives whichmay emanate from the Commission.
• Enhancing supervision, administrativeco-operation and enforcement.The Commission regards as a priority theenhancement of co-operation between EUMember
Tony Coles is a consultant inJeffrey Green Russell’s Gamingand Betting Department.He is well-known in the leisureindustry for his specialistknowledge of gaming andbetting law. He enjoys aninternational reputation for thestrength of his practice. Clientsspan a range of sizes andsectors and include a number ofinternational household namesin the leisure industry.
Tony regularly lectures toan international audience ongaming issues and is a frequentcontributor to gaming lawperiodicals and journals.He is immediate past presidentof the International Masters ofGaming Law as well as being amember of the InternationalAssociation of GamingAdvisors, The Society for theStudy of Gambling and theEuropean Association for theStudy of Gambling.
He is a respectedauthority on gaming issues andis the author of the UK and thebetting exchange sections of thewell-known Internet GamingReport. He is also a memberof the Editorial Board ofGaming Law Review.
“The Commission identified theneed for an improved regulatoryframework governing online gamblingservices within the EU as well asthe need for greater co-operationbetween Member States and betweenEU institutions. ”
Continued on next page
10 CASINO LAWYER • SPRING 2013
>>NEW DEVELOPMENTS IN JURISDICTIONS: EUROPEAN UNION
States and, especially, between thegambling regulatory authorities in eachof the States. The Commission considersit essential that its policies be successfullyimplemented at both Member State andEU level by the development of closerworking relations between thoseregulatory authorities.
The Commission also proposes toinvestigate the benefits and limitations ofresponsive enforcement measures,including website and financialtransaction blocking, and procedureswhich may require online intermediariesto remove what are identified as “illegalgambling offers” or to block access tothose offers.
The Commission has said that itconsiders that the possible use of theInternalMarket Information Systemmaybe beneficial in this objective.
• Protecting consumers, citizens,minors and vulnerable groups.The Commission states that it is eager toensure greater protection for consumerswho access online gambling sites,particularlyminors (an expression used bythe Commission to refer to those undereighteen years of age, even though incertainMember States young adults abovethat age may also be covered by theregulatory regime applicable to children)and other vulnerable people. TheCommission intends to preparerecommendations for the establishment ofa common set of consumer protectionprinciples which would apply across thesector. It also considers that responsiblegambling advertisements must makeconsumers aware of age restrictions, thefact that gambling can be harmful whennot pursued responsibly, and that risks toplayers can be financial, social and healthrelated. To this end, during 2013 theCommission will prepare recommend-ations for minimum requirements forgambling advertising across the EU.
The Commission also intends toreview recommendations from specialistresearch groups and says that it willconsider initiatives for further researchinto pathological gambling.
• Preventing fraud and moneylaundering.Although its assertion may be challengedby many in the industry, the Commissionsays that it associates online gamblingwith online fraud, credit card fraud,identity theft and money laundering. Itregards these problems as beingtransnational and requiring significant co-operation between Member States. It istherefore considering the possible
extension of the current Anti-MoneyLaundering Directive, which at presentapplies only to casino gaming, so that infuture it would cover all forms ofgambling.
Given that in a number of MemberStates certain issues are addressed by aregulatory requirement that onlinegambling equipment and software becertified, the Commission is to seek toensure consistent standards across the EUand to aim to reduce the administrativeburden which currently arises from theneed for operators to obtain certificationin each Member State, often to differentstandards.
The European Commissionsets standards in the regulationof online gaming
Continued from previous page
• Safeguarding the integrity of sportsand preventing match fixing.In recognising thatmatch fixing is a threatto the integrity of sporting events, theCommission acknowledges this threat canarise both with and without theinvolvement of sports betting operators.It is well-known that many leading onlinesports betting operators currently havewell established reporting arrangementsin place with the authorities in manysports. These arrangements have led tothe identification of wrong-doing, and theconviction of the wrong-doers concernedwhether sportsmen, administrators orthose accessing a betting site. To expandon this, the Commission intends in 2014 topublish its recommendations for EU-wideanti-match fixing measures and will alsoassist the Council of Europe, theInternational Olympic Committee andother sports bodies to encourage andpromote international co-operation so asto aim to prevent match fixing.
The Way ForwardIn its paper, the Commission says that itintends the actions it has identified andwhich are summarised above to beimplemented “promptly”. Thus, withintwo years it will produce a reportdetailing whether or not those actionshave proved sufficient to address thechallenges which the Commissionregards as facing online gambling. Ifnot, the Commission is likely to proposethat additional measures are taken.Meanwhile there are on-goingopportunities for those involved in theonline gambling industry, and for thosefrom outside the industry who areinterested in the way in which it develops,to engage with the Commission.Although its paper sets out its currentplans, it would be fair to say that theCommission has not turned its faceagainst any particular solution to on-going issues in the industry.
ConclusionMany have said that the publication of theCommission’s paper will not have anyimmediate impact, and it seems to be clearthat this initiative will not result in any, orat least any immediate, pan-Europeangambling regulation. If that evermaterializes, it will be some while henceand will only arise as a result of muchgreater work at the EU level. However,the continuation of the infringementproceedings against individual MemberStates is likely to ensure that, within aperiod of a few years, those States whichare seriously out of step with EU law willbe found to have adopted new regulatoryregimes. Withmore than a dozenMemberStates having laws that are almostcertainly out of step with their EUTreatyobligations, it is certain that theCommission has much work to do inpursuing its infringement proceedings.And the involvement of the Court ofJustice of the European Union is not at allunlikely before this process ends.
Upon the publication of the paper,Michel Barnier, the EU Commissioner forthe Internal Market, promised that theCommission would “fulfil its role asguardian of the EU Treaty”. But where aMember State indicates plans to change itslaws, and then begins to implement those
plans, the Commission is likely to allowtime for the change. For example, thereare currently infringement proceedingsunderway against the Netherlands, butwith the new Dutch Government’s plansto implement changes to the regulationsfor online gambling, it is likely that theCommission will allow opportunities forthese changes to be introduced in a way itregards as satisfactory and only then willit review the changed regime.
Of course, one significant, but notunexpected, omission from the Commis-sion’s paper is tax harmonisation. Thelevel of individual gambling taxes in eachMember State is, generally speaking, notan issue to be determined at EU level, butnonetheless it continues to represent asignificant issue for online gamblingoperators. In the writer’s view any moveto tax harmonisation is a longway off, if itwere ever to appear.
On publication, the paper was greetedby many as representing a significant stepforward towards ending the discrimin-atory regimes in a number of MemberStates, but by others as a bigdisappointment. With the great range ofoperations within the online gamblingindustry, and with the pressures tomaintain existing benefits at one end ofthat range and the entrepreneurialpressures for change andmodernisation atthe other, that divergence of opinion canonly be expected. Furthermore one mustnot overlook the significant tax benefitswhich gambling provides for the revenuesof many, if not all, Member States, as wellas the political nature of the EUinstitutions.
It may therefore be not at all unlikelythat, five years hence, we will be lookingback at this paper to remind ourselves ofwhat was proposed to happen but which isstill awaited.�
CASINO LAWYER • SPRING 2013 11
Many have said thatthe publication of theCommission’s paperwill not have anyimmediate impact,
and it seems to be clearthat this initiative will notresult in any, or at least
any immediate,pan-European gambling
regulation.
“
”
12 CASINO LAWYER • SPRING 2013
>>NEW DEVELOPMENTS IN JURISDICTIONS: UNITED KINGDOM
The rationale for the proposedchanges is stated as being consumer pro-tection and simplification, allowing UKconsumers to deal with UK licensed en-tities and with recourse to the UK regu-latory body. If the UK regulated entityis not operating in a manner that the UKregulator deems appropriate, its licensesand ability to do business in the UKcould be stopped. However, as with alllegislative and policy changes, there areintended and unintended consequences.This article examines the proposedchanges and some of those conse-quences.
Abolition of the ‘white list’One important change proposed by theBill is to phase out the white list and Eu-ropean Economic Area (EEA) exemp-tions. The Act currently prohibitsadvertising services to theUK unless theoperator is based in the EEA (including
Gibraltar) or in the following WhiteListed jurisdictions: Alderney, Antiguaand Barbuda, the Isle of Man and Tas-mania. The proposed changes in the Billwould require all EEA or white list op-erators servicing the UK market to ob-tain a UK operating license. The UKgovernment is looking to provide someprovisional operating licenses to enableEEA and white listed operators to tran-sition smoothly into the new regime, butno details have been released.
In principle, EU law permits an au-thorised operator in one Member Stateto provide remote gambling services toconsumers based in another MemberState. Member States are still fully enti-tled to ‘opt out’ on the grounds of pub-lic policy, as we have seen across Europeand require remote operators from otherMember States to obtain a local license.
Ostensibly, the Bill appears to fallin-line with EU law, as the foundation
for imposing such a restriction is basedon consumer protection and publicorder. The Bill is consistent with theapproach other EU jurisdictions such asBelgium, France and Italy have taken,which all require local licenses to serv-ice their market.
The shift from ‘point of supply’to ‘point of consumption’The other main change proposed by theBill is a shift from point of supply regu-lation (i.e. where the remote gamblingoperator is located) to point of con-sumption (i.e. where the consumer is lo-cated). If this comes into force,unamended, all overseas operators willneed a UK operating license in order totransact with, and advertise to, Britishconsumers. This also has a knock-on ef-fect on software providers that serviceremote gambling operators. If their soft-ware is being used by an entity servicingthe UK market, they will require a UKsoftware operating license.
UK ReformsProposed changes in gambling law may yieldunintended consequencesBy Thomas Logan
UNITED KINGDOM
The Department for Culture, Media and Sport is currently conduct-
ing a review of the Gambling Act 2005 (the Act). The Draft Gam-
bling (Advertising and Licensing) Bill (the Bill) was published in
December 2012 and proposes radical reforms to the current re-
mote gambling regulations in the UK, affecting operators, suppliers and
affiliates. The Bill is currently progressing through Pre-Legislative Scrutiny
by Commons Select Committee with the most recent hearing being held
on February 12. With the coalition government having the majority in the
House of Commons, and the likelihood that the bill will receive support
from opposition too, it is likely that the Bill will come into force without sig-
nificant amendments.
CASINO LAWYER • SPRING 2013 13
ForUK players, helpfully there is noindication that the player pool will be re-quired to be segregated.
Licensing and compliance costsAnnual UK licensing fees are relativelyconsistent with other “white list” opera-tors. According to the Bill, operators al-ready in “well-regulated jurisdictions”that can provide the necessary compli-ance information “... will not face signifi-cant increases in licensing costs.” Thesame cannot be said of current remoteoperators not in white-list jurisdictions.Revenues from licensing fees are ex-pected to only increase by two millionpounds annually; notwithstanding thisthe Gambling Commission has alreadybeen accused of “Empire Building” byConservative MP, Phillip Davies.
Gambling Duty and TaxSeparately to the Bill, the UK govern-ment has introduced a ‘point of con-sumption’ tax for offshore gamblingoperators. This will mean, by Decem-ber 2014, any remote operator servic-ing the UK market will be required topay gambling duty, at 15% on all grossprofits. Under these changes, HMRCwill have new powers to impose crimi-nal sanctions and/or revoke an operat-ing licence for non-payment. As a resultof the duty change, HMRC anticipatesa revenue boost of £70 million in thefirst year, rising up to £270 million inthe following years.
Additionally, UK companies aresubject to UK corporation tax on theirprofits, levied at 23% for 2013. This ad-ditional cost would make a major dif-ference to online poker providers’ costbase unless it can be minimized. Struc-tures where the profits are effectively“offshored” have however come undersignificant scrutiny recently, and theUK Government is exploring optionsto close these loopholes.
When will this happen?The question is when the Bill will hit thestatute books. It cannot be feasible forHMRC to revoke offshore remotelicenses; therefore, we can only assumethat these new powers aremeant to workin parallel to the Bill. It follows that theBill should become law before theDecember 2014 cut-off, if not earlier.Remarkably, a separate PrivateMember’sBill introduced in June last year (Off-shore Gambling [Amendment] Bill),which seeks to achieve similar objectivesto the Draft Gambling (Licensing andAdvertising) Bill, aims for a much moreambitious deadline: April 2013.
SummaryThe major impact of the Bill and taxreformswill be to repatriate tax revenuesand remote operators, those who mayhave previously fled to the white listjurisdictions for tax reasons, back to theUK and to widen the net to crack downon offshore gambling operations.
And while operators and softwareproviders currently servicing the UKmarket should consider the implicationsof these changes and whether or not toobtain a UK operating or softwarelicense in advance, affiliates too need toconsider their own responsibilities in en-suring that the partners they promoteare fully compliant with the new regula-tions, once in place. Affiliates and adver-tising agents of white list and offshoreoperators need to add in a layer of duediligence to check that their operatorshave the requisite license in the UK.�
Thomas Logan is the Group GeneralCounsel and Legal Director at TotalCompliance. Thomas advises clients in theonline gambling industry in relation tolicensing, business structuring, corporatetransactions, compliance and intellectualproperty matters. You can contact MrLogan at [email protected]
MEMBERSIN THE NEWS
�
Britt SingletaryBritt Singletary of Singletary Thrash in Biloxihas been appointed by US District JudgeCarl Barbier in New Orleans to serve as anAppeal Panellist for the final review of allclaims related to the BP Deepwater Horizonoil disaster. Sixteen attorneys from Texasaround the Gulf to Florida were selected.Only two came from Mississippi. BP or theClaimants have the right to appeal an awardfrom the Claims Administrator to the Panel.The Panel decision is final unless JudgeBarbier accepts review. Britt is listed in the2013 Best Lawyers for Gaming and Alterna-tive Dispute Resolution. As a former USMagistrate he has conducted thousands ofsettlement conferences. This appointmentwill be challenging but is also an opportunityto serve the Court in resolving the largestclass action in America’s history.
2013 Edition of Indian GamingIndustry Report ReleasedIn February, Alan P. Meister, Ph.D., PrincipalEconomist with Nathan Associates and aCalifornia-based member of IMGL, releasedthe new edition of his annual Indian gamingstudy, the Indian Gaming Industry Report.In its eleventh year of publication, the studycontinues to provide comprehensive and up-to-date nationwide and state-by-state dataand analysis on Indian gaming in the UnitedStates. A summary of the study’s findings isincluded in Dr. Meister’s article starting onpage 20 of this issue of Casino Lawyer.
Recovery Road ExpandsTreatment ServicesRecovery Road has announced its expansionto include treatment of gambling addiction,providing those living with the illness anopportunity for recovery. Recovery Road hasleveraged its current model for addictiontreatment and services and added keypersonnel, including Arnie and Sheila Wexler,two of the country’s pioneers in treatingcompulsive gambling.
The Wexlers bring more than 40 yearsof experience working with compulsivegamblers and their families to RecoveryRoad. Both are Certified Compulsive Gam-bling Counselors (CCGC) and will be instru-mental in the success of Recovery Road’sgambling addiction program, as well as in thehiring of other certified gambling counselors,therapists and staff.
Continued from page 5
14 CASINO LAWYER • SPRING 2013
NEW DEVELOPMENTS IN JURISDICTIONS: UNITED STATES>>
While the Kentucky legislaturecontinues to debate the issue ofexpanded gaming withoutprogress,1 two Kentucky horse
racing tracks – KentuckyDowns and EllisPark – offer their patrons “Instant Racing”,or wagering on historical horse races. Thetracks’ Instant Racing software is housedin a slot machine-like terminal, and thebettor wagers on historical horse racesprovidedwith limited past performance in-formationwhich does not identify the date,the horse or the track. After placing awager, the bettor is given the option ofwatching the race or immediately viewingthe results andmoving quickly to the nextwager. The revenue generated by InstantRacing is substantial – from September2011 toDecember 31, 2012, approximately$228 million has been wagered throughthe machines2 – but the legality of thegame in Kentucky remains in question.
Generally, gambling devices like slotmachines are prohibited by Chapter 528 ofthe Kentucky Revised Statutes, but underKy. Rev. Stat. § 436.480, the prohibitionsfound in Chapter 528 “shall not apply topari-mutuel wagering authorized underthe provisions of Chapter 230,” Ken-tucky’s horse racing laws. The genesis ofInstant Racing in Kentucky came in late2009 when State Senator Damon Thayer
(R) submitted a request to Attorney Gen-eral Jack Conway (D) to determine the le-gality of Instant Racing in Kentucky,citing in his request that a 2007 OaklawnPark racetrack report indicated that $17.7million was wagered each month throughits Instant Racing system, and that theamount of wagering had nearly tripledfrom 2004-2006.3 In the resultingOpinion,Attorney General Conway found that In-stant Racing did not qualify as pari-mutuelwagering under then-current Kentuckyracing regulations (which contemplatedlive racing), but suggested that the Com-mission had the statutory authority toamend its regulations to include InstantRacing in its definition.4
Under Kentucky law, the KentuckyHorse Racing Commission (the “RacingCommission”) has the authority to prom-ulgate administrative regulations govern-ing and regulating wagering on horseraces under the pari-mutuel system.5 Fol-lowing the Attorney General’s Opinion,the Racing Commission drafted amendedregulations authorizing pari-mutuel wa-gering on both live and historical horseracing.6 In July of 2010, the Racing Com-mission, the Kentucky Department ofRevenue, and a group of Kentucky racetrack associations then brought a declara-tory judgment action in the Franklin Cir-cuit Court asking the court to adjudicatethe legality of the proposed regulations.7
The Family Foundation of Kentucky, avigorous opponent of expanded gaming inKentucky, intervened as Respondent, ar-guing that Instant Racing is not pari-mutuel wagering and thus is illegal
gambling under Chapter 528.After taking judicial notice of the
struggles of, and importance of, the horseindustry in Kentucky, as well as the poten-tial legal and economic harm that could be-fall the racetrack associations should theyproceed without an adjudication of theregulations’ propriety, Judge Thomas D.Wingate of the Franklin Circuit Court setan expedited briefing schedule.8 Followinghearings on the merits of the case, on De-cember 29, 2010, the Franklin CircuitCourt ruled that the Instant Racing regu-lations were a lawful exercise of the Rac-ing Commission’s authority to regulatepari-mutuel wagering on horse racing andthat the licensed operation of wagering onhistorical horse races was pari-mutuel.Thus, Instant Racing does not contravenethe statutory prohibitions on gamblingfound in Chapter 528 of the Kentucky Re-vised Statutes.9
The Family Foundation appealed, andon June 15, 2012, in a 2-1 decision, theKentucky Court of Appeals reversed thecircuit court, holding that the question ofwhether Instant Racing was truly pari-mutuel wagering was a question of fact,not law (as the circuit court had held), andremanded the case to the circuit court fora hearing and findings of fact.10 The orig-inal Petitioners appealed, and on January11, 2013, the Supreme Court of Kentuckygranted discretionary review.11 Advocatesof Instant Racing have taken the SupremeCourt’s interest as a positive sign, but, fornow, the legality of Instant Racing in Ken-tucky remains in limbo.
Because Instant Racing in Ken-
Kentucky Update:
InstantRacing
UNITED STATES
By Kerry O. Irwinand Laura D’Angelo
CASINO LAWYER • SPRING 2013 15
tucky is only authorized by regula-tion, not by statute, a legislative en-actment could clarify the legality ofwagering on historical races. In Feb-ruary 2013, House Speaker GregStumbo (D) introduced House Bill416, which was in part designed topay for pension reform for the stateretirement system by utilizing rev-enue from Instant Racing.12 The bill,which passed the House on Febru-ary 27th, has a definition that in-cludes Instant Racing as a type ofpari-mutuel wager.13 Family Foun-dation of Kentucky spokesmanMartin Cothran saidTuesday that the language appears to be an attemptto resolve the legality of Instant Racing.14
While the bill passed theHouse, the Senate hasindicated that it traditionally does not act on anyissue that is currently before the courts.15 And notevery advocate of expanded gaming is in favor ofthe bill, in part because it would cap the revenue that
horse racing would receive fromInstant Racing at $300 million intotal wagers. Representative DavidOsborne (R), who earlier in the ses-sion introduced a constitutionalamendment that would establishseven casino locations and provideup to $100 million a year for anEquine Excellence Fund intendedto support the horse industry inKentucky, expressed such doubts.16
“My interest in expanded gamblinghas never been about state coffers,”Osborne stated.17 “It’s about what
it does for the horse industry.”18
Meanwhile, facing legislative indecision on ex-panded gaming, the Kentucky horse racing indus-try – in particular Kentucky Downs and Ellis Park– has placed a sizable wager on the legality of In-stant Racing. The industry is receiving a payout, butthe results of the race are yet to be determined.19 �
Kerry O. Irwin is an associateand Laura D’Angelo is aPartner in the Lexington,Kentucky, office of Dinsmore& Shohl, LLP. Both practice inthe areas of equine, gamingand general corporate law.
Kerry O. Irwin
Laura D’Angelo
1 See, e.g., Gregory A. Hall, Casino Bill Filed in Kentucky House, THE COURIER-JOURNAL, February 20, 2013, available athttp://www.courier-journal.com/article/20130219/NEWS0101/302190079/Casino-bill-filed-Kentucky-House (last visited March 1, 2013).2 Tom LaMarra, KY Lawmaker Questions Raid on Instant Racing, THE BLOOD-HORSE, February 28, 2013, available athttp://www.bloodhorse.com/horse-racing/articles/76540/ky-lawmaker-questions-raid-on-instant-racing?source=rss (last visited February 28, 2013).3 Laura D’Angelo, Kentucky Update: Instant Racing, CASINO LAWYER, May 2011 (citing Marr, Esther, Kentucky Senator Suggests InstantRacing, THE BLOOD-HORSE, available at http://www.bloodhorse.com/horse-racing/articles/50324/ky-senator-suggests-instant-racing,April 22, 2009 (last visited February 28, 2013)).4 10 Ky. Op. Att’y Gen. 001 (January 5, 2010), available at http://ag.ky.gov/civil/opinions/Pages/2010.aspx (last visited February 28, 2013).5 Ky. Rev. Stat. § 230.361(1).6 “The only wagering permitted on a live or historical horse race shall be under the pari-mutuel system of wagering.” 810 Ky. Admin. Regs. 1:011Section 1.7 The Kentucky Horse Racing Commission, et al. v. The Family Foundation of Kentucky, Inc. Civil Action No. 10-CI-1154 (Franklin Cir. Ct.).8 Order Scheduling Briefing at 5, Kentucky Horse Racing Commission et. al v. The Family Trust Foundation of Kentucky, Inc. d/b/a The Family Foundation,No. 10-CI-01154 (Franklin Cir. Ct. July 26, 2010).9 Opinion and Order, Kentucky Horse Racing Commission et al. v. The Family Foundation of Kentucky, Inc., Civil Action No. 10-CI-1154 (Franklin Cir. Ct.,December 29, 2010), available at http://www.bloodhorse.com/pdf/10-CI-1154OpinionandOrder.pdf (last visited February 28, 2013).10Opinion Vacating and Remanding, The Family Trust Foundation of Kentucky, Inc. d/b/a The Family Foundation v. The Kentucky Horse RacingCommission, et al., No. 2011-CA-000164 (Ky. Ct. App. June 15, 2012).11 Gregory A. Hall, Kentucky Supreme Court to Hear Instant Racing Case, THE COURIER-JOURNAL, January 11, 2013, available athttp://www.courier-journal.com/article/20130111/BUSINESS/301110116/Kentucky-Supreme-Court-hear-Instant-Racing-case(last visited February 28, 2013).12 Gregory A. Hall, Does Stumbo Bill Resolve Instant Racing Court Case? THE COURIER-JOURNAL, February 27, 2013, available athttp://blogs.courier-journal.com/horsebiz/2013/02/27/does-stumbo-bill-resolve-instant-racing-court-case/ (last visited February 28, 2013).13 Id.14 Id.15 Tom LaMarra, KY Lawmaker Questions Raid on Instant Racing, THE BLOOD-HORSE, February 28, 2013, available athttp://www.bloodhorse.com/horse-racing/articles/76540/ky-lawmaker-questions-raid-on-instant-racing?source=rss (last visited February 28, 2013).16 Id.17 Id.18 Id.19 Seemingly in anticipation of a favorable decision on the legality of Instant Racing – either in the courts or in the legislature – Keeneland RacingAssociation has teamed with Nevada-based Full House Resorts to purchase the Thunder Ridge harness track in Eastern Kentucky. The partnersplan to reinvent the track as a boutique Quarter Horse racetrack with purses boosted by simulcast wagering and Instant Racing. See Janet Patton,Keeneland aims to build prime Quarter Horse racetrack near Corbin, THE HERALD-LEADER, February 14, 2013, available athttp://www.kentucky.com/2013/02/14/2517437/exclusive-keeneland-to-build-prime.html (last visited March 1, 2013).
The tracks’Instant Racing
software is housedin a slot machine-liketerminal, and thebettor wagers on
historical horse racesprovided with limitedpast performanceinformation whichdoes not identifythe date, the horse
or the track.
“
”
16 CASINO LAWYER • SPRING 2013
NEW DEVELOPMENTS IN JURISDICTIONS: UNITED STATES>>
The premise is simple enough: Some-one has an asset that it undervaluesand doesn’t use. Someone else cov-ets that asset but has no way of ob-
taining it. The solution, of course, is forthe party that covets the asset to try to buyit from the party that possesses it. Trans-actions such as this happen on a regularbasis in a free-market society. It’s consid-ered healthy for business.
Now tweak the scenario. New Jersey,California, New York, even Minnesota,covet an asset that only four states cur-rently possess: the exemption that wasgranted in the 1992 federal ban on sportsbetting.
The law has been in the news recentlysince the state of New Jersey, under the di-rection of governor and former U.S. At-torney Chris Christie, announced in early2012 that it would allow the state’s casinosand horse race tracks to accept wagers onsporting events, in direct violation of thefederal ban. The Professional Sports Pro-tection Act, also known as PASPA, is thelegislation that formally bans states –other thanNevada, Delaware, Oregon andMontana – from allowing wagers on pro-fessional or collegiate sporting events. Atthe time the legislation was passed, theaforementioned four states had some sortof sports wagering scheme already inplace and Congress granted those statesan exemption. The law’s primary sponsor,ironically, was former New Jersey senatorBill Bradley, a former collegiate and pro-fessional basketball player.
In order to appease the Atlantic City
casinos, Congress gaveNew Jersey one year to im-plement a sports wageringscheme and thus be eligiblefor the PASPA exemption.But the state, thanks tosomemaneuvering by Sen-ator Bradley, was unable tooverturn its own law ban-ning sports betting andended up joining the forty-six other states that weresubject to PASPA.
Twenty years later,New Jersey voters over-whelmingly approved ameasure to allow sports betting, and thestate announced its intentions to pressahead despite the federal ban. The statewas promptly sued by the four professionalsports leagues and the governing body ofcollegiate athletics, the NCAA, and onFebruary 28, a U.S. District Court ruledagainst New Jersey, saying the state’s ini-tiative was in violation of PASPA. Thelegal theory that New Jersey was unableto overcome is simple and powerful: theSupremacy Clause. Under the SupremacyClause—Article VI, clause 2 of the Con-stitution — a state may not enact legisla-tion that is in violation of federallegislation. New Jersey’s legislation al-lowing sports betting is in direct violationof PASPA; hence, it violates the Su-premacy Clause and was, correctly underthe letter of the law, struck down.
New Jersey argued that PASPA is un-constitutional for a variety of reasons, al-
leging it violates the TenthAmendment’s state sover-eignty provision, that Con-gress abused its CommerceClause powers and the law“commands” the state toenact or comply with a fed-eral initiative. Those argu-ments were dismissed at thedistrict court level but willlikely be raised again whenthe state formally appeals tothe 3d Circuit Court of Ap-peals. New Jersey’s odds maynot be much better at the ap-pellate level considering that
in 2009 that same court denied Delaware(which, remember, already has an exemp-tion) its plan of expanding its sports wa-gering scheme from a parlay system tosingle-game wagering.
So if New Jersey loses again in the 3dCircuit is it just out of luck?
The state still has two avenues avail-able to it. First, it can lobby Congress torepeal or amend PASPA. There are twopieces of legislation currently in commit-tee in the House of Representatives thatwould amend the law. One would giveNew Jersey an exemption, the other wouldcreate a window for any state to enactsports betting if it chooses.
At a time in which taxes and tryingto find additional revenue is an obsessionin Washington, framing a repeal oramendment of PASPA on purely economicgrounds as a revenue enhancement hasn’thappened. PASPA results in hundreds of
New Jersey:
‘Let’s Make A Deal’
UNITED STATES
By Cory Aronovitz, Robert Foltmanand Keenan Ballo
NJ Gov. Chris Christiesays he isn’t throwing inthe towel in the fight to
legalize sports gamblingin New Jersey.
CASINO LAWYER • SPRING 2013 17
millions of potential tax dollars not beingcollected, not to mention the additionalcosts of enforcing the law.
The Gaming industry may be amongthe few, if only, industries that would wel-come government regulation and taxationif it meant legalized sports wagering. Andyet, the economic impact of moving for-ward has been muzzled by the antiquatedarguments put forth by the sports leaguesin defense of PASPA. Barring a Congres-sional repeal or amendment of PASPA,New Jersey, and any other state thatwantedto get into the sports wagering business,still has another card it could play: BuyOregon’s orMontana’s exemption, or haveeither of those states assign the “right” toPASPA’s exemption to New Jersey.
Under this theory, the exemption thatCongress grantedNevada, Delaware, Ore-gon andMontana in the PASPA legislationis considered a contractual “right.” Thefour states have a “contractual right” tooffer sports betting. Contractual rights canbe assigned from one party to another. Aparty can either completely assign theright or partially assign a right. Under ourexample, Oregon and Montana could sellits PASPA exemption completely, or par-tially assign, or lease it to another state.
Selling or leasing the PASPA exemp-tion would not result, technically, in an in-crease in sports betting, since only fourstates would still be legally entitled to offerit. From that standpoint, it should mattervery little to the federal government whichfour states are exempt. The state acquiringthe exemption would be bound to imple-ment only the betting scheme that the as-signing state could implement. It could bethat New Jersey would not be able to offersingle-game wagering but instead just aparlay system similar to Delaware. How-ever, a limited version of sports betting ismore than what it can currently offer.
Also, it would be difficult for one ofthe professional sports leagues to challengethe transfer because, again, there wouldn’tbe a net increase in states that would be ex-empt from PASPA. It would still be four.
Most importantly, however, allowing
New Jersey or anotherstate to negotiate with ei-ther Oregon or Montanato acquire its exemptionwould result in the assetbeing used, unlike the cur-rent situation. It can be ar-gued that by granting theexemptions in the firstplace, Congress did so inorder for the beneficiarystates to use, or continue touse, them. In fact, another argument canbe made that it would be more economi-cally beneficial for Oregon andMontana tolease the exemptions than to use themwithin their own borders. If either statewas able to negotiate a deal in which itwould receive a percentage of the tax rev-enues generated by sports betting beingoffered at Atlantic City or throughoutCalifornia, the revenue would likely be farhigher than if it offered sports betting it-self, based on larger populations and po-tential customers in New Jersey andCalifornia.
Any income that Oregon or Mon-tana would derive would be pure profitand free from all expenses of regulationand oversight that would be required bylicensing casinos within its borders.Every dollar the states generated by leas-ing its exemptions would be more thanwhat it is currently generating by lettingthe exemption sit idle.
Allowing this sort of transaction be-tween willing parties (in this case sover-eign states) benefits both parties. Theacquiring party is able to obtain an asset ithad little opportunity to acquire by othermeans (barring unlikely Congressional orjudicial action), and the selling party is abletomonetize an asset that was beingwasted.
One argument against this proposal isthat states should not be allowed to sell, orlease, rights granted to them by Congress.That, however, is a far grayer area than thebattle New Jersey is currently fighting byenacting a law that is in direct conflict witha federal law. And if selling the exemptionis considered against public policy, then
Congress should revokethe exemptions granted toOregon and Montana forlack of use and offer themto states that would makeuse of them.
As much as New Jer-sey wants to claim (cor-rectly) about the unfairnessof PASPA, there is very lit-tle wiggle room for a judgewhen the Supremacy
Clause is so clear and established. It is alsoextremely difficult to get a court to declare alaw unconstitutional that has been on thebooks for as long as PASPA has.
Congress rarely enacts broad, nation-wide legislation while concurrently grant-ing exemptions from that legislation to aselect few states, as was the case withPASPA. That was one of the theories ad-vanced by New Jersey in district court andwill likely reprise before the court of appeals.
By not enforcing PASPA in all fiftystates, Congress is discriminating againststates in favor of the four that weregranted exemptions. The federal govern-ment should not be allowed to further dis-criminate against the states, this time allfifty, who want to negotiate for the sale oruse of that exemption.
Since amending the law does not ap-pear to be on Congress’ agenda in the com-ingmonths, and a Constitutional challengeto PASPA appears difficult to establish (andeven if it was established, would only bebinding in the 3d Circuit), allowing the saleor lease of the PASPA exemption fromOregon andMontana to a willing state notonly is sound business, but a common-sense solution to make use of a law thatreally no longer makes much sense. �
Cory Aronovitz is a founding member of the InternationalMasters of Gaming Lawyers, founder of the Casino LawGroup and an adjunct professor of Gaming Law at the JohnMarshall Law School in Chicago.
Robert Foltman is a third-year law student at TheJohn Marshall Law School and a sportswriter and assistantsports editor at the Chicago Tribune.
Keenan Ballo is a third year law student at The JohnMarshall Law School. He is legal intern with The CasinoLaw Group and the host/creator of EverythingGaming/Casino Law Blog.
As much asNew Jersey wantsto claim (correctly)about the unfairnessof PASPA, there is
very little wiggle roomfor a judge when
the Supremacy Clauseis so clear andestablished.
“
”
18 CASINO LAWYER • SPRING 2013
>>
Last year’s decisive (8-1) decision bythe United States Supreme Courtin Match-E-Be-Nash-She-WishBand of Pottawatomi Indians v.
Patchak, 132 S. Ct. 2199 (2012) appearedto be a major blow to tribal gaming.Patchak seemed to open up challenges tofee-to-trust transfers to a broader groupof plaintiffs and significantly extend thetime for filing such suits. Most gamingobservers at the time agreed thatPatchakwould certainly delay development onnewly acquired tribal lands.
Not necessarily. The Secretary ofthe Department of Interior (“Secretary”or “DOI”) has indicated a major shift infederal policy to foster tribal economicdevelopment on newly acquired trustlands. Even without Congressional ac-tion to addressPatchak, the Secretary andthe Bureau of Indian Affairs (“BIA”) areprimed to continue to transfer land intotrust at a rapid pace. The Court’s deci-sion in Patchak, when combined with theSupremeCourt’s 2009 decision inCarcieriv. Salazar, 129 S. Ct. 1058, raises severalcomplex issues, including (1) whether thelitigation floodgates were opened to ques-tion newly acquired Indian land trust ac-quisitions, and (2) whether the trusttransfers would remain in limbo duringthe pendency of litigation.
These questions may have been an-swered by the Secretary’s recent attemptsto assuage the detrimental impact ofPatchak on tribal gaming developments.
On June 18, 2012, the SupremeCourt determined that an individual
property owner (plain-tiff David Patchak) nearthe Gun Lake Band’sCasino had standing tochallenge the Secre-tary’s acquisition ofland into trust for theTribe. The SupremeCourt’s decision con-sisted of two parts.
First, the eight-justice majority heldthat Patchak’s claimunder the Administra-tive Procedures Act (“APA”), 5 U.S.C. §701 et seq., was not barred by the QuietTitle Act’s “Indian lands” exception.The Court determined that Patchak wasnot claiming a right, title or interest inthe land, but rather that the governmentwas not entitled to any such right, titleor interest in that land. The Quiet TitleAct was therefore not applicable and didnot void the APA’s sovereign immunitywaiver. Second, the Court determinedthat Patchak had prudential standing tochallenge the Secretary’s trust acquisi-tion because Patchak’s alleged economic,environmental, and aesthetic harms“fall…within the zone ... protected orregulated by” the contention that the Sec-retary violated the Indian ReorganizationAct. At the time, many tribal gamingscholars viewed this decision as a “gamechanger.” Patchakwas initially feared tohinder tribal gaming and economic de-velopment on newly acquired trust lands.However, the Secretary has attempted to
mitigate some of these harsh effectsthrough reversal of certain long-stand-ing DOI policies. Prior to the ruling inPatchak, the Secretary would publish anotice of a final decision to take land intotrust for a tribe at least thirty days beforethe date of the transfer. If any litigationwas commenced within this thirty-daywindow, the DOI’s internal policies en-couraged it to “self-stay” any fee-to-trusttransfers until resolution of the pendinglitigation.
Based on actions in late 2012 andearly 2013, the DOI may have alreadyeliminated its “self-stay” policy. On De-cember 3, 2012, the DOI published itsthirty-day notice in the Federal Registerof its intent to take into trust: (1) a 305-acre parcel on behalf of the North ForkBand of Mono Indians in MaderaCounty (“North Fork Transfer”), and (2)a 40-acre parcel on behalf of the Enter-prise Rancheria of Maidu Indians, inYuba County (“Enterprise Transfer”).
NEW DEVELOPMENTSIN NATIVE AMERICAN GAMING
By Heidi McNeil Staudenmaierand Harsh P. Parikh
Effect of Patchak on Tribal Trust Lands
Update:
Heidi McNeil Staudenmaier Harsh P. Parikh
CASINO LAWYER • SPRING 2013 19
Following the public notice,nearby citizens and Indian tribesaffected by the fee-to-trust trans-fers timely filed separate lawsuitschallenging the Secretary’s deci-sion under the APA. Unlike pastpractice, the Secretary refused to“self-stay” either transfer. TheSecretary asserted that his princi-pal reason for “self-stay” in priorcases was no longer extant and de-termined that it was not necessaryto consult the Department’s inter-nal procedures set forth in the BIAHandbook. Specifically, in theSecretary’s view, since Patchak al-lowed suit under the APA evenafter land was taken into trust, a“self-stay” was no longer necessary.
As a result of the Secretary’schange in policy, the plaintiffs inboth cases sought to enjoin thetrust transfers. In both cases, thejudges separately concluded that the land couldbe taken into trust. The courts opined that theSecretary could “unwind” the transfer if later or-dered to do so, and therefore the plaintiffs were notirreparably harmed. Nevertheless, the beneficiaryTribes and the Government are required in bothcases to provide certain notice before undertakingany “physical alteration” of the land at issue. Thecourts further warned that the beneficiary tribescould proceedmoving forward with planning theirgambling facilities “at their own risk.”
The Secretary also has indicated reconsidera-tion of the 30-day public notice requirement.Earlier this year, the Assistant Secretary of theBIA publicly commented that the DOI is consider-ing doing away with the 30-day review period tonotify the public of land-into-trust decisions.
While these post-Patchak developments maymitigate some uncertainties created by the Patchakruling, other concerns remain. For instance, eventhough the land will be transferred into trust, the
tribe must determine whether tomove forward with constructionand development on its newlyacquired trust lands or delay majorfinancial investments until the six-year statute of limitation expires.ThePatchak decisionmeans there isa certain risk that the fee-to-trusttransfer could be undone throughlitigation, almost six years later. Assuch, the tribe may opt to resolvethe pending litigation before invest-ing and expending major revenuesfor casino development. In this re-gard, Patchak still may mean thatthe time for getting a casino up andrunning is increased, and the costsare considerably higher.
California Senator DianeFeinstein and Arizona Senator JohnMcCain remain outspoken critics ofoff-reservation gaming. In a Janu-ary 31, 2012, letter to the Secretary,
Senator Feinstein noted that the Secretary’s“abrupt change in [self-stay] policy has caughtmany…by surprise.” She posed several interest-ing questions regarding the DOI’s decision toabandon its “self-stay policy,” including:
� Federal liability and indemnity for invest-ments made by tribe to trust lands
� Procedures for unwinding the fee-to-trusttransfer
� Consultation with tribes and other stakeholders
While the Secretary’s Patchak “patch” mayalleviate some of the initial concerns, it also raisesother legal complexities in an uncharted land.Litigation over fee-to-trust transfer is bound tocontinue and may hinder economic developmenton newly acquired trust lands. �
At the time,many tribal gamingscholars viewed this
decision as a“game changer.”
Patchak was initiallyfeared to hindertribal gamingand economicdevelopment on
newly acquired trustlands. However,the Secretary hasattempted to
mitigate some ofthese harsh effectsthrough reversal
of certainlong-standingDOI policies.
Heidi McNeilStaudenmaier is a seniorpartner in the law firm ofSnell &Wilmer LLP, based inthe Phoenix, Arizona office,where her practice emphasizesGaming, Federal Indian Law,and Business Litigation. She islisted in Best Lawyers inAmerica for Gaming Law,Native American Law andCommercial Litigation and wasnamed Best Lawyers’ GamingLawyer of the Year forPhoenix. She is also included inChambers USA for America’sLeading Lawyers for Businessand Chambers Global for TheWorld’s Leading Lawyers forBusiness. She is a formerPresident of theInternational Masters ofGaming Law and holdsleadership positions in theAmerican Bar AssociationBusiness Law Section’s GamingLaw Committee. She canbe reached [email protected] 602.382.6366.
Harsh P. Parikh is anattorney in the law firm ofSnell &Wilmer LLP, basedin Costa Mesa, California.His practice is concentrated incommercial litigation, gaminglaw and intellectual propertylitigation. He represents indi-viduals, businesses, institutionaland public entity clients in allfacets of litigation in state andfederal courts. Mr. Parikh hasbeen featured in CasinoEnterprise Management, theLos Angeles Daily Journal andthe World Online GamblingLaw Report on gaming lawissues. He can be reached [email protected] or714.427.7408.Mr. Parikh is also available ontwitter@CAGamblingLawyer.
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By Alan P. Meister, Ph.D.
20 CASINO LAWYER • SPRING 2013
Despite a sluggisheconomy in 2011,Indian gaming ex-perienced its sec-
ond straight year of growthfollowing its first and onlydecline in 2009, which cameas a result of the Great Re-cession. So where does In-dian gaming stand then interms of its recovery? Howis Indian gaming performing relative toother gaming segments? And wheredoes Indian gaming go from here?
This article looks to data and find-ings from the recently released edition ofthe Indian Gaming Industry Report (2013Edition) to answer these questions.
THE NATIONAL PERSPECTIVEIndian gaming sustained modest growthin 2011. With some gains in gross do-mestic product (GDP), per capita dispos-able personal income, and employmentnationwide and in every state, gamingrevenue grew 3.4% to approximately$27.4 billion.
While the 2011 gaming revenuegrowth rate was still below pre-recessiongrowth rates – approximately 15% from2002 through 2005, 10.1% in 2006, and4.1% in 2007 – gaming revenue roseabove its pre-recession level. In fact,gaming revenue was at an all-time highin 2011, eclipsing the former peak ofapproximately $26.6 billion from 2008.
Non-gaming rev-enue at Indian gamingfacilities also grew in2011. After two consec-utive years of decline,non-gaming revenuegrew 4.7% to approxi-mately $3.3 billion.Interestingly enough,non-gaming revenueactually outgrew gam-ing revenue in 2011.
This reflects the continuing trend ofadding, expanding, remodeling, andupgrading non-gaming amenities atIndian gaming facilities, and the move-ment continues to improve quality andincrease the breadth and depth ofIndian gaming facilities.
Other segments of the gamingindustry also continued to show signs ofrecovery in 2011 as well. At the nation-wide level, the commercial casino, racino,and card room segments all grew atfaster rates than they did in 2010. WhileIndian gaming grew at approximatelytwice the rate of the commercial casinosegment, which grew at 1.7%, Indiangamingwas outgrown by both the racinoand card room segments, which grew ap-proximately 8.1% and 3.7%, respectively.
Amidst their relative performances,Indian gaming continued to gain groundon the commercial casino segment in2011. Indian gaming generated approx-imately 43.5% of all U.S. casino gamingrevenue (i.e., gaming revenue generatedat Indian gaming facilities, commercial
Indian Gaming Looking UpBoth gaming and non-gaming revenue sees secondstraight year of growth
>>NEW DEVELOPMENTSIN NATIVE AMERICAN GAMING
CASINO LAWYER • SPRING 2013 21
casinos, and racinos). This was only a slightlysmaller share than the commercial casino segment,which led the way with approximately 45% ofcasino gaming revenue. Racinos generated theother 11.5% of casino gaming revenue.
In addition to having a positive impact onNative American tribes, Indian gaming continuedto make significant contributionsto the U.S. economy. Indian gam-ing facilities, including their non-gaming operations, directlygenerated approximately $29.6 bil-lion in output, supported about339,000 jobs and $12.3 billion inwages, and made over $1.4 billionin payments to non-tribal gov-ernments in calendar year 2011.Indian gaming also led to sec-ondary impacts consisting ofpurchases by Native Americantribes, their casinos, and employ-ees’ households, as well as the it-eration of purchases by suppliersand their employees’ households.In 2011, it is estimated that directand secondary impacts of Indian gaming totaledapproximately:
� $81.8 billion in output;� 686,000 jobs;� $26.8 billion in wages;� $11.0 billion in federal, state, and localtax revenue; and
� $1.4 billion in direct payments by tribes� to federal, state, and local governments.
STATE, FACILITY BREAKDOWNSWhile Indian gaming on a nationwide basis grewin 2011, it did not grow everywhere or grow uni-formly across the country. The performance of In-dian gaming varied widely across gaming facilities,states, and classes of gaming. At the gaming facil-ity level, approximately 65% of Indian gaming fa-cilities experienced growth in gaming revenue in2011, while about 35 percent experienced declines.On the positive side, about 23% of all gaming facil-ities grew 10% or more.
At the state level, gaming revenue growth var-
ied from +26% in Alabama to -3% in New York,with 75% of the states (21 of 28) experiencinggrowth over 2010. The fastest-growing statesafter Alabama were Mississippi, Montana, NorthCarolina, and Oklahoma. The fastest-decliningstates after New York were Oregon, NorthDakota, Connecticut, and Idaho.
The states that made the largest positive con-tribution to nationwide gaming revenue growth in2011 were large Indian gaming states with healthygrowth rates: Oklahoma, Arizona, Washington,and California. One relatively smaller state, Ala-bama, also made a strong contribution toward theoverall nationwide growth of Indian gaming withits continuing growth. The states that made thelargest negative contribution to nationwide Indiangaming growth in 2011 were: Connecticut, NewYork, Oregon, Wisconsin, and North Dakota.While the nationwide supply of Indian gamingwassubstantial on the whole, it continued to be veryfragmented across the U.S. There were 242 NativeAmerican tribes operating over 341,000 gamingmachines and 7,700 table games in 460 gaming fa-cilities across 28 states.
Nonetheless, gaming revenue at Indian gam-ing facilities continued to be highly concentratedwithin certain states. In 2011, the largest state interms of gaming revenue at Indian gaming facili-
Alan P. Meister, Ph.D.,a Principal Economist atNathan Associates Inc.,specializes in the applicationof economic analysis to litiga-tion, regulatory, public policy,and strategic business matters.He leads the Gaming Industryand Indian Gaming consultingpractices at Nathan Associates.Dr. Meister has also conductedyears of independent, scholarlyresearch on Indian gaming andauthored a number of publica-tions, most notably his annualstudy, the Indian GamingIndustry Report. Hisgaming research and analyseshave been relied upon before theUnited States Supreme Courtand a panel of the WorldTrade Organization. He alsohas been commissioned by theNational Indian GamingCommission to independentlyanalyze the economic effects ofproposed regulatory changes.Dr. Meister can be reachedat (949) 474-4955 [email protected] more information onNathan Associates, please visit:www.nathaninc.com.For more information onthe Indian Gaming IndustryReport, please visit:www.indiangamingreport.com.
Continued on next page
Alan P. Meister, Ph.D.
22 CASINO LAWYER • SPRING 2013
>>NEW DEVELOPMENTSIN NATIVE AMERICAN GAMING
ties continued to be California, generat-ing $6.9 billion based upon approxi-mately 1.6% growth over 2010. It aloneaccounted for just over 25% of gamingrevenue at Indian gaming facilities na-tionwide. The top two states, Californiaand Oklahoma, generated a combined38% of gaming revenue. Meanwhile, thetop five states, which included Washing-ton, Florida, and Connecticut withCalifornia and Oklahoma, accounted forapproximately 61% of total gaming rev-enue. The level of concentration for thetop 10 states, which added Arizona,Michigan, Minnesota, Wisconsin, andNew York to the top five states, was 86%of total gaming revenue.
Gaming revenue also continued to behighly concentrated among a small per-centage of Indian gaming facilities. In2011, the top 6% of all Indian gamingfacilities, which each generated $250 mil-lion ormore, accounted for approximately38% of total gaming revenue at all Indiangaming facilities. And while the top 31%of gaming facilities, which each generated$50 million or more, accounted for about85% of nationwide gaming revenue, thebottom 33% of gaming facilities, whicheach generated $10 million or less,accounted for only 2% of nationwidegaming revenue.
There was also a wide disparity inperformance across the classes of Indiangaming in 2011. The 24 Indian gamingstates with at least some Class III gaming(i.e., Las Vegas style gaming) generated98% of total gaming revenue for Indiangaming, while the four states with onlyClass II gaming, which include bingo andgames similar to bingo, includingelectronic bingomachines, generated only2% of total gaming revenue. However,while Class II gamingwas a small portionof nationwide Indian gaming, it grewmuch faster than Class III gaming. ClassII only states as a group grew 22% in2011. This was 7 times that of the stateswith at least some Class III, which onlygrew 3 percent.
THE FUTURE OUTLOOKIn terms of the future outlook for Indiangaming, its performance in 2010 and 2011is encouraging, especially considering thattheU.S. economy is still in recoverymode.The question is howmuch further can In-dian gaming grow? As noted in past re-ports, Indian gaming on a nationwidebasis was already experiencing an overallslowdown prior to the beginning of theGreat Recession in late 2007 due to supplyconstraints. Many public policies, such asproposed and enacted legislation and reg-ulations, judicial decisions, and tribal-stategaming compacts, had the effect of re-stricting the supply of Indian gaming.
Based upon its cumulative post-re-cession performance and anecdotal evi-dence from 2012, things are looking up forIndian gaming in the short-term to mid-term future. There are several contribut-ing factors to this outlook:
1)The economy will continue toimprove over time, bringing backdisposable income, consumerconfidence, and spending on casinogambling;
2)Many Native American tribes areinvesting in their gaming opera-
tions by remodeling, upgrading,expanding, and replacing facilitiesin order to maintain and grow theirmarkets;
3) In some Indian gaming states,there is unmet demand and/orlimited competition;
4) In some states where restrictionson the supply of gaming have beeneased, tribes will be able to expandwhen demand is sufficient;
5)There are opportunities forfurther conversions from Class IIto Class III gaming;
6) Class II gaming machinescontinue to perform well as analternative to Class III machines;and
7) Some smaller, less mature Indiangaming states have room forgrowth.
However, as has been the case histor-ically, performance will likely vary widelyacross Indian gaming facilities, tribes, andstates.
On the other hand, the long-termoutlook for Indian gaming is uncertain.Any number of things could negativelyimpact Indian gaming. These potentialthreats include both non-market andmar-ket factors. Potential non-market factorsinclude continuing legal challenges, legis-lation, and regulations that restrict Indiangaming and limit its expansion.
Potential market factors include:� The maturation of gamingmarkets;
� Increasing competition; and
� The evolution of Internetgaming and its interaction withbrick-and-mortar casinos. �
Continued from previous pageIn addition to
having a positive impacton Native American tribes,Indian gaming continued
to make significantcontributions to the
U.S. economy. Indian gamingfacilities, including theirnon-gaming operations,
directly generatedapproximately $29.6 billionin output, supported about
339,000 jobs and $12.3 billionin wages, and made over$1.4 billion in paymentsto non-tribal governmentsin calendar year 2011.
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CASINO LAWYER • SPRING 2013 23
Although the concepts were es-tablished long ago, recently re-newed attention has been givento several ethical issues as they
relate to corporate or in-house counsel.This discussion begins with a cau-
tionary tale, that of Lauren Stevens, a for-mer Vice President and counsel toGlaxoSmithKline, who was charged withlying to a government agency and ob-struction of justice. Stevens had con-ducted an internal investigation in orderto respond to a very broad FDA inquiryinto whether GSK had illegally marketedits drug Wellbutrin for “off-label” uses.After conferring with outside counsel,Stevens provided the company’s responseto the FDA, which may very well havecontained half-truths. Shewas indicted onfour counts in a Federal indictment. For-tunately, at trial she was granted a di-rected verdict before the matter wassubmitted to the jury, the judge findingthat Stevens was “not engaged to assist aclient to perpetrate a crime or fraud.” In-stead, the privileged documents in thiscase show a studied, thoughtful analysisof an extremely broad request from theFood and Drug Administration and anenormous effort to assemble informationand respond on behalf of the client. Thebasis of the court’s ruling seems to be thatthe lawyer was acting as legal counsel toher client and did not affirmatively at-tempt to commit a fraud.
How would this case turn out if theagency was the Nevada Gaming ControlBoard and the company was a licensee orapplicant for a gaming license? Start withNevada Gaming Commission Regulation4.020 which, while allowing an applicantthe ability to claim any privilege, the claim
of privilege in and of itself can be suffi-cient grounds for denial of a license. Inaddition, Nevada regulators expect self-reporting by licensees of any violationsof law or regulation. The attorney repre-senting the client before the Board andCommission
1) is subject to the automatic waiver ofany privilege by the client, NGC Reg.10.080,
2) is obligated “not to be intentionallyuntruthful to the board or commission”nor withhold any information which theboard or commission is entitled to re-ceive (which is everything!) nor interferewith the board’s attempt to obtain the in-formation, NGC Reg. 10.090,
3) certifies every application, report, affi-davit, written argument, brief, statementof fact or other document submitted bythe attorney to the board or commissionNGC Reg. 1.110 and
4) on request of the board or commis-sion, provides any information that theattorney has concerning violations ofthe Act or regulations by any person.NGC Reg. 10.120.
In addition, should the attorneygain knowledge that a client has notcomplied with the Act or regulations orthe client has made a material omissionor error in any application, report orother document submitted to the Boardor Commission, the attorney is obligatedto inform the client. NGC Reg. 10.100.Presumably should the client refuse tocorrect the error or omission or fail toself-report or correct the violation, theattorney should cease representation of
the client, which creates an interestingdilemma for the in-house attorney – toquit the job or violate commission regu-lations and jeopardize her own license.
The attorney-client privilege andthe in-house attorney.When dealing with Nevada gaming, theattorney-client privilege does not exist forall intents and purposes. Many Nevadagaming licensees and gaming licensees inother jurisdictions are publicly tradedcompanies. Some have operations over-seas. What happens when the SEC, DOJ.EEOC, OSHA or other federal agenciescome calling? What if the waivers pro-vided by Nevada gaming regulation arenot enacted or promulgated in the otherjurisdiction?
The attorney-client privilege is theoldest privilege recognized by Anglo-American jurisprudence. In fact, the prin-ciples of the testimonial privilege may betraced all the way back to the Roman Re-public, and its use was firmly establishedin English law as early as the reign ofElizabeth I in the 16th century. Groundedin the concept of honor, the privilegeworked to bar any testimony by the attor-ney against the client. Epstein, The Attor-ney-Client Privilege and the Work ProductDoctrine 2 (4th ed. 2001).
There are several policy justificationsthat have played a role in the developmentof the doctrine. At its most basic, the priv-ilege ensures “that one who seeks adviceor aid from a lawyer should be completelyfree of any fear that his secrets will be un-covered.”United States v. Grand Jury Inves-tigation, 401 F. Supp. 361, 369 (W.D. Pa.1975). Thus, the underlying principle of
Current Ethical Issues for theIn-house Gaming AttorneyBy Barth F. Aaron
GAMING LAWYERS & ETHICS>>
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24 CASINO LAWYER • SPRING 2013
the privilege is to provide for “sound legaladvice [and] advocacy.”Upjohn Co. v. UnitedStates, 449 U.S. 383, 389 (1981). In otherwords, shielded by the privilege, the clientmay be more willing to communicate tocounsel things thatmight otherwise be sup-pressed. In theory, such candor and honestywill assist the attorney in providing moreaccurate, well-reasoned professional advice,and the client can be secure in the knowl-edge that her statements to her lawyer willnot be taken as an adverse admission orused against her interest. Indeed, armedwith full knowledge, we, as attorneys, arebetter equipped to effectively and compe-tently represent our client.
Boiled down to its basics, the privilegeprovides: the attorneymay neither be com-pelled to nor may he or she voluntarily dis-closematters conveyed in confidence to himor her by the client for the purpose of seek-ing legal counsel. Likewise, the client maynot be compelled to testify regarding mat-ters communicated to the lawyer for thepurpose of seeking legal counsel.
Although there is no single authorityon the attorney-client privilege, the classicdefinition by Professor Wigmore is as fol-lows: “(1)Where legal advice of any kind issought (2) from a professional legal adviserin his [or her] capacity as such, (3) thecommunications relating to that purpose,(4) made in confidence (5) by the client, (6)are at his [or her] instance permanentlyprotected (7) from disclosure by [theclient] or by the legal adviser, (8) except theprotection be waived.” JohnHenryWigmore,Evidence In Trials At CommonLaw § 2292, at554 (McNaughton 1961 & Supp. 1991).
What is the attorney-client privilege?The privilege protects from disclosure“communications” between the client andthe attorney. It has been found to be a two-way privilege, so that what the client tellsthe attorney andwhat the attorney tells theclient are both privileged. Schwimmer v.U.S., 232 F2d 855 (8th Cir.), cert denied, 352U.S. 833 (1956); Green v. IRS, 556 F. Supp.79, 85 (N.D. Ind. 1982), affirmed withoutop. 734 F. 2d 18 (7th Cir. 1984).However, the
underlying facts are not subject to the priv-ilege, only the communication with the at-torney. Should the client be called to testify,she must still answer questions of “whathappened” or “what did you see.” Whatwould be protected is, “What did you tellyour attorney?” or “What did your attor-ney say?”
The particular issues for the in-houseattorney are found in two factors in Profes-sor Wigmore’s definition – is the advicebeing offered legal advice andwas the com-munication made in confidence. The lead-ing modern decision in the area is UpjohnCo. v. United States, 449 U.S. 383 (1981).
Traditionally, in recognition that cor-porations are fictional “persons” and are op-erated by a group of individuals, the courtsused a “control group” analysis to deter-mine who the corporate client was for pur-poses of the attorney-client privilege. Thiswas a narrowly defined group of individu-als senior in the corporate hierarchy whocould direct the company and its activitiesand make binding decisions for the com-pany. In Upjohn, another pharmaceuticalcompany found that overseas employeeshadmade payments to gain favor with localgovernments. The Chairman of the Boarddirected theGeneral Counsel to conduct aninvestigation so that proper legal advicecould be obtained. The company had noti-fied the Securities and Exchange Commis-sion and the Internal Revenue Service ofthe situation. The General Counsel con-ducted his investigation by issuing a ques-tionnaire to employees of the company.The IRS issued a subpoena requesting, interalia, the questionnaires. In the interim, thecompany had identified to the IRS the em-ployees to whom the questionnaire hadbeen addressed. The Supreme Court dis-carded the Court of Appeals control groupanalysis in favor of amore functional analy-sis considering whether the employee isacting in the scope of her employment,whether the communication is with an at-torney for purposes of providing legal ad-vice to the company and whether theinformation is also available frommore sen-ior (the traditional control group) person-nel. InUpjohn, the Supreme Court held on
GAMING LAWYERS & ETHICS>>
Continued from previous page
The privilege protects fromdisclosure “communications”between the client and the attorney.It has been found to be a two-way privilege,so that what the client tells the attorneyand what the attorney tells the client are both privileged.
CASINO LAWYER • SPRING 2013 25
its facts that the information contained inthe questionnaires was not otherwise avail-able frommore senior employees, the ques-tionnaires were for the purpose of counselobtaining the facts necessary and for thepurpose of providing legal advice andwerenot subject to disclosure. However, theCourt specifically found that nothingwould stop the IRS from interviewing theoverseas employees and obtaining the un-derlying facts known to them, just not bythe “silver platter” route of obtainingwhatwas provided to the attorney.
It is noted that the direction from theChairman and theGeneral Counsel’s ques-tionnaire all contained statements of con-fidentiality, which allowed the Court to findthat the communication was meant to beconfidential for the attorney’s use only.
To be subject to the attorney clientprivilege, the communication must be in-tended to be confidential or private. It isfairly easy when the client is an individual– close the door to the office, do not copyanyone else on emails or letters and useother obvious aspects of an intent tomain-tain confidentiality. But what does a corpo-ration do when there may be severaldepartment heads who need to be informedor there may be other employees, vendors,customers or others who receive the com-munication?
Unfortunately, the answer is “it de-pends.” Here the courts look to the extentof the dissemination andwhether those re-ceiving the communication have a need toknow. Most evidently, adding third partiessuch as customers or vendors to the com-munication is most likely to lead to a find-ing that the author did not intend thecommunication to be confidential. Like-wise, broadly circulating the communica-tion to employees who were not involvedin the transaction or decision-makingprocess is most likely to lead to the sameconclusion.
However, various courts seem to ana-lyze the situation differently. The view isnow to determine whether (1) a lawyer’sadvice is requested and (2) whether that ad-vice is legal advice. Courts now recognizethat in-house attorneys serve multiple
functions. In-house attorneys can be asmuch business advisers as they are legaladvisers. A personal example of the au-thor’s is that he was asked on several occa-sions to review potential business targets,analyze their financial histories and opera-tions and provide advice on whether it wasa proper acquisition target. Almost noneof that due diligence was legal analysis; itwas almost entirely business oriented. Onlythat portion that related to regulatorymat-ters or potential liabilities or possibly thestructure of the deal (stock vs. asset pur-chase) would have any chance of beingdeemed legal advice.
Courts have adopted a so-called “pri-mary or dominant purpose” analysis. SeeN.C. Elec. Membership Corp. v. CarolinaPower & Light Co., 110 F.R.D. 511, 514(M.D.N.C. 1986); Teltron, Inc. v. Alexan-der,132 F.R.D. 394, 396 (E.D. Pa. 1990)(“[must be able to] clearly demonstrate that theadvice to be protected was given in a profes-sional legal capacity.”); U.S. Postal Serv. V.Phelps Dodge Ref. Corp., 852 F. Supp. 156(E.D.N.Y. 1994). Is the advice sought fromthe attorney primarily or dominantly legalor business? In theU.S. Postal Serv. V. PhelpsDodge case, the court asked the practicalquestion of “whether the communicationwould have been made if it were not sent(or copied) to the attorney?”
Some practical suggestions to protectthe attorney-client privilege in a corporatesetting:
1) Limit the number of people to receivea communication seeking legal advice.Preferably, send it only to the counsel.Direct a separate email to business associ-ates should they need to know.
2) Related, remember the dreaded “ReplyAll” button. It appears that more peoplehave gotten into more trouble using“Reply All” than any other technology.
3) Clearly mark the communication as“Confidential” – but do not overdo it.Marking all correspondence to counsel as“Confidential” lessens its impact and willsurely be ignored.
4) Clearly state that the purpose of thecommunication is to seek legal advice.
5) Attorneys, in replies, should alsoclearly mark “attorney-client privileged”when providing legal advice. Again, donot overdo it.
6) Some authors are recommending sepa-rating management positions from thoseof legal counsel, so the recommendationis the General Counsel should not also bethe company Secretary. This would helpclarify whether the advice is being soughtfrom the lawyer and not the businessmanager.
7) Finally, remember that simply copyingthe attorney on the email will not make itmagically protected.
Upjohn created another issue for in-house attorneys which usually arises in theprocess of an internal investigation.
Take this situation. The CEO comes toyou, the newly appointed General Counselof NewcoGaming, Inc., and reports that hehas uncovered emails which seem to reflectthat certain managers are receiving pay-ments from vendors for preferential treat-ment. The CEO wants you to investigate.
Your first response is that outsidecounsel should conduct any internal inves-tigations as that will help ensure confiden-tiality and preserve the attorney-clientprivilege. The response is an adamant “it’snot in the budget, get it done yourself !”
So you proceed to review the emailsthe CEO obtained and outline the courseof an internal investigation which includesinterviewing several key employees. Wiseto the methods of investigators, you haveyour paralegal sit in on all the interviewsand you place the tape recorder on the con-ference table in front of the witness andclearly state that the interview is to berecorded and can be available for later use.During the course of one of the inter-views, a procurement specialist, DorisJones, informs you that she in fact was paida “bonus” by John Smith, the Director ofPurchasing, which she knew came from avendor. She never reported the receipt of
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26 CASINO LAWYER • SPRING 2013
the vendor’s “gift” contrary to the com-pany’s gift policy. In an interview, the Di-rector of Purchasing freely admitted torequesting from vendors “compensation” toensure the vendor would receive purchaseorders from the casino. His tone indicatedhe thought there was nothing wrong withthis and that in previous employment hehad done the same as he was taught it wasproper through his past employment.
Two footnotes. First, no one saideveryone is smart. Second, you clearly ad-vised the interview was to be recorded andplaced the recorder in plain sight.What ad-ditional step should have been taken? Theinterviewer should have gotten the waiverof the recording in writing.
On your reporting the results of theinvestigation to the Compliance Committeeof the Board (your gaming company doeshave a compliance committee, does it not? –in Nevada, it should3), the committee deter-mines to self-report to theGaming ControlBoard that there has been improper conductin the purchasing department, that thecompany has already taken corrective ac-tion in strengthening its purchasing poli-cies to expressly prohibit any form of giftfrom vendors, has appointed another pro-curement specialist as a compliance officerspecifically for that department with thetraining necessary and has terminated theemployment of the Purchasing Directorand suspended Doris Jones for one week.
Although you are new to this position,you have worked in the past for theGamingControl Board and you are able to convincethe Board that sufficient corrective actionhas been taken and it decides that no disci-plinary action will be taken against NewCoprovided there are no other violations in thenext twelve months.
However, John Smith now files a re-verse gender discrimination charge withthe Nevada Equal Rights Commission onbehalf of the EEOC. The NERC investi-gator requests a response from the com-pany. You prepare the response including atranscript of John Smith’s interview. Hisdiscrimination charge is dismissed as therewas a valid business reason for his termina-
tion. He files a complaint with the Office ofBar Counsel of the Nevada State Bar Asso-ciation claiming you violated RPC 1.6 byimproperly disclosing a client confidential-ity because when Mr. Smith was speakingwith you he believed you were his lawyerand asking questions to help keep him outof trouble. That was why he was so candidand cooperative. Not only does he want youpunished, he wants to be compensated forhis lost income.
Note that because there are no formal-ities to creating the attorney-client rela-tionship but rather, the analysis is, “Whatdid the client reasonably believe?” and “Didshe reasonably believe you were her lawyerat the time of the communication?” RPC1.6 generally prohibits the disclosure of in-formation relating to the representation ofa client unless the client gives informedconsent or subject to exceptions that do notapply here. Note that the fraud/crime ex-ception, which is also an exception to theattorney-client privilege, only appliesprospectively to prevent the commission offuture crimes or fraud, not retrospectivelyshould the confidential communication re-veal the past commission of crime or fraud.
Additionally, the attorney also violatedRPC 1.13 which describes the ethical obli-gations when the organization is the client.Subparagraph (f) requires:
In dealing with an organization’s di-rectors, officers, employees, members,shareholders or other constituents, alawyer shall explain the identity ofthe client to the constituent and rea-sonably attempt to ensure that theconstituent realizes that the lawyer’sclient is the organization rather thanthe constituent.
One outgrowth of the Upjohn decision iswhat has become known as “Upjohn warn-ings.”When speakingwith an employee, es-pecially when conducting an internalinvestigation, counsel should provide cer-tain warnings or advice to the employeewitness to avoid the situation just described.This applies to all counsel, but especially in-house counsel who have daily contact withmany employees and as the local lawyer
may become viewed as the person to go tofor legal advice. The advice is to start anyinteraction with fellow employees wherethe tenor of the conversation is the seekingof personal legal advice with a statementthat the corporate attorney does not repre-sent the employee as the attorney repre-sents the company, that the attorney cangive some friendly informed advice (if theattorney so chooses) but the employeeshould seek advice from her own lawyer toconfirm what to do before taking action onthe situation.
Upjohn warnings have become some-what more formalized. It is even suggestedtreating these warnings as a form of Mi-randawarning in the corporate setting andmake them part of the boilerplate of the in-vestigation process. The standard Upjohnwarnings are:
�The lawyer represents the company andnot the individual personally.
� The interview is part of an investigationbeing conducted for the purpose of pro-viding legal advice to the company.
� The interview is protected by the attor-ney-client privilege that belongs solelyto the company and not the individual.
� The privilege is subject to waiver at anytime by the company without the indi-vidual’s consent or knowledge.
� The substance of the interview is to bekept confidential, including as to otheremployees.
� The individual may want to retain out-side counsel to represent her interests.
It is recommended that not only arethese warnings read into the record at thestart of any interview, but written confir-mation from the witness acknowledging re-ceiving the warnings is obtained.
It is noted that the next to last warn-ing, to maintain the confidentiality of theinterview has recently been found by theNational Labor Relations Board to be a vi-olation of an employee’s organizationalrights, turning on its head fifty years ofLabor Act jurisprudence. It is a subject for
GAMING LAWYERS & ETHICS>>
Continued from previous page
CASINO LAWYER • SPRING 2013 27
Barth F. Aaron
Barth F. Aaron is admitted topractice law in Nevada, NewJersey and New York. Hestarted in the gaming industryover 25 years ago as a DeputyAttorney General in the NewJersey Division of GamingEnforcement. In private practicein Atlantic City, he represented amajority of gaming suppliersand vendors before movingin-house first as GeneralCounsel for Aristocrat, Inc.,the US subsidiary of theinternational “pokie” machinemanufacturer Aristocrat LeisureLimited. He then concentratedin regulatory compliance as thefirst Corporate Director ofRegulatory Compliance forPenn National Gaming on itsentry into the casino gamingindustry. Returning to a ChiefLegal Officer position, Mr.Aaron was Secretary andGeneral Counsel to VisionGaming & Technology, Inc.,a privately held slot manufac-turer and then for Full HouseResorts, Inc., a publicly tradedgaming operator, where heserved on a management teamthat transformed a small,unknown operator into a well-recognized regional competitor.Mr. Aaron now serves as aconsultant to the gamingindustry and is available tocreate, draft, review and auditinternal controls, regulatorycompliance programs, corporategovernance programs andrelated legal compliance.He welcomes the opportunity toserve on Regulatory ComplianceCommittees and is available as aRegulatory Compliance Officer.
another day, but, at the time of the writing of thispaper, perhaps the D.C. Circuit ruling in Noel Can-ning vs. NLRBwill impact the validity of any recentNLRB determination. The Circuit Court ruled thatthe President’s recess appointments to the Boardwere unconstitutional and impermissible.
The last concern to be addressed is containedin the second part of the Upjohn decision. TheSupreme Court also addressed whether the ques-tionnaires sought by the IRS as documents wereprivileged. This question implicates theWork-Prod-uct doctrine or privilege.
The Work-Product doctrine is separate anddistinct from the attorney-client privilege. The for-mer protects the work and thought processes of theattorney, while the latter protects communicationswith the attorney. In some respects, each is broaderthan the other. The Work-Product doctrine is notlimited to communications between the client andattorney; it only protects that which is created in an-ticipation of litigation. To the contrary, the attor-ney-client privilege is not limited tocommunications in anticipation of litigation but ap-plies to any confidential communications betweenthe client and attorney. Similarly, theWork-Productdoctrine can protect information or communicationsreceived from persons other than the client, such asexperts or investigators.
“In anticipation of litigation” is interpretedbroadly so that litigation need not have been com-menced and any adversarial proceeding can be in-cluded, so administrative hearings andgovernmental investigations fall into the categoryof litigation.
The policy behind the work-product doctrinewas stated by the US Supreme Court in Hickman v.Taylor, 329 U.S. 495 (1947). There the Court said:
[I]t is essential that a lawyer work with acertain degree of privacy, free from unnec-essary intrusion by opposing parties andtheir counsel. Proper preparation of aclient’s case demands that he assemble in-formation, sift what he considers to be therelevant from the irrelevant facts, preparehis legal theories and plan his strategywith-out undue and needless interference.... Thiswork is reflected of course, in interviews,statements, memoranda, correspondence,briefs, mental impressions, personal beliefs,and countless other tangible and intangibleways....
Were such materials open to opposing counselon mere demand, much of what is now put down inwriting would remain unwritten. An attorney’sthoughts, heretofore inviolate, would not be his own.Inefficiency, unfairness and sharp practices wouldinevitably develop in the giving of legal advice andin the preparation of cases for trial. The effect onthe legal profession would be demoralizing. And theinterests of the clients and the cause of justicewould be poorly served. Id. at 510-11.
Thus, the Court recognizes that both fact andopinion can be covered by the Work-Product doc-trine. Here there is a split. The attorney’s opinion, orwhat reflects counsel’s subjective beliefs, impres-sions, and strategies regarding a case should be ab-solutely protected. However, should facts not beotherwise available to the opponent, the recitationof fact can be ordered disclosed upon a showing ofsubstantial need and undue hardship in obtainingthe facts through other means.
“To the extent that work product reveals theopinions, judgments, and thought processes ofcounsel, it receives some higher level of protection,and a party seeking discovery must show extraor-dinary justification.” In re Sealed Case, 676 F.2d 793,809-10 (D.C. Cir. 1982)
To summarize then, the attorney-client privi-lege protects from disclosure communications be-tween a client and her attorney which are intendedto be confidential, which is demonstrated by theclient and attorney taking steps to ensure confiden-tiality. In-house counsel are faced with the dilemmaof first knowingwho their client is and secondwithbeing both a legal and business adviser. The work-product doctrine, which may cover the same tangi-ble material as falls under the attorney-clientprivilege, protects that which is created in prepara-tion for or anticipation of litigation by the attorneycontaining her thoughts, impressions, legal analy-ses, conclusions, trial tactics and related mentalproduct and may cover the factual presentations re-lied on by the attorney. This recitation of facts couldbe discoverable should the adversary be able to showan inability to obtain the material facts withoutundue hardship.�
3 NRS 463.720, implemented by NGC Reg. 5.045. See,Creating and Implementing an Effective Gaming ComplianceProgram, Rodefer, Nevada Gaming Lawyer, September2011.
28 CASINO LAWYER • SPRING 2013
GAMING LAWYERS & ETHICS>>
Ionce read that “ethics is what you dowhen no one’s looking”. I do not agree;to the contrary, I firmly believe thatethics should be as public, open and
visible as possible.The consideration of ethics in the
legal profession is of key and growing im-portance. Yet, too few of us consciouslyconsider ethicswhilstweighing out our op-tions in the day-to-day of our job. In par-ticular, the gaming industry is somehownaturally prone to give rise to conflicts,doubts and difficult situationswherewe are,to say the least, a little bit in the dark.
I am still learning a whole lot aboutethical standards throughmy involvementand increasing exposure to the gaming in-dustry, precisely due to its (apparent) un-ethical halo. The gaming sector is not onlyoverregulated and largely dominated bysurprisingly strict standards and regula-tions related to compliance and responsi-ble conduct of business but is also widelyinfused with moral considerations thatprovide more than enough room for dailyreflection.
It is of common belief that justice re-lies on a deep grounding of respect for in-dividual capacity to develop a free, moraland rational existence that needs to beprotected from its very core. This becomesthe rule of law upon which a democraticsociety can be recognized and survive andon which a coherent system of individualand collective rights and obligations is cre-ated and remains.
We, the lawyers, are the ultimateguardians of the law and the key support-ers of the pillars of justice. This is no easytask that puts us in a critical function forthe preservation of social order. And it be-comes more important when it comes to apart of economic life, a way of entertainingourselves that is not entirely innocuous.
Again, the idea thatwemay not be asmind-ful of this as we should comes to mind.
The fulfillment of our professionalduties in an ever changing and technolog-ically driven environment like the gamingsector generates the need for us to revisit
our ethical code, trying to achieve thehighest standard in what we do whilstplaying this role. Of course, it is impossi-ble to anticipate every single situation inwhichwemay eventually get involved, butthe roots and fundamentals that structureour ethical vision are a tangible guidancethat points the way and inspires us toshape how we develop and protect thelegal system and underlying social rela-tionships. At the same time, it is the baragainst which we will measure wrongdo-ers and transgressors and the touchstoneto test how we approach clients and man-age everyday conflicts and events.
My father, who had set up the firstgaming law boutique in Spain just severalyears ago spoke in a low voice about “ad-vising my clients on legal strategy and opera-tions in a very regulated sector” to whoeveraskedwhat he was currently up to. Clearly,he was proud of his chosen noble profes-sion, but still, there was something to hishidden tone. Ever since, I have lived and
trained myself in the values that he, vari-ous books, close friends and some others,taught me, distilling them through myown experiences.
With a degree in law and a degree ineconomics, years of experience at an in-vestment bank as financial analyst and atan international law firm as a financing andsecurities lawyer later, I fully landed in thegaming industry. My idea was to developthe so-called international practice, the in-vestment and financial angles of that verysame boutique, now a little bigger.
A few years on, I am still going downthat route reflecting along the way on themany ethical aspects that come up whilstwework in this very absorbing sector. AndI firmly believe that we work in a profes-sion that should, more than any other,stand for the highest ethical canons anddiscipline. Thus, we should strive to em-body this series of principles as we inter-actwith the public, our clients and the legalsystem, albeit the discouragement of see-ing how others get rich and applaudedwithoutmaking an effort andwithout evenconsidering the ethical implications oftheir doings. Not to mention the twistedjudicial and enforcement system that isconstantly threatening tomake us collapse.
We have to ask ourselves a series ofvital questions: What does the public ex-pect from us?How dowe face a client whois willing to pay ridiculous amounts for alegal opinion that is not entirely clear?How dowe deal with a company that doesnot comply with our policy and is notabiding by the law? What price are wewilling to pay and, evenmore importantly,can we live without it? You can’t be ethi-cal if your clients or your suppliers arenot. One thing is to interpret regulationsand the other is to stretch them far beyondwhat is permitted in our statutes.
Ethical Musings of a Gaming LawyerBy Cristina Romero de Alba
The considerationof ethics in the legal
profession is of key andgrowing importance.Yet, too few of us
consciously considerethics whilst weighingout our options in theday-to-day of our job.
“
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CASINO LAWYER • SPRING 2013 29
Cristina Romero de Alba
Cristina is a partner at LOYRAAbogados y Asesores sinceApril 2011, the first specializedboutique law and advisory firmdedicated to gaming in LatinAmerica and Spain, retainingclients ever since its establishmentin 1981. Cristina is in charge ofthe international departme nt ofthe firm and responsible for thedevelopment of its client base inEurope and the Americas.
Cristina has acted asspeaker at several gamingconferences like IAGA, G2E andIgamingsummit 2011 and regu-larly writes contributions forGambling Compliance, theWOGLR, Diario Jurídico,Actualidad Jurídica Aranzadiand SNL Financial. She hasalso written the chapter on“Infringements and Sanctionsin the New Gaming Law”published by La Ley (WoltersKluver) in Spain as part of thebook “The New Gaming Law13/2011” and is the AcademicDirector of the MastersProgramme on the GamingSector for the Instituto deEmpresa, ranked among the topBusiness Schools in Europe andworldwide by the WSJ, the FT,Forbes and The Economist.
She collaborates asresearcher for the FundaciónCodere, a non-profit organiza-tion which develops analytics,studies and research to helpdevelop gaming regulationsand standards and responsiblegaming.
Cristina speaks German,French, English and Portuguese.
After my experience in a few jurisdictions, re-visiting my knowledge about the fundamental in-stitutions of civil law and logic, I rapidly came tothe conclusion and will still defend to the end thatthere is no such thing as “de-regulation” or “un-reg-ulation”. It just cannot be; a certain activity is eitherlegal or illegal, regardless of whether it is carriedout in physical premises or via the internet. Con-sider drug dealing, for example. Of course, manycriminal codes do not expressly contemplate thatdrug dealing over the internet is prohibited, it is justgenerally banned. No distinction. What would bethe grounds for it anyway?
Regardless, some lawyers seem to have falleninto the trap of economic interests and have beenacting as supporters of, not so much real legaldoubts (a grey line transformed into a softer greyand almost white one), but of a forced interpre-tation of what has always been prohibited (a darkblack line that they pretend is as white as freshlyfallen snow).
Ridiculous amounts of money, “glamorous”clients and inactive public institutions, sadly in-cluding justice, are plainly overwhelmed by a phe-nomenon that trespasses the ultimate barriers ofsovereignty, urging this interpretation, openly con-trary to what ethics and the legal system dictate.
Politicians with little or very rudimentaryknowledge and a great amount of selfishness areinevitably poisoned to follow this very same inter-pretation as they will hold on to general conceptssuch as “technology is always good, it means progress”,“the internet is a different not just a distribution and com-munication channel”, “we cannot face or enforce any ac-tions against cross border phenomena, we don’t have theresources or the legal instruments”. Andwe end upwitha legal system that is not applied and justice thatis not supported or even activated.
The essence of our professional dutiesshould be closely attached tomoral, ethical andequity parameters, to be able to free our-selves from our own interests andfavor the client whilst preserving ourindependence and dignity. Self-respectand pride should not be derived fromnor found in material gain.
Gambling is widely done foramusement, entertainment and social-
ization, but it still has this bizarre and obscure angle,andwe are all responsible and liable for it. Themanyerrors of the past, the stretching of the “thin greyline” between legal and illegal and the fraudulent useof gaming operations for other purposes have, un-doubtedly, harmed the industry. Luckily enough, thisis not a general feature. The example of online gam-ing is just one of many. What about the interpreta-tion of what a certain game is or where it can beoffered? Is it just the most recent?
The gaming lawyers, as an international body,should research, interpret, deliberate and lookaround, tackle these issues and purge the professionto free it from greed.
Coincidentally, those very same people whosay that gambling is equal to themob and tomoneylaundering are the ones that have not had enoughexposure and are probably just unable to grasp thedimension and the escalating levels of compliance,high standards and technological developments inthis industry. As gaming attorneys, let us strive tokeep it that way.
We should all take not just amoment, but amo-ment every single day to assess how we contributeto the image of the industry. I have little doubts onthe fact that the future will bring us economic im-provement, cross border investment, developmentof gaming offering, technology,marketing and gen-erally changes to “the way we see things”. Onlineand mobile gaming is just the beginning of the lat-est wave of changes. Think of social gambling,think of international liquidity, think of expansionof the integrated resort model to Europe. How arewe going to confront those? Retreat to ethics; theyare an unchanging reference. �
Modern times also found Greeks dom-inating casinos in other countries. Gamblingat several European casinos was dominatedby Nicholas Zographos. Zographos had theability to track cards in baccarat. His con-trolled of the bank at the baccarat tables en-abled him to stop play whenever it appearedthat a losing streak was coming.
Another Greek personality shared theadvantages of sitting on the house side ofthe table. Basil Zarahoff purchased con-trolling shares of SBM’sMonte Carlo casi-
nos in 1923. The Greeks came back foranother stint in 1950 when Aristotle Onas-sis took control of SBM. He held domina-tion until 1966 when Prince Rainierregained ownership. These were also theyears when Greek born Nicholas Dando-los, a.k.a. “Nick the Greek” gained promi-nence in American poker circles. Nick theGreek was one of the first two players inBinion’s World Championship of Poker in1969, albeit he finished second.
OnGreek soil, major casinoswaited, but
other gaming was in place. Greece has had agovernment lotterywith passive games since1862. In 1993 a private group was licensedto sell instant games. Since 1959 a privategroup has run sports betting. Today thereare over four thousand shops offering bets.Additionally, the Hellenic Horse Racing Or-ganization has conducted pari-mutuel bettingsince 1925. While basically illegal, Internetgaming is quite prevalent with revenues ex-ceeding those of nine casinos today.
Nine casinos have been establishedunder Law 440whichwas passed onMay 18,1995. However, there were earlier gaminghalls. In 1928 an earthquakewhich destroyedmost of Loutraki, and the town leadersopened a casino to aid in economic recovery,but it closed soon after it opened. Later threesmall government owned casinos enjoyed op-eration in the 1970s and 1980s.
The nineGreek casinos today stand outfrom others in Europe as they are not tied tothe traditional model of tight control foundin Germany, France, Italy and elsewhere.
Casinos inGreece
WheretheGames Began
30 CASINO LAWYER • SPRING 2013
Greece first conducted formal games. Greek gods participated in agame to decide their powers. A dice roll determined Zeus would rulethe heavens, Poseidon the seas, Hades the underworld. Hermes,the son of Zeus, was made god over gambling. Ancient Greeks or-
ganized sports events. The Pan-Hellenic games were held at Olympia in 776 B.C.,and later at Delphi, near Corinth, and Nemea. The Ancient Olympic games surviveduntil 394 A.D. They were reinstituted as the modern games in Athens in 1896, thenin other major world cities each four years afterwards, with the exception of world waryears. The Olympics were also in Athens in 2004.
By William Thompson, pH.D.
Rather, the ambience found in the Greekcasinos is much like that in Las Vegas casinosalbeit Greek facilities are smaller. Several dohave as many as one thousand slot machinesand ninety table games. Machines are foundon floors mixed with tables. One Europeanfeature found in the casinos is that players paya fee and identify themselves at the door. Feestypically are fifteen Euros, and a patron re-ceives playing chips or a drink. Casinos alsohave dress codes (in contrast to AncientOlympic games where the code was “no”dress during the competition). Theminimum age forpatrons is twenty-three for most casi-nos, but some set theage at twenty-one.
The casinos are all privately owned andwith one exception: hotels having from a fewdozen to almost five hundred rooms.Amenities abound. They have show rooms,swimming pools and spas, restaurants,beaches. In many ways they could take onthe label “Integrated Resort Casinos.” Itwould be a bit of a stretch to call them“mega-resorts,” but not for Porto CarrasGrand Resort Casino which opened in May1995, sixty-five miles south of Thessaloniki
in northern Greece. Thetwenty-four hour casinooffers 425 machinegames, and forty-threetables on a gaming floorof 19,500 square feet.This first casino underthe new law is at-tached to the Sithoniahotel with 477rooms, fourteen
restaurants, lounge facilities, a night club,theatres, spa, golf course, retail shops, ten-nis courts, riding school, five thousand seatconvention center and a 315-berth marinabeside six miles of private sandy oceanbeach.
A beach also spreads in front of ClubHotel Casino Loutraki on the Gulf ofCorinth. The facility features pools, a spa,health and massage center. The casino cov-ers 32,950 square feet. There are one thou-sand slot machines and ninety-five tables onthree levels, all inside a 275 room hotel withnine restaurants, lounges, and business cen-ter. The European Association of Gamblingstudies held 2012 sessions in a 10,000 squarefoot meeting area. The casino is three milesfrom the Corinth Canal, and eightmiles fromAcrocorinth and the Temple of Apollo.Loutraki was the second to open under the1995 law. It draws many customers fromAthens, seventy miles away.
The seaside resort town of Loutraki isfamous for its natural spring waters,
beaches and the popular Loutraki Casino
Club Hotel Casino Loutraki (above)is one of the largest casinos in
Greece and offers a state-of-the-artcasino and luxurious hotel
Acrocorinth (r.)and the Temple ofApollo (below) are
two of Loutraki’s mostpopular attractions
Continued on next page
Porto Rio Casino opened in 1995, a few miles from Patras, thethird largest Greek city. The casino is near ruins of the Temple ofPoseidon and within sight of the famous Rioantiro Bridge connect-ing the Peloponnesian Peninsula to mainland Greece. The 16,145square foot casino has 327 slot machines and forty table games. It ispart of a hotel with 235 rooms, a convention and banquet center,health club and spa, two pools, private beach, marina, and threerestaurants and lounges.
Casino Xanthi in northern Greece opened in December 1995,with 178 slots and twenty-five tables. The almost 20,000 square footcasino is in a twenty-seven room hotel, with meeting facilities, spa,and restaurant.
A large resort casino at Thessaloniki, second largest city inGreece, opened in 1996. The twenty-four hour casino has 911 slotmachines and 87 tables operating on a gaming floor of 43,000 squarefeet. The casino is inside a hotel with 152 rooms, seven thousandsquare foot convention center, business center, health club, swim-ming pools, tennis courts, a 180-berth marina, along with a nightclub, theater, gift shop, and five restaurants.
In 1997, a casino opened on the island of Syros, two hours byboat southeast of Athens. It is the only casino without a hotel, al-beit the island has large hotels. The twenty-six tables and 186 slotsare on a gaming floor of 22,596 square feet. It is open from 8 p.m.to 4. a.m. and is controlled by Kazino Zypoy.
The three casinos that were formerly controlled by the gov-ernment were privatized under the 1995 law. Rhodes had been underItalian control, after the Ottomans fell, and in 1929 they permitteda short-lived casino. After becoming part of Greece in 1947, atten-tion turned to having a new casino. A government facility opened in1966. It reopened in 1999. Today, the 18,300 square foot casino isattached to a hotel with tirty-three rooms, restaurants and meeting
space. The twenty-four hour facility has 310 slot machines andthirty-four table games.
In 2000, Corfu reopened its privatized casino, which was firstopened in 1962 by the government. It has the smallest gaming floorin Greece, 10,000 square feet, with fifty slot machines and sixteentables. The attached hotel offers 256 rooms, a spa, pools, and restau-rants. Considered one of the most beautiful casinos in the world, itwas the site for filming the James Bondmovie, “For Your Eyes Only.”
Mont Parnes Casino is located 20 miles from Athens in theMount ParnithaNational Park. The 41,000 foot facility has five hun-dred slots and fifty-nine tables. The casino is open from 8 p.m. to 2a.m. A seventy-six room hotel is beside the casino with restau-rants, spa, and tennis courts. The casino first opened in 1971, andits turnover to a private corporation occurred in 2002 after delaycaused by an earthquake in 1999.
Under the casino law, starting in 1999, Golden Star Cruisesbegan offering casino games aboard their ships sailing from Pi-raeas, the major port city for Athens.
The adoption of the Las Vegas style for casinos resulted fromseveral factors. First, all the casinos today date from a law passedin 1995. Prior to that time the only casinos that existed were smallgovernment owned facilities. It should be noted that Rhodes hada casino from 1929 into the 1940s, but the island was not part ofGreece until 1947. Greek independence from the Muslim Ot-toman Turks was not realized until 1829, and even afterwardsthere were concentrations of Muslim populations. Gambling is of-fensive to teachings of Mohammed. Moreover, during the nine-teenth and twentieth centuries there was no economic upper classthat craved the pleasures of casinos as did the traditional elitesand royal class elsewhere in Europe. A monarchy was establishedin Greece after independence, but the king was German and hisroyal entourage was not Greek. Another force against the early
32 CASINO LAWYER • SPRING 2013
Loukraki Greece is home toone of the largest casinos in Europe—
the Club Hotel Casino Loutraki
While today’s casinoswere licensed inatimeof prosperity,darkdayshave befallenGreek’s economy. Fiscal criseshave
engulfedthecountry since 2008; growthrates arenegative,publicdebt soars alongwithunemploymentrates.
Casinoshave beenaffected.
Continued from previous page
CASINO LAWYER • SPRING 2013 33
emergence of casinos was the fact that Greece was engulfed in in-ternational battles during much of its early time of independence.Wars included the Crimean War (1853-1856), Greco Turkish Wars(1897, 1919-1922), A Macedonian Struggle (1904-1908), BalkanWars (1912-1913), World War I (1914-1918), World War II (1939-1945), and a Civil War (1946-1949). Wars are not conducive for op-erating casinos.
In the 1980s and 1990s political stability and middle class pros-perity was found in Greece. Recovery from wartime devastation wasfollowed byGreek entry into the European Union in 1981. In 2001 theEuro became its currency. It was a good time to start a casino. Both thegovernment and operators felt a need to “go big.” There were taxes andprofits to be made, and a middle class would provide a player base. Thenine casinos hold licenses from the Minister of Tourism. While thecasinos pay gamingwin taxes of either 20% or 30% (determined in theirlicense), they also had to pay a major fee when they received their li-cense. In the case of the three existing casinos—which had been gov-ernment owned, but were purchased by private ventures, the feeincorporated costs of upgrading (and expanding) facilities.
While today’s casinoswere licensed in a time of prosperity, dark dayshave befallen Greek’s economy. Fiscal crises have engulfed the countrysince 2008; growth rates are negative, public debt soars along with un-employment rates. Casinos have been affected. Revenues in 2011 were18.5% below the previous year. Between 2007 and 2011 the drop at thecasinos declined from 3.2 billion Euros to 2.2 billion Euros. As casinoshave struggled, they have done so with civic responsibility trying to pro-tect their employees. Employee numbers have fallen only 7.2% (from5642in 2007 to 5222 in 2011) compared to the revenue falls of 30.1%.
Spokesmen for the industry tried to put on a positive face for therecent European Association of Gambling Studies Conference, butthey emphasized one thing. Casinos cannot survive for the long rununless the government gives them power to offer gaming productsover the Internet. As with all prospective Internet gaming opera-tions, we will just have to wait and see. �
William Thompson is an emeritusprofessor of public administration at theUniversity of Nevada, Las Vegas(89154-4030). 702-477-5432 [email protected]
He is author of over a dozen bookson gambling subjects, and he is a frequentcontributor to Casino Lawyer.
� The overall Greek gambling market has experienced a sharpgrowth between 2000 and 2009 and it is estimated that legalgambling activities accounted for 3.7% of Greek GDP in 2009
� The current economic crisis and the resulting recessionaryenvironment, coupled with the massive offer of illegal gamblingservices, have negatively affected total turnover generated inGreece by legal gambling activities
� The annual turnover generated by the gambling activities withinthe licensed land—based casinos in Greece is expected to decreasefromUS$845m in 2009 to US$649m in 2015
� Next to the large legal gambling market in Greece exists asizeable illegal one, estimated at almost half the size of the legalmarket, betting exchanges not included to the estimation
� 120.000 to 140.000 illegal VLTs and casino games operate inhundreds of unlicensed premises – more than 250 illegal gamblingwebsites (60 of them with Greek interface) in operation
� Online gambling services are offered in Greece during the lasttwelve (12) years, despite their total prohibition by law up until thebeginning of 2012
� The annual turnover generated in Greece in 2010 from illegalonline sports betting has been estimated at €2bn and from illegalonline poker and casino at €2bn
� In 2010 Greece stood in the 6th place amongst the 27 EUmember –states in terms of annual turnover generated from onlinegambling services despite the fact that, at that time, onlinegambling was totally prohibited in Greece
� After several years of growth, the land – based casino segmentin Greece has been experiencing increased pressure from illegaloffline and online gambling operators and Greece’s recessionaryenvironment
� The introduction of slot machines (VLTs) and the uncontrolledprovision of casino games via internet are the main concerns of theindustry
� Demand for online gambling services continues to grow steadily,despite the adverse economic climate, since the consumers shallseek best opportunities to play and online gambling is a competi-tive market, with high pay-out ratios enjoyed by the consumers,an average of 93% for private industry operators
THE IMPACT OF ILLEGAL OFFLINE& ONLINE GAMBLING MARKET
Many people who work in the gaming industryare vulnerable to problems with their own gamblingbehaviors. Some are naturally attracted to the actionbecause they already have a gambling problem. Some
develop a problem after being exposed to the environment. Studieshave shown that employees in gaming establishments (racetracks,casinos, lottery vendors, and so on.) have a higher percent-age of gambling problems than the general population.When Mickey Brown was the president of FoxwoodsCasino, he urged his staff not to “become one of the peo-ple you’ve seen across the table.” Mr. Brown estimatedthat “5-10 percent of Foxwoods employees have gambled morethan they probably should and more than just recreational.”
It is difficult to spot a compulsive gambler, because, unlike otheraddictions, compulsive gambling is a hidden and invisible disease. Formillions of people, gambling offers a harmless and entertaining di-version from everyday life.Whether playing bingo or baccarat, these
people are participating in a legitimate and time-honored recreationalactivity by taking a chance on an unpredictable event in the hope ofwinning. For others, however, the simple act of placing a bet is avastly different experience. What seems a moment of elation or ex-citement for some gamblers is in reality a moment of overwhelmingcompulsion- a moment in which these people have lost the ability tocontrol their gambling behavior. These individuals cannot resist theimpulse to gamble- they are compulsive gamblers.
It is important to note that compulsive gambling is a treatableillness, and a person can lead a productive life after finding help andrecovery.
The American Medical Association adopted a resolution (Res-olution 430 in 1995) citing “the addictive potential of gambling,“ sug-gesting that their member physicians “advise their patients of theaddictive potential of gambling.“
When I was the Executive Director of the Council on Com-pulsive Gambling of New Jersey, eight percent of our calls to thehot line came from casino employees. Since 1994, we have trainedover forty thousand casino workers nationwide. Raising the aware-ness of employees through training on the subject of compulsivegambling is sometimes the catalyst for the employee to seek help.Every time we do training, some workers, who have a gamblingproblem or have a family member with the problem, approach usfor help. Often we receive phone calls from employees severalmonths after they hear our presentation. Many of these people findit difficult to come forward with the problem, fearing that expo-sure will affect their chances for advancement with the company.Supervisors who recognize an employee who has a serious gam-bling problem also often approach us.
CompulsiveGamblerWORKING
By Arnie and Sheila Wexler
The
34 CASINO LAWYER • SPRING 2013
in theGaming Industry
The problem exists at all levels of employment.Workers have approached us-from housekeepers to executives of casino companies. The range of calls from gam-blers seeking help includes a housekeeper who revealed that she stole items fromguest rooms in order to support her gambling addiction; a casino limousine driverwho was planning to kill himself as the result of his gambling problem; a pit bossthat let dead-beat gamblers signmarkers and then received a payoff from the gam-bler. A racetrack announcer called me for help after trying to fix races in orderto get money to gamble. We received a call for help from an employee on thehotel side, who was using customers’ credit cards to access money for his gam-bling. A legal counsel to a casino company asked for our help in getting him ex-cluded from gambling in casinos in his state. A woman who worked in creditcame forward to ask for help as she was in jeopardy of losing her marriage andchildren. The range of employees is huge.
As problem or compulsive gamblers becomemore andmore pre-occupied withtheir gambling, their gambling will eventually affect their company and their jobperformance. Some areas include erratic work performance, inconsiderate treatmentof customers, borrowing money from coworkers or customers, absenteeism, tardi-ness, theft, embezzlement - all affecting the integrity of the game they are dealing.The compulsive gambler may be coerced to fix games by bookmakers or loan sharksto whom they may owe money. Finally, there are increased health care costs forthem and their affected families.
It would be beneficial and prudent business judgment if gaming companieshelped their employees who have a gambling problem rather than terminating them.Employees are a company’s most valuable asset as they are often in the front linewith the customers. Employers and supervisors need to realize that compulsivegambling is an addiction, not unlike alcoholism and drug addiction.
Many companies already have health benefits that include treatment for otheraddictions. These benefits should also include treatment for compulsive gambling foremployees and their families, paid for by the employer. Employers can also makeavailable a room for an in-house Gamblers Anonymous meeting. Human Resourceand Employee Assistance Program personnel should have training on the subjectof compulsive gambling. Brochures and information regarding help for a gamblingproblem should be made available to all employees.
Another area that employers may want to consider is the legal ramificationsof not taking action if they recognize that their employee has a gambling problem.They may be held accountable by the regulatory body in their state for continuingto employ someone who has a compulsive gambling problem and is currently gam-bling. On the other hand, employers should have documented information beforeapproaching a worker who is suspected of having a gambling problem.
Early detection of this hidden illness may result in the employee getting helpbefore he or she reaches the desperation phase of compulsive gambling. Withrecovery, both the employee and the employer will benefit.
We are encouraged to see that some gaming companies have come a long wayin the last few years in addressing this sensitive issue. They have developed train-ing programs and responsible gaming programs and policies that have helped theiremployees who have a gambling problem. �
Arnie and Sheila Wexler have provided extensive training on Compulsive,Problem and Underage Gambling, to more than 40,000 gaming employees(personnel and executives) and have written Responsible Gaming Programs formajor gaming companies. In addition, they have worked with Gaming Boardsand Regulators, presented educational workshops nationally and internationallyand have provided expert witness testimony. Sheila Wexler is the ExecutiveDirector of the Compulsive Gambling Foundation. They also run a nationalhelp line (888 LAST BET) and work at Recovery Road, a treatment facilityin Palm Beach Gardens, Florida that specializes in the treatment of thosesuffering with gambling addiction.
The AmericanPsychiatric
Association (since1980) has definedthe disorder usingthe followingcriteria.
Persistent and recurrent maladaptivegambling behavior as indicated by at least fiveof the following:
1) Is preoccupied with gambling (e.g., preoccu-pied with reliving past gambling experiences, handi-capping or planning the next venture, or thinking ofways to get money with which to gamble).
2) Needs to gamble with increasing amounts ofmoney in order to achieve the desired excitement.
3) Has repeated unsuccessful efforts to control,cut back, or stop gambling.
4) Is restless or irritable when attempting to cutdown or stop gambling.
5) Gambles as a way of escaping from problemsor of relieving a dysphoric mood (e.g., feelings ofhelplessness, guilt, anxiety, and depression).
6) After losing money gambling, often returnsanother day in order to get even (“chasing”one’s losses).
7) Lies to family members, therapists, or others toconceal the extent of involvement with gambling.
8) Has committed illegal acts, such as forgery,fraud, theft, or embezzlement, in order to financegambling.
9)Has jeopardized or lost a significantrelationship, job, or educational or careeropportunity because of gambling.
10) Relies on others to provide money torelieve a desperate financial situation causedby gambling.
Pathological Gambling:KNOW THE SIGNS
Diagnostic criteria for 312.31 Pathological Gambling DSM-IV
