Fantini s PUBLIC POLICY REVIEW

Transcription

1 Fantini s PUBLIC POLICY REVIEW The Gaming Industry s Legislative, Regulatory and Legal Journal Frank Fantini Publisher February 17, 2015 Laura Briggs Editor Matthew Waters Regulatory Writer Login to the Legislation Tracker User Name: legislation Password: 1204tracking LEGISLATIVE REPORT THE NEXT CASINO MARKETS? LEGISLATIVE ROUNDUP: AK, FL, IL, IA, KY, MD, MN, NY, ND, US, WV REGULATORY UPDATE RECENT ACTIONS: NV, NJ UPCOMING MEETINGS: CO, LA, MA, MN, MS, NM AGENDA HIGHLIGHTS: CO, MS GUEST OPINION PROXY PLAY AND DESERTROSEBINGO.COM LEGISLATIVE REPORT THE NEXT CASINO MARKETS? The gambling world is always looking for the next best thing. In Nevada, enhancements to slot machines are in the works that would allow skill to play a part in the outcome. In Atlantic City a new style of betting is coming into play based on physical skill rather than luck, with Borgata planning to host basketball-shooting contests next month for money. And while two of the biggest gambling states are looking for ways to boost interest in betting, many states are still trying to pass laws to allow conventional casinos.

2 KENTUCKY legislators will look at a bill to legalize up to six casinos in the state with revenue going to subsidize racetracks and education. The casinos would be limited to counties with 85,000 people, meaning Louisville in Jefferson County and Lexington in Fayette. Commercial casinos have been considered and defeated for the last 16 legislative sessions. This time isn't likely to be any different with a short session and an issue that has lost a lot of momentum, according to Senate majority leader Damon Thayer. House Bill 300 was introduced by long-time gaming advocate House Speaker Greg Stumbo who himself has referred to casinos as a back burner issue. NEBRASKA legislators would have the power to legalize casinos under Legislative Resolution 10 CA, which has passed a Senate committee. At present, any gambling expansion requires a statewide referendum, though this amendment would require one, too. As a constitutional amendment. Current state law allows horse race betting keno and lottery, but slot machines and casinos have been voted down in the past. LR 10 CA will be a tough sell in the full legislature as a motion has already been filed to kill the bill. NEW HAMPSHIRE. Sen. Lou D Allesandro introduced Senate Bill 113 to legalize fullfledged casinos. The bill would allow the state gaming commission to approve two separate casinos under category one and category two gaming licenses. The category one license would authorize 80 to 160 table games, 2,000 to 3,500 slot machines and require a minimum investment of $450 million. The category two license would allow 25 to 80 table games and 750 to 1,500 slot machines. It would require a minimum investment of $125 million. There would be a 10-year moratorium on additional licenses. The locations of gaming facilities would require passage of local referendums. Application fees would amount to $500,000 and if awarded a license, there would be an additional $80 million fee for a category one license and $40 million for category two. The state tax rate would be 35 percent of gross slot machine revenue and 18 percent of gross table game revenue.

3 Last year, a bill to authorize one casino passed the Senate but fell one vote short in the House. This year s proposal might be opposed by Gov. Maggie Hassan who strongly supports just one casino in the state. However, the addition of a second casino in the bill should curb fears that just one casino would establish a gaming monopoly, and State Rep. Joe Sweeney says two casinos would have broader appeal. The lengthy bill attempts to meet all of the concerns that D Allesandro has faced since he began trying to legalize casinos 16 years ago. The Senate Ways and Means Committee heard testimony on the bill Tuesday, but no action was taken. TENNESSEE. House Joint Resolution 87 allows the state legislature to authorize casinos provided that all state revenues from gaming be spent on education or gambling addiction programs. The bill would amend the existing law that authorizes the state lottery but does not authorize games of chance associated with casinos or slot machines. House Bill 1236 and Senate Bill 1139 would create a special joint committee to study casino gambling. TEXAS legislators will look at a constitutional amendment to allow casinos and racinos for commercial operators and Indian tribes. Senate Joint Resolution 31 and House Joint Resolution 40 would allow up to six casinos in cities and two on Gulf Island tourist destinations and up to eight racinos at horse and greyhound race tracks. Texas has 13 race tracks including Lone Star Park near Dallas, which is 49 percent owned by the Chickasaw Nation of Oklahoma. Penn National owns a track near Houston and Pinnacle one near San Antonio. Applicants would be required to invest a minimum of $400 million for an urban casino, $200 million for an island destination casino, and $150 million for a slot machine casino. The bills would require the state to negotiate gaming compacts with federally recognized Indian tribes. Currently, the only casino in Texas is the Kickapoo Indians Class II Lucky Eagle Bingo Casino, but the state is home to two other federally recognized tribes: the Alabama- Coushatta in East Texas and the Tigua near El Paso. The bill would also establish the Texas Gaming Commission and aim to reduce the number of illegal gaming machines in the state. Texans gamble an estimated $2.5 billion dollars per year at casinos in neighboring states, mostly in Louisiana.

4 VIRGINIA. Senate Bill 716, to authorize casinos in Virginia, has already been defeated. LEGISLATIVE ROUNDUP: AK, FL, IL, IA, KY, MD, MN, NY, ND, US, WV ARKANSAS These bills have recently been added to our tracking service: - SB 7 abolishes the state Lottery Commission and makes the lottery part of the executive branch of government; voted on and passed unanimously. It now advances to the Senate, which will consider the bill Wednesday. FLORIDA - H 0763 allow sale of lottery tickets at point-of-sale terminals. ILLINOIS - HB 2417 would allow betting on historical races. - HB 2428 would amend the state s Horse Racing Act of Also included is wagering on the outcome of previously run horse races, defined as pari-mutuel wagering. IOWA - Iowa HF 255 would authorize licensee for two smoke-free casinos. The bill is sponsored by Linn County legislators who want to see a casino developed in Cedar Rapids. The state gaming and racing commission earlier rejected a license request by prospective Cedar Rapids casino developers. KENTUCKY - HB 467 further defines illegal gambling machines placed in business establishments. Newly added wording includes any mechanical or electronic device permanently located in a business establishment, including a private club that is offered or made available to a person to play or participate in a simulated gambling program in return for direct or indirect consideration. - HB 446 establishes the state racing committee as licensor for historical racing machines. Annual license fees for associations seeking to offer historical racing can be as much as $100,000 while manufacturers can have license fees as high as $5,000. The second section of the act states it does not assume the legality of historical wagering or the devices and systems used in it.

5 - SB 199. By amending Section 226 of the state Constitution, the General Assembly would have the power to authorize additional forms of gambling. Should it pass, it would require ratification through a referendum worded as "Are you in favor of allowing the General Assembly to pass general laws authorizing other forms of gaming?" MARYLAND - SB 495 would raise the state tax on table games from 20 to 30 percent. MINNESOTA - HF 765 would permit wagering on results of professional or collegiate sports or athletic events. - HF 905 would allow the state lottery to operate slots at the Minnesota-St. Paul International Airport. NEW YORK - A would prohibit a casino in Orange County. NORTH DAKOTA - SB 1231 would require gaming manufacturers and distributors to apply for a license annually. US CONGRESS - HR 707 calls for restoring the US policy of the Wire Act which would prohibit all forms of i-gaming. WEST VIRGINIA - SB 446 would increase the number of limited video lottery machines a retailer may have from five to seven. REGULATORY UPDATE RECENT ACTIONS: NV, NJ NEVADA. The Gaming Control Board gave their recommendations on these items February 11. The Gaming Commission will decide on the recommendations on February 26.

6 - AMERICAN CASINO & ENTERTAINMENT request for extension of its interactive gaming license was recommended without condition. - BARTENDERS, BARBACKS AND FOOD SERVICE employees no longer need to register as gaming employees as long as their responsibilities do not include any gaming activities, the Gaming Control Board decided in a notice dated February 5 and distributed February BETTING ON COLLEGIATE AND OLYMPIC sports could be allowed by the end of the month if the Gaming Commission approves regulation changes. Of three options, the Gaming Control Board recommended one that would allow betting on all Olympic events subject to the chairman s discretion. Other options would not allow betting on Olympic sports that include scoring by judges, and not have given the chairman discretion on the allowed events. The full text of the options is at - DOTTY s request to add another slot parlor in North Las Vegas was recommended for approval with a condition. book. - SHARKEY s CASINO in Gardnerville received approval with condition to add a sports - WILLIAM HILL s application for an extension on the sports book approval granted to Jackpot Crossing in Fernley was recommended for approval without condition. - VIRTUAL EVENTS. Betting on virtual events, which could include digital races with the outcome determined by the gaming device, has been recommended. Proposed changes to Regulation 22 can be viewed at NEW JERSEY. - CAESARS CEO-designate Mark Frissora received unanimous approval to begin his duties at the New Jersey Casino Control Commission s February 11 meeting. Frissora is now cleared to work for at least nine months and can get an extension for another three. Full licensing will be voted upon after the commission completes its investigation. - The Casino Control Commission s next meeting is March 11. UPCOMING MEETINGS: CO, LA, MA, MN, MS, NM COLORADO. The Colorado Limited Gaming Control Commission will meet 9:30 a.m. Thursday. The agenda can be seen at 15%20Agenda.pdf.

7 LOUISIANA. The Louisiana Gaming Control Board will meet Thursday. The agenda will be available at MAINE. The Gambling Control Board will meet at 9 a.m. Tuesday. The agenda will be available at MINNESOTA. The Minnesota Gambling Commission will meet Tuesday. The agenda can be seen at MISSISSIPPI. The Mississippi Gaming Commission will meet 9 a.m. Thursday. The agenda can be seen at NEW MEXICO. The New Mexico Gaming Control Board will meet 11 a.m. Wednesday. The agenda can be seen at AGENDA HIGHLIGHTS: CO, MS COLORADO. - WPT HEADS UP HOLD EM, a patent-pending variation owned by Galaxy Gaming, could be available to play in Colorado casinos if the Colorado Limited Gaming Control Commission approves amendments to the rules of poker on Thursday. Also on the agenda is Royal Match 21, a variation of blackjack. Descriptions and pay tables for the two games are at MISSISSIPPI. - FINDING OF SUITABILITY. Juliet Lim, executive VP and general counsel for Global Cash Access, and Richard Haddrill, executive vice chairman of Scientific Games Board of Directors, are applying for their finding of suitability at Thursday s meeting. - WPT HEADS UP HOLD EM from Galaxy Gaming is also on the agenda for approval. GUEST OPINION PROXY PLAY AND DESERTROSEBINGO.COM By Joe Velandra CEO Great Luck Gaming Note: Joe Velandra is a member of the Rosebud Sioux Nation and a former executive of the National Indian Gaming Commission whose company provides the software platform to the lipay Nation of Santa Ysabel Indians who are in court testing the theory of Indian sovereignty upon which they are operating their DesertRoseBingo.com gambling website. Velandra describes that theory.

8 INTRODUCTION & BACKGROUND The intent of this piece is to explain the legal and technical basis for Proxy Play Bingo, as developed by Great Luck, LLC and operated by the Iipay Nation of Santa Ysabel (the Tribe ) through DesertRoseBingo.com. Santa Ysabel Interactive, Inc. ( SYI ), a tribal corporation chartered and indirectly owned by the Tribe, commenced operations of DesertRoseBingo.com in early November Within a month, the State of California filed a lawsuit against the Tribe and obtained a temporary restraining order concerning the bingo games offered through DesertRoseBingo.com. The Tribe is seeking dismissal of the state s complaint, and the next hearing in the case is scheduled for March 5 before the Federal District Court in San Diego to address jurisdiction and sovereign immunity. The Department of Justice has filed a separate complaint against the Tribe, arguing that DesertRoseBingo.com violates the Unlawful Internet Gaming Enforcement Act (UIGEA), but it has not served its complaint upon the Tribe. That lawsuit is on hold while the National Indian Gaming Commission reviews of the Santa Ysabel Gaming Commission s final agency actions approving the Class II gaming system and games as operated by SYI. PROXY PLAY AND DESERTROSEBINGO.COM DesertRoseBingo.com offers VPN Aided Class II Gaming using technology developed by Great Luck. The technology is a patent pending Class II gaming system known as the Virtual Private Network Assisted Play System ( VPNAPS ). By deploying new software and hardware that work as technology aids, the VPNAPS enables browsers to access server-based electronic bingo games conducted on the Tribe s sovereign Indian Lands, and played for real money by a designated Proxy Agent. A Proxy is a legal representative that is engaged to represent the interests, and follow the instructions of, the person engaging the Proxy (the Principal ). A Proxy may be engaged to act on behalf of the Principal to do anything the Principal may legally do under the laws of a sovereign government. In many contexts, a Proxy may be engaged in a variety of ways, including: by letter, contract, postcard, fax, telegram, telephone call, handshake, , text message and Internet form. As long as the Principal clearly intends to engage the Proxy and would be legally able to take the action the Proxy is instructed to take, the Proxy may take the same action on behalf of the Principal including lawful gaming on Indian lands. Interestingly, this basic legal concept of Proxy is at the heart of the legal Internet gaming in New Jersey. Under New Jersey law, gambling is only permitted in Atlantic City. Nevertheless, New Jersey law allows patrons outside of AC to gain access to licensed sites in AC through a Proxy. New Jersey state law deems patrons to be present in AC where the bet is accepted and the game is played on the Proxy server. In other words, NJ allows the operator of the Internet gaming site to be a patron s Proxy. Similarly, the Tribe s VPNAPS ensures compliance with Tribal laws and regulations allowing Proxy play. SYI operates DesertRoseBingo.com in accordance with the Tribe s laws and regulations, which include a gaming ordinance approved by the chair of the NIGC. DesertRoseBingo.com

9 uses the Great Luck VPNAPS to control access to lawful Class II games by a browser-enabled device; and, most importantly to ensure compliance with all legal and regulatory requirements. The VPNAPS acts like a locked gate, which requires a key. A user may obtain that key only by completing registration, which includes Know Your Customer, Geolocation, and age/identity verification. The user may be admitted into the system on tribal lands only when he/she has satisfied all of those parameters. The Virtual Private Network component of the technology creates a secure and restricted access connection that only allows registered users to access the server-based games located on the Tribe s Indian Lands. Think of the VPN this way: The User is like a driver on an interstate highway (the Internet). The User takes the highway to a NASCAR track (the VPN). The User requests access to the NASCAR track. If the request is granted and the User is allowed to enter the track, it is no longer on the highway it is on a private roadway. If admitted, the User funds their account and requests to engage a Proxy to play Class II bingo on the Tribe s lands on his/her behalf. If the Tribe accepts the User s offer to engage the Proxy, the Tribe notifies the Principal and the Proxy then follows the instructions to play Class II bingo on his/her behalf. The Proxy reports the game results back to the Principal when the game is complete. The technology is an aid to the play of Class II bingo identical to nearly all Class II gaming systems being used throughout Indian Country. The entire game takes place on Indian Land, as required by both Tribal and federal law. Only the Proxy plays the game. After the game, the results are reported and made available to the Principal, who may then view a replay of the game. The Principal is not able to view or participate in live action play of the game in any manner. The Proxy plays the game as instructed and, when completed, the Principal may only view the already completed game via a browser-enabled device. CONCLUSION Proxy play simply involves the appointment of an agent to play a legal game of chance. Whether it involves an individual asking a family member to place a wager on his/her behalf on a trip to Las Vegas, or an individual contacting a proxy agent through another form of communication, Proxy play has been authorized by numerous jurisdictions. The Principal s location is immaterial in both circumstances, so long as the Proxy Agent and the gaming operator comply with all legal and regulatory requirements of a sovereign government when and where the game is played. INVITATION FOR GUEST OPINION COLUMNS Fantini s Public Policy Review accepts guest pieces from attorneys and others involved with legislative gaming. Send queries to Public Policy Review Editor Laura Briggs at LBriggs@FantiniResearch.com.

10 STAFF: Frank Fantini, publisher. Laura Briggs, editor. Ashley Rentz, deputy editor. Dee Wild-Shyver, associate editor. Matthew Waters, regulatory writer. Mike Pelrine, director of business development. Ashley Hara, marketing manager. Matt Bellia, senior researcher, emeritus. CONTACT US: Morning Report Research Inc. Fantini Research P. O. Box 1676 * Dover, DE W. Loockerman Street, Suite 101-A, Dover, DE Phone: * toll free: * Fax: Website: SUBSCRIBER RIGHTS AND CONDITIONS: Fantini s Public Policy Review and Fantini Research are divisions of Morning Report Research, Inc. All rights reserved. Our reports and content are protected by copyright and we reserve all rights except for as granted in this paragraph, and subject to the conditions stated below. We grant each subscriber and secondary recipient the right to receive, read, and utilize the reports and report contents for their individual use only. Your Subscriber Rights and Conditions give subscribers and additional recipients the right to receive, read, and utilize the copyrighted reports and report contents for their individual use only. This right of individual use does not authorize providing whole or partial copies to others (even in your company) in any way, such as forwarding, posting, printing, file sharing, scanning, making photocopies, circulating, selling, publishing or otherwise. The right does not authorize any use by a person before he or she becomes a subscriber or additional recipient. Any other right must be granted in writing by Morning Report Research, Inc. You agree to inform paid subscribers and recipients of the conditions on their use, and you authorize us, in our discretion, to employ tracking services to check their compliance. Unauthorized copying or distribution violates copyright law and may carry serious consequences. SUBSCRIPTIONS: As a paid Fantini s Gaming Report subscriber, the annual rate to Fantini s Public Policy Review is $799. The FGR non-subscriber rate is $1,099. Additional subscribers may be added to your account with reduced fees. We also offer affordable multi-user licenses and can be customized for any number of designated recipients. See Subscriber Rights and Conditions above. For inquiries or additional information, Sbscriptions@FantiniResearch.com, or call Subscriptions can also be ordered online at T012015/ds