Gaming law mavens

by , Nov 7, 2012 | 5:38 am

My intention was to post a blog about the International Masters of Gaming Law fall conference last month while I was in Europe. Obviously that didn’t work out. It’s almost a month late and everyone’s still talking about yesterday’s US elections. But I got so much out of the conference, and the coverage of gaming and betting issues was so good, that it’s still worth getting down some thoughts and comments here, my bad timing notwithstanding.

First, a very little bit about the IMGL. From its statement of purpose: the IMGL “is a non-profit association of gaming attorneys, regulators, educators, executives and consultants from around the world who are dedicated to education and the exchange of professional information concerning all aspects of gaming law.” IMGL sponsors several conferences and generates excellent publications, but it’s also a trade association meant to raise the profile of and drum up business for its members. That’s not a bad thing—and it is not a union, as state and provincial bar authorities are in all but name—but it should be acknowledged.

Great Keynote—Mark Harms, the Chairman and CEO of Global Leisure Partners, gave the keynote speech to kick things off. I think a really good keynote advances some of the themes that will be unpacked during the conference. Harms delivered. He spoke about the big ticket items that the conference subsequently touched on, many of them in the context of plans and challenges being faced by GLP. He emphasized the distinctions between national and regional markets, pointing out the growth in Asia over the last ten years and the differences on the land-based gaming side as between North America and Europe. (Harms sees European bricks and mortar casinos as a cottage industry compared to the United States, but hopes that’s about to change with Sheldon Adelson’s project in Spain. Harms thinks that European gaming may be about to see “a renaissance.”) The speech touched on what investors are looking for in gaming projects in the current environment and the regulatory uncertainty about the “intersection” of social gaming and casino gaming products. Interestingly, Harms suggested that Zynga is ripe for consolidation into one of the major gaming companies.

View from the Business Side—Michael Lipton (Dickinson Wright) moderated a panel consisting of general counsels in the industry, viz., Kevin Mullaly (GLI), Mary O’Loughlin (Paddy Power), and Bryce Geoffrey (Lock Poker). This was an interesting panel that provoked some good interactions with the audience.

There were some initial comments about the effect of the DOJ’s memorandum opinion to the New York and Illinois lotteries late last year, and the usual emphasis on employing quality local counsel in fragmented gaming markets. (Of course: What’s a lawyers’ conference without a recommendation to hire lawyers?) But there were some fascinating comments about New Jersey sports betting; Mullaly, for example, thinks that this process will grind on for years and sees a political answer coming ahead of a legal one. I also first learned during this session that DiCristina was being appealed by the government to the Second Circuit (hat-tip to Linda Shorey of K&L Gates).

But the best part of this panel was towards the end when people tore into a discussion of what constitutes grey and black markets in terms of Internet gaming and betting. O’Loughlin had some observations about how Paddy Power negotiates this tricky question (their “belts and braces” approach results is a more “conservative” posture, not just with respect to the US, but in myriad global markets). This part of the panel was dominated by Geoffrey, who says that his clients (Lock) are taking US-facing business with full knowledge of the risks they are running. Geoffrey asserted that he tells his clients to treat player funds as lawyers’ trust funds and they do it, but that they can’t publicize where those funds are being held because of the risk of seizure by the US Department of Justice. Despite Lipton’s attempt to stir the pot—and he is good at that, as anyone who has seen him preside over panels before knows—he panelists wouldn’t be drawn into labelling particular markets “grey” or “black.”

One of the fun exchanges in this session was between Tom Auriemma (member of the compliance committee at Penn National) and Geoffrey. Tom asked how Lock would get around the fact that they’ve taken US bets if they decided at some point to seek licensure in New Jersey for Internet gaming. Geoffrey gave a pretty obvious but candid answer: “There’s not a snowball’s chance in Hell that my clients will be licensed anywhere in the US.” I’m not used to seeing this level of candour on these panels. I liked what seemed to be a fairly honest and open back and forth among the panelists and the audience.

Social Gaming—This was my favourite panel. It raised some of the deeper questions and issues in social gaming and honestly grappled with them, even though definitive answers to many of these items are elusive at this stage. Panelists were Melissa Blau (iGaming Capital), Marc Ellinger (Missouri gaming attorney at Blitz, Bardgett & Deutsch), Mitch Garber (Caesars Interactive & former PartyGaming CEO), Diane Mullenex (a French gaming attorney), Jenny Williams (Chief Executive of the British Gambling Commission), and Andre Wilsenach (CEO of the Alderney Gambling Control Commission).

Williams was circumspect about whether the BGC wants to extend regulation to social gaming beyond “traditional” casino gambling, calling it only a policy question. Wilsenach was more assertive, suggesting that regulators should ask whether social gaming meets the “smell test” of traditional gaming. Then, as now, I think that defining this puts the cart before the horse and that a working definition of “social gaming” needs to be agreed on first. I also reject the “I know it when I see it” or “smell test” approaches to regulation. Ellinger made the comment that he doesn’t think social gaming can even be defined at this stage, except by example, which is a huge problem.

Garber was the star of this panel, and had some strong views on social gaming. He made the excellent point (in my opinion) that, conceptually, there’s no difference between much social gaming being undertaken now and, thirty-two years ago, putting a quarter in a Pac-Man machine. He welcomes regulators “testing” this space, because he doesn’t think social gaming meets the three prongs of consideration, prize, and chance. This starts to get at a conceptual definition of social gaming first, which I favour.

Discussion ensued about gatekeeper functions (e.g., age verification), overlap between real money and social gaming poker players (some great observations from Blau on this point), and where the onus will lie in terms of proving social gaming is or is not gambling as (if?) alleged by regulators.

US Federal Internet Gaming Bill—John Maloney (Nevada and California gaming attorney) made the apt observation that we’ve been talking for years about a federal Internet gaming bill and we’ll be having the same discussion in 2013. He doesn’t see this issue going anywhere. Mark Clayton (Lionel Sawyer & Collins) wondered aloud whether, once four or five states are actively regulating the sector, Congress might see it as “too late” to regulate on the national stage. He suggested that pressure could then be exerted by the gaming industry on state governors to submit to federal oversight.

Lobbying—A persistent theme throughout the conference was the importance of lobbying spend to achieve client objectives. There appeared to be a consensus among participants that this is a necessary element to developing many i-gaming strategies. (Lawyers that aren’t registered lobbyists need to be careful that they’re not trying to get out of their zone(s) of expertise and doing things they shouldn’t be doing.) This is true of fully developed and so-called “emerging” gaming markets.

A great example of the critical nature of lobbying for me is quite close to home in my native Toronto. There’s much discussion of whether an Ontario Lottery and Gaming casino resort will be built in the city. The casino interests pouring into the city trying to convince Toronto politicians to play ball don’t need lawyers nearly so much as they need lobbyists, publicists, and market research data showing what a great thing a casino will be for the city.

Skill Gaming—I moderated a panel on skill gaming, what it really means and some recent developments. My panelists were (in no order) Nick Nocton (Jeffrey Green Russell), Dan Schiffman (New York gaming attorney), Maire Conneely (A&L Goodbody), and Henrik Hoffmann (Lett Advokatfirma). They all did a wonderful job giving useful perspectives on what constitutes skill and if, why, and how it continues to be important in various contexts. Dan had some great, detailed observations on the recent DiCristina decision. I think I ended up tying the discussion too much to national perspectives on skill gaming, which is the opposite of what I wanted to do, but I think it came off all right.

All of this merely scratches the surface of what went on at the conference. It was a great couple of days and I’m looking forward to next spring’s session in Montreal.

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