What Asia can
Learn from Las Vegas, and Vice Versa
I
have an unique perspective on this development.
Like many others, I often act as a consultant and expert witness for
governments and industry, in
So
what lessons can the casino capitols of the world learn from each other? Here are a few:
1) Gambling has to be
strictly regulated to keep it honest and prevent scandals.
2) Casino regulation
requires knowing who the real owners are and the background of everyone
involved in the casino's operation.
3) Casino regulation also
requires keeping track of every dollar, or pataca, that goes in or comes out.
4) And watch the hands that
handle the money - that means the dealers and up, more than the players.
All these points relate to why we
regulate legal gambling at all. Wouldn't
it be easier to just sell the licenses to the highest bidders and then bow
out? Most governments don't do that, in
part because they want to make even more money, by selling licenses and then
getting a large share of the gaming revenues through taxes. This means that governments have a direct
stake in casinos' profits and are hurt if insiders skim off the top before the
profits can be taxed. It also means...
5) Governments always get greedy and raise
taxes if you're successful.
But
governments also have a duty to protect patrons. A license is seen as a promise by the
government to everyone who enters a casino that they will get an honest
game. One problem when organized crime
(in the
The
decision whether to have casinos is a state, not a federal, issue. But infiltration by O.C. can attract unwanted
attention from higher governments. In
the 1950s, U.S. Senator Estes Kefaufver held the first televised hearings,
which linked
6) Legalization opens the
door to an unrelenting push for more gambling: more casinos; additional games,
loosening of restrictions on hours, stakes and credit.
7) Regulators start out
tough, but can become overly friendly to operators.
8) Over time, almost every
decision regulators make is favorable, or at least neutral, to operators.
Casino
executives often think regulators are against them, since they may turn down
nine out of ten requests. But they do
grant that tenth request. And since
players aren't organized, regulators' decisions almost never favor patrons.
9) The first casinos have
fantastic returns on investment, due to pent up demand.
10) This leads inevitably to
an over-supply and bankruptcies, if there is no limit to the number of
licenses.
11) The situation is made
worse, because it is impossible to control neighboring jurisdictions. Monopolies are extremely profitable. That's why they won't let you have one.
12) Legalization gives
legislators and regulators the chance to be social engineers. Cruising was designed to protect gamblers
from themselves. No one thought what it
meant to lock a compulsive gambler in a casino for four hours.
13) Experiments sometimes
work, and sometimes fail.
14) Conventional wisdom
should be followed, and ignored.
The
Atlantis went bust in
As
the G2E's, especially the G2E Asia, have shown, slot machines do not always
have to be video screens with three symbols down and five across.
15) Be prepared for
inevitable problems: Slot machines malfunctioning, players claiming they have
won when they have not, minors trying to sneak in, disruptive drunks.
16) And for potential
scandals that are not your fault: Patrons leaving children in cars, reporters
catching politicians making enormous bets.
17) And for the law changing:
Smoking bans, government requiring more reporting of cash transactions.
All
this leads to the most important rule:
18) Understand and accept
that casinos are not like other businesses.
They are not adult Disneylands®.
Amusement
parks do not have to worry about restrictions on their rights to advertise,
whether their contracts are enforceable, and how to collect debts from
patrons. They aren't normally faced by
opposition from churches, or accused of ruining families. No one suggests outlawing all bars because of
drunk drivers.
Hire
the most experienced personnel you can find, from anywhere in the world. Security and day-to-day operations are most
important in the short run. But you also
need to retain the best outside experts in fields like marketing and law, or
you won't have any long run.
END
#145
© Copyright 2009.
Professor I Nelson Rose is recognized as one of the world's leading
experts on gambling law. His latest
books, Internet Gaming Law and Gaming Law: Cases
Not Your Grandmother's Bingo
One
of the biggest fights in the often strange world of legal gaming is -- What is
bingo?
This
has been fought in courts for more than a decade. One case almost made it to the U.S. Supreme
Court. But then-Chief Justice Rehnquist
refused to hear the appeal, because he did not want to become the butt of jokes
on late-night talk shows.
But
bingo is no laughing matter. At least as
many people play bingo as play poker.
And bingo halls make money.
Leading industry analyst Eugene Martin Christiansen estimates the
nation's commercial, charity and tribal bingo games have gross revenues of more
than $3.5 billion a year.
Nobody
has much trouble, any more, with paper bingo played with ink daubers or paper
pull-tabs sold by hand. These are
clearly Class II games under the Indian Gaming Regulatory Act.
Tribes
can set up Class II games without having to ask permission from the state in
which the bingo hall is located. Class
The
problem is electronics. With computers
and video screens, bingo can be played on a gaming device that is as easy to
play as a slot machine, and as much fun.
For
the past five years, National Indian Gaming Commission Chairman Phil Hogen has
been trying to get a bright line drawn in the law between what is a Class II
bingo or pull-tab device and what is a Class II lottery or slot machine. His efforts have not been greeted warmly by
tribes, manufacturers or players.
According
to Indian Country Today, at a Senate
Committee on Indian Affairs hearing on
Why
the deadline for bingo regulations should be tied to Hogen's retirement date is
not clear.
But,
more importantly, who exactly does not know "what's going on"?
The
current regulations and court decisions are not difficult to understand. I have worked with bingo played both on and
off Indian land, and no one seems terribly confused. Manufacturers and operators of linked bingo
devices and paper pull-tab dispensing machines with video screens understand
when I suggest modifications to keep their games within the law. I have given a number of Legal Opinions to
tribes and tribal suppliers that a gaming device is Class II and not Class
While
everyone inside bingo is in favor of the current situation, state governments,
the federal Department of Justice and direct competitors, including casinos,
want the law not clarified, but changed.
I recently filed an amicus brief with the Alabama Supreme Court, because
the Governor thinks all bingo should be played with paper cards and ink
daubers.
Their
problem is that the law of bingo today has more to do with how the game was played
in the 1980s than the 1930s (when, by the way, they did not use ink daubers).
For
hundreds of years, bingo and its predecessors, lotto and tombola, were played
with hard paper cards and markers. When
bingo was brought over to the
In
the 1980s, hard paper cards and loose markers gave way to preprinted sheets of
paper, "flimsies," and large ink daubers. Players could daub quickly, without having to
worry about knocking beans all over the table.
The game got faster and faster, leading to "speed" or "quicky" bingo, in
which the caller calls the numbers as fast as he can. Other fast games included "instant
bingo," in its many variations, and U-Pick 'Em, where players could choose
their own numbers on three by three bingo cards.
Every
bingo card on flimsies had a serial number.
Simple computers allowed operators to know instantly if a claimed
"Bingo!" was a winner.
Those
same computers allowed players to play the game directly on a video screen or
hand-held device.
At
the time IGRA was being considered by Congress and signed into law in 1987 and
1988, bingo was being played on competing electronic devices. These included the Bingo-Master,
ElectroBingo, Easy Bingo/Bingo Brain, Cadillac Bingo, Diamond Bingo, Starship
Bingo, and Bingo Card Minder, which played simultaneously dozens of bingo cards
held in the machines' memory; MegaBingo, a large-prize bingo game played in
multiple locations through the use of computers, satellites and telephone
lines; automated paper pull-tab dispensing machines; and Lightning Bingo, which
was a bingo game played on linked electronic devices.
It
was the intent of Congress to keep these games legal. I know, because I drafted language that was
incorporated into the legislative history of IGRA. This was for clients who wanted to make sure
they could stay in business.
Hogen's
proposed regulations would change the law.
Here are some examples:
$ Bingo
cards would have to be displayed. Bingo
cardminders never displayed all of the cards being played.
$ Bingo
could only be played with exactly 75 numbers.
Bingo is sometimes played with 90 number and with patterns such
"jail bars" where only the Bs, Ns and Os are used.
$ Variants
of bingo cannot have pre-covered numbers.
No Free Space?
$ Players
have to wait at least two seconds for the game to begin, unless there are six
players entered. Games and devices were
invented in the 1980s to speed up the play of the game, not slow it down.
And my favorite: If all the players leave before the game is over, the game is declared void and wagers are returned to the players. How exactly is the operator supposed to return wagers to players who have left the game?
On
But, in a
sign that bad ideas never die, Hogen sent a letter to a tribe in
END
Prosecutors Claim Internet Gaming Ads Violate Local Laws
Here's a quote that should scare
anyone involved with any form of legal gaming.
The federal Department of Justice
("DOJ") got Google, Microsoft and Yahoo to agree to pay $31.5 million in fines
to settle claims that they had promoted illegal gambling by running ads on the
Internet. The DOJ announced that the
fines were "for corporate conduct the government found in violation of the
Federal Wire Wager Act, federal wagering excise tax laws, and various states'
statutes and municipal laws prohibiting gambling."
The DOJ has subtly, but greatly,
expanded its war of intimidation against Internet gambling. It has openly declared that it has the right
to file criminal charges against anyone who violates any state or municipal law.
Of course, every state, city and
county has laws against gambling.
Nevada, for example, actively prosecutes illegal bookies and anyone else
who operates commercial gambling without the necessary licenses.
And every state and municipality has
laws against advertising illegal gambling, and often, even legal gambling.
A Georgia law, for example, makes it
a crime to "knowingly print, publish, or advertise any lottery or other scheme
for commercial gambling." An Atlantic
City casino that allows residents of Georgia to register online for a poker
tournament might be violating this statute.
In a case that it later criticized,
but did not expressly overrule, the U.S. Supreme Court ruled that Puerto Rico
could prohibit casino advertising to its residents.
The Supreme Court also declared that
it was constitutional for Congress to limit television and radio state lottery
commercial broadcasts to states with state lotteries. That is still the law today: A Las Vegas T.V.
station might lose its license if it airs an ad for the California State
Lottery.
However, in the Greater New Orleans Broadcasting case, the Court ruled that it did
indeed violate the First Amendment for Congress to prohibit a
Louisiana-licensed casino from advertising on Louisiana T.V. and radio
stations. The main problem was that the
prohibition was irrational, since identical, but tribally-owned, casinos could
broadcast their commercials.
As a nice twist, one of the lawyers
for the American Gaming Association in the Greater
New Orleans Broadcasting, arguing for the right of casinos to advertise,
was my former classmate, John Roberts, now Chief Justice of the United States.
Ironically, it was the DOJ that
expanded the decision, by announcing that it would no longer go after any
casino broadcaster under federal law, even in states without licensed casinos.
But the DOJ never said it would not
enforce state prohibitions on gambling ads.
And the Supreme Court has never said those state statutes are
unconstitutional.
The good news is that there is so
much legal gambling in the country now, that it would be difficult to defend a
state law that prohibits the advertising of legal gaming from another
state. And the Internet, like television
and radio waves, cannot be kept out.
It is possible that DOJ is once
again merely beating its chest, and not intending to go after any more online
advertisers. And it's not even clear if
local laws do apply to the Internet.
Still, if I were in charge of a
licensed casino, I would have my lawyers look again at my web advertising, with
an eye on avoiding "various states' statutes and municipal laws prohibiting
gambling."
END
#08-19 © Copyright 2009. Professor I. Nelson Rose is recognized as one of the world's leading experts on gambling law. His latest books, Internet Gaming Law (2nd edition just published), Gaming Law: Cases and Materials, and Blackjack and the Law are available through his website, www.GamblingAndTheLaw.com.
Gambling and
the Law®:
Can Everyone Win In Florida?
Sometimes
the most important part of a legal document are the words that are not there.
Gov.
Charlie Crist, for example, just signed a new compact with the Seminole
Tribe. It expressly allows the Tribe to
have slot machines and banking card games, like blackjack.
What
the compact doesn't mention is limits.
So, the Tribe is free to decide not only its stakes and hours of
operations, but how many slot machines and table games it wants, in all seven
of its casinos.
It
also means the compact violates federal and state law and is invalid - unless
the Florida State Legislature decides to ratify it anyway.
Crist
signed a similar tribal-state compact in 2007.
But he was sued by the Florida House of Representatives.
The
case wasn't even close.
The
Florida Supreme Court ruled that Crist and the Seminoles could agree to slot
machines, because the State Constitution permits slots in parimutuel outlets in
two counties. But the Governor simply
could not enter into a compact for a prohibited game, like blackjack. The Court held the compact invalid, because
only the State Legislature can decide what forms of gaming are legal in the
state.
In
light of threats, of questionable legality, by the federal Secretary of
Interior to impose rules for slot machines without the state's input or revenue
sharing, the State Legislature authorized Crist to enter into a new
compact. He had until 11:59 pm on August
31, 2009. He made it, with only a few
hours to spare.
But
the State Legislature had authorized the Governor to enter into a compact which
allowed banking card games only at the tribe's four casinos in Broward and
Hillsborough counties. The Seminoles'
lawyer, Barry Richard, the lead litigator for George W. Bush in the 2000
Florida voting fiasco, was widely quoted as saying,
"The tribe has substantial arguments
that they would be able to have blackjack, whether or not they have a
compact. I can't guarantee they're going
to get it, but [the possibility] is a very strong incentive for the Legislature
to work something out. If they don't,
the state is going to get no money."
Of course, blackjack is only available through a
valid compact.
The
compact contains a few other strange departures from what the Legislature
required. Where the Legislature required
that injured patrons could receive up to $1 million, the Governor and tribe
agreed to a cap of only $100,000 on patron tort claims; hardly sufficient in a
wrongful death case.
The
revenue sharing is also different, but still a minimum of 12%, reaching up to
25% of gaming win over $2.25 billion in Broward County. The state will eventually get billions, but
the tribe will stop paying if state or privately-owned casino-style gambling
expands.
Crist
did give one bone to competitors:
Cardrooms would be able to spread no-limit poker games.
The
State Legislature now has only an up or down vote on the proposed compact. The lawmakers will have to decide if they can
live with this, or hope for another, better deal, while the state's budget
deficit continues to grow.
My
guess is the Legislators will throw in some additional side requirements, like
decent insurance protection for patrons and some tax breaks for competitors,
and sign off on the deal. For it is
politics, not law, that will determine who wins in Florida. As the man who brought us George W. Bush -
even though Al Gore got more votes - put it, "If they don't, the state is going
to get no money."
END
#2009-13 © Copyright 2009. Professor I Nelson Rose is recognized as one of the world's leading authorities on gambling law and is a consultant and expert witness for players, governments and industry. His latest books, Internet Gaming Law (2nd edition just published), Blackjack and the Law and Gaming Law: Cases and Materials, are available through his website, www.GamblingAndTheLaw.com.
Almost the Law
Law
school classes are conducted using the case method. Students are given published court opinions
and then questioned on what they deduce the law is. This produces lawyers with the mistaken
belief that the first place to look when conducting legal research is reported
cases.
It
is dangerous to forget that the final say on the law still usually means a bill
that has been approved by a legislature and signed by the executive.
With
a few important exceptions - Indian gaming, interstate horseracing and Internet
gaming - it is state legislatures, not the federal government, who determine
the most important issues involving legal gambling.
So,
what are the big issues facing lawmakers?
Looking at the bills that were introduced in state legislatures over the
years shows us not only what is being proposed, but what actually becomes law.
Almost
every state is looking at expanding legal gaming. The Hawaii Legislature had so many proposals
to legalize gambling that it passed a Resolution, now gone, declaring no new
gaming proposals.
Yet
in every state, almost all expansion bills still can't get out of
committee.
But
one occasionally does pass and is signed into law. These inevitably lead to more proposals for
expansion, never reduction.
States
start with legalizing charity bingo and licensing horseracing. There still are a few that don't have state
lotteries. But the current trend is
proposals for racinos. This year, they
were approved for Ohio. And once slot
machines or video lottery terminals are introduced, there are always campaigns
to expand with table games, as recently happened in West Virginia and Delaware.
Delaware
has the additional advantage of being one of the few states grandfathered-in
under the federal Professional and Amateur Protection Act, with the right to
take sports bets through its state lottery.
I was hired by the Delaware State Lottery to recommend what the tax rate
on the new sports books should be.
But
expansion is still the exception, not the rule.
The gaming industry has gained great political power in many states, but
card clubs and casinos still lose most of their battles. This is particularly true when they want
restrictions relaxed, such as being able to operate longer hours or higher
stake games. And forget about getting
tax rates reduced, unless there have been a few high-publicity
bankruptcies. The failure of almost
every bill having anything directly to do with gaming and money, except raising
taxes, shows how important it is to make sure everything is done right when
legal gambling is first introduced into a state.
Legal
gaming is especially politically weak when confronted with widespread social
movements. Having legislators mandate
such things as smoke-free rooms can hurt business when there are direct
competitors, such as tribal casinos, that don't have the same
restrictions. The casinos in Black Hawk,
Cripple Creek and Central City did not celebrate when Colorado repealed their
exemption from the "Colorado Clean Indoor Air Act."
Every
proposal to bring in legal gaming now includes provisions to help problem
gamblers, such as proposal in California to keep ATMs off the gaming floor.
Casinos
are still viewed as slightly immoral deep pockets. So, bills to exempt businesses from
burdensome taxes, in states like Colorado, Indiana, Kansas and Nebraska, or to
preserve historic buildings in Montana, expressly exclude casinos from the
benefits of the new laws.
One
Connecticut representative introduced a bill that could create a national
nightmare for casinos and players: to
tax out-of-state visitors on all they have won at casinos in the state.
States
are ramping up their competition for the gaming dollar. The Louisiana Legislature created a committee
to study "the effects of Mississippi's decision to land-base its casinos." We know what the recommendations will
be: "a study is necessary for the state
to determine whether a move to limited inland gaming would also lead to
increased economic development in this state..."
But
Tom Burch, a Kentucky Representative, had the ultimate solution for
competition. He introduced a resolution
that Kentucky send a submarine to sink any Indiana riverboat casino that
strayed onto its side of the Ohio River.
END
