Mississippi Gaming Commission’s Special Interim Commission Meeting: September 14, 2017

The Mississippi Gaming Commission held a Special Interim Meeting on Thursday, September 14, 2017, at 10:00 a.m. in the Biloxi office of the Mississippi Gaming Commission. Executive Director Allen Godfrey, Chairman Al Hopkins, and Commissioner Jerry Griffith were in attendance. The following matters were considered:

Riverboat Corporation of Mississippi d/b/a Golden Nugget Biloxi Hotel and Casino received approval of the following:

  1. Registration of Golden Nugget, Inc. as a Holding Company of Riverboat Corporation of Mississippi

  2. Registration of Landry’s Gaming, Inc. as a Holding Company of Riverboat Corporation of Mississippi

  3. Transfer of the Equity Interests or Securities of Riverboat Corporation of Mississippi

  4. Pledges of Equity Interests or Securities in Connection with the Credit Facility

  5. Imposition of Equity Restrictions Including Negative Equity Pledges in Connection with the Credit Facility

These approvals were in connection with a restructuring of the ownership of the Golden Nugget companies in order to facilitate the acquisition of the Houston Rockets NBA basketball team.

This post was written by Thomas B. Shepherd & Christopher S. Pace  of Jones Walker LLP © 2017
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Mississippi and Louisiana Attorneys General Among Those Filing Amicus Brief with Supreme Court in New Jersey Sports Wagering Case

Attorney General Jim Hood of Mississippi and Attorney GenerFantasy Sports, New Jersey, Sports Wageringal Jeff Landry of Louisiana joined their counterparts from West Virginia, Arizona, and Wisconsin in filing a brief of Amici Curiae in support of the State of New Jersey’s Petition for Writ of Certiorari in its sports wagering case. In the case styled Governor Christopher J. Christie, et al. v. National Collegiate Athletic Association, et al., an en banc panel of the Third Circuit Court of Appeals interpreted the Professional and Amateur Sports Act, 28 U.S.C. § 3702, as prohibiting States from modifying their existing laws to repeal prohibitions on sports wagering.  As a result of this interpretation, the Supreme Court has been petitioned for writ of certiorari in this case to determine whether the Act commandeers the regulatory authority of the States in violation of the Tenth Amendment.

The crux of Amici States’ argument focuses on the fact that federal law does not directly prohibit sports wagering when it takes place in a State in which such wagering is legal.  Rather, the Act makes it unlawful for a State, other than those that were grandfathered in at the time the Act was enacted, to license or authorize sports wagering.  As a result, the Amici States argue that the federal regulatory approach that currently exists amounts to unconstitutional commandeering instead of lawful preemption under the Supremacy Clause.  However, the Amici States explicitly assert that they take no position on the specific sport wagering laws at issue in this case.  Instead, the Amici States are not concerned in this instance with what Congress regulates but rather the manner in which Congress regulates.

It will be interesting to follow this case through this process to see what, if anything, Congress and the Amici States will do if New Jersey prevails.  Based on the Amici States arguments, Congress could still elect to directly regulate sports wagering, although it appears that the tide has turned and that such regulation would be disfavored by the majority of Americans.  In Mississippi, Mississippi Code § 75-76-101, which requires that all gaming be entirely located and conducted on the licensed premises, would have to be addressed, at a minimum, to implement sports wagering.  Similar laws would have to be addressed to permit sports wagering in Louisiana as well.  In any event, although the arguments in this case are focused primarily on States’ rights in relation to the federal government, the outcome could have interesting consequences in gaming jurisdictions around the nation.

© 2016 Jones Walker LLP

Alabama: Indian Gaming Benefits More Than Just Tribes

While political opposition still sometimes flares up, with some form of legal gaming available in all but two states, there now is little question that gaming is widely accepted in the United States. In 2014, commercial casino gaming revenues were slightly less than $38 billion, and tribal gaming represented an additional $28.5 billion. These are significant economic contributors, and tribal gaming is especially important in helping improve conditions in many communities.

Tribal gaming is a unique economic engine. The Indian Gaming Regulatory Act (IGRA), which was enacted in 1988 to provide a statutory basis for the regulation of gaming on Indian lands, prohibits using net revenues from Indian gaming for any purpose other than funding tribal government operations or programs; providing for general welfare of the tribe and its members; promoting tribal economic development; donating to charitable organizations; or helping fund local government agencies’ operations. The dedication of tribal gaming revenues to these beneficial purposes has funneled hundreds of millions of dollars into health and welfare programs, education, housing and public safety, assisting not only tribal members, but the surrounding communities.

The Poarch Creek Indians (PCI) in Alabama illustrate this point. Since achieving federal recognition in 1984, they have grown their gaming economic development operations from a small bingo hall with 130 jobs to three major casinos and a growing number of non-gaming enterprises with a combined total of nearly 4,000 employees, most of whom are not enrolled tribal members.  The casinos are “destinations,” with first class restaurants, spas and entertainment venues, including recreation for the local communities such as movie theaters, arcades and bowling alleys. In keeping with the IGRA rules, their revenues fund health clinics, elderly housing, scholarships, and even a 15,000 acre wildlife preserve. They funded the construction and on-going full-time staffing of two fire and rescue stations that serve the entire community and have joint assistance agreements between their tribal police and two sheriff’s departments to help with local law enforcement.

PCI has generously fulfilled the IGRA provision that allows “helping fund local government agencies’ operations,” with substantial donations to schools, transportation, hospitals, public safety operations and other local government functions. They make charitable gifts to a broad range of agencies and have an endowment program to which anyone can apply for up to $5,000 to fund a community service program.

Perhaps even more remarkable is the Creek Indian Enterprises Development Authority through which PCI is expanding their business operations into a diversified group of enterprises bringing economic development to the entire state, and especially good jobs to areas where, not so long ago, share cropping was still prevalent. PCI operates a major interstate truck stop, convenience stores, hotels and restaurants not connected to gaming, one of the largest cattle farming operations in Alabama and a high-tech manufacturing facility serving the aircraft and automobile industries and supplying parts for space vehicles. As an indicator of the Tribe’s sound economic development strategy, in 2015, these business enterprises were self-sustaining, with no supplemental funding from the gamng operations.

The drafters of the IGRA legislation intended it to be a vehicle to provide the ability for Indians to benefit their communities and help tribal members escape wide-spread poverty. The PCI economic development focus is a demonstration of the wisdom of that policy.

© 2016 Jones Walker LLP

Should There be a Legislative Solution to Disputed Indian Trust Applications?

Recent actions in Arizona and Indiana suggest that there is a new approach to local government opposition to Indian tribal applications for trust status of newly acquired land. The question has to be whether this is sound Indian Law policy, although the follow-up question seems to be whether the proponents even care.

The most shocking proposal is being sponsored by Arizona’s Senior Senator John McCain and Congressman Trent Franks to repeal a federal law enacted long ago as part of a land settlement negotiated with the Tohono O’odham Nation of Arizona. Specifically, the Tribe entered into an agreement with the federal government pursuant to which the Tribe would be compensated for the flooding of tribal reservation land with both cash and the right to construct a casino in the state on land not otherwise restricted for such a project.

The history of this dispute was summarized by Tribal Chairman Ned Norris, Jr. before the House of Representatives in 2013 as follows:

In 1986 the United States made a promise to the Tohono O’odham Nation when Congress enacted land and water rights settlement legislation, the Gila Bend Indian Reservation Lands Replacement Act, Pub. L. 99-503 (Lands Replacement Act) – legislation that the Department of the Interior has described as “akin to a treaty.” Tohono O’odham Nation v. Acting Phoenix Area Director, Bureau of Indian Affairs, 22 IBIA 220, 233 (1992). This settlement legislation was intended to compensate the Nation for the Army Corps of Engineers’ unauthorized destruction of the Nation’s Gila Bend Indian Reservation. Among other things, the United States promised in that settlement legislation that the Nation could acquire new reservation land in Maricopa County to replace its destroyed Gila Bend Reservation land (which also was located in Maricopa County). The United States also promised that the new land would be treated as a reservation for all purposes.

Following enactment of that federal law, the Tribe has moved forward to develop a resort/casino on newly acquired land on unincorporated land within Maricopa County in the Glendale-Phoenix area – commonly referred to as the “Glendale Project.” It has been opposed with multiple lawsuits filed by the State, local governments and even other Indian tribes.

The Tohono O’odham Nation has prevailed in every judicial determination rendered and is now constructing its resort/casino project. But there is new Congressional activity to prohibit the project and – in the process – change federal law for the sole purpose of stopping this single tribal project by unilaterally repealing critical parts of the Congressional Act settling an important dispute over federal flooding of tribal reservation lands.

The McCain-Franks bill has been favorably reported out of the relevant committees in the both the Senate and the House of Representatives. The legislation is not of general application; rather, it is written for the sole purpose of blocking the Glendale Project.

Indian gaming is conducted pursuant to a 1987 Supreme Court decision which led to enactment of the Indian Gaming Regulatory Act of October 17, 1988 (“IGRA”). Since that time, many local governments and citizen groups have opposed tribal gaming development on lands newly acquired in trust status. Those challenges properly have been grounded on the very clear requirements of IGRA which impose subjective standards for review and decision. To this end, the challenges to Glendale Project under applicable federal laws – including both IGRA and the Indian Reorganization Act of June 18, 1934 – have been unsuccessful. By all legal assessments, the Tribe is clearly within the law.

However, the Tribe is subject to Congressional action since the Indian Commerce Clause of the United States Constitution gives Congress plenary power over Indian affairs. And this legal fact is the foundation of the McCain-Franks assault on the project. Thus, what should be a dispute determined on the basis of existing law suddenly becomes a battle over whether Congress should legislate a final resolution in contradiction to existing law.

Let there be no doubt about the fact that Congress can terminate the Glendale Project, but the real question is whether it should do so through enactment of a dangerous precedent which likely would lead to other state Congressional delegations seeking “killer” federal legislation. And, the better question is whether this result is either necessary or advisable.

First, the Tohono O’odham situation is unique, in that the Tribe is pursuing an economic opportunity that is specifically tied to provisions of a federal land settlement statute. Reversing a key provision of that earlier legislation probably exposes the United States to a major Court of Federal Claims lawsuit for massive financial damages for the uncompensated taking of the tribal claims to the Glendale site that were legislated by the Gila Bend Indian Reservation Lands Replacement Act.

Second, how can this precedent be ignored when local politicians in other states propose similar legislative attacks on tribal projects that also are concededly legal under existing law? Rather than pursue claims on existing law, the door suddenly opens to outright statutory revocation of tribal rights.

And the scenario for the next such claim is coming from Indiana where state politicians are proposing federal legislation to block the Pokagon Band of Potawatomi Indians from expanding its casino empire from its reservation in the northern part of the state to newly acquired lands near South Bend. The tribe proposes to construct a $480 million project on lands that it claims qualify for gaming pursuant to specific provisions of IGRA. Whether the land does or does not quality for gaming has not been determined, but Indiana legislators do not want to take a chance on tribal success. Rather, they want immediate federal legislation blocking this single project without regard to legal or factual merit.

Other local groups are almost certainly watching these developments. If Congress blocks the Glendale Project, then there is no reason why it would not block others without regard to existing law. A political resolution of Indian trust applications would reverse many decades of established law. The precedent needs to be carefully considered.

Authored by Dennis J. Whittlesey  of Dickinson Wright PLLC

© Copyright 2015 Dickinson Wright PLLC

Legalize Poker? Expert Witnesses Will Be Responsible

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As poker continues to rise in popularity in mainstream America, it could very well be expert witnesses who ultimately cause the game to become largely legalized.

Over the last decade, poker (specifically Texas Hold’em poker) has emerged from the back rooms of smoky taverns, exited the underground gambling dens of low-level mobsters, and announced itself to conventional society as being a legitimate contest between skilled competitors.

The general public has been receptive. Multimillion-dollar tournaments are now televised on ESPN as more and more Americans are playing online every day, most of the time illegally through websites based offshore or overseas.

As the public watches often-familiar, famous faces continue to make final tables and win, television-viewers are able to witness each player’s strategy, lending to the idea that the game is based more on skill than chance. This fact, according to experts, distinguishes poker from “gambling” and should thus remove poker from the jurisdiction of state gambling laws.

“It is my considered opinion, based on my experience, on research that I have personally conducted, and on a review of the scholarly literature, that Texas Hold’em is a game in which skill predominates over chance in determining the outcome,” wrote expert witness Robert C. Hannum, a professor of risk analysis and gaming at the University of Denver, in an affidavit filed last month in a Wisconsin circuit court. “Thus, in my opinion, it would be incorrect to describe Texas Hold’em as a game of chance.”

The lawsuit, Verrett and Kroon v. Schimel, was filed by a poker advocacy group against the state attorney general and seeks declaratory judgment to have the court rule poker as a bona fide game of skill. A decision of such would thereby allow a poker player to gamble legally on the outcome of oneself, similar to lawfully betting on yourself in darts, pool, golf, tennis, or even pie-eating.

Hannum’s statistically exhaustive 22-page expert witness affidavit goes to great lengths to show how little chance (or how the cards are dealt) affects the overall outcome in poker. He cites statistics and mathematical analysis and extensively examines other scientific studies on poker.

“In contrast with these numerous studies finding that skill predominates over chance in poker, I am aware of no study reaching the conclusion that poker is a game predominately of chance,” Hannum writes. “In my opinion, the studies above establish conclusively that in the long run, skill predominates over chance in poker.”

To the average legal observer, it would seem that a judge will be hard-pressed to disagree with Hannum and the associated statistical science and would thus be forced by sheer mathematics to rule in favor of poker’s categorization as a game of skill rather than an act of gambling.

While the case will directly affect only poker players in Wisconsin, it’s difficult to think that the trend will not follow across the United States.

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Bulgaria Adopts New Gambling Tax Regime

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Bulgaria has a new gambling taxation regime effective January 1, 2014, which, together with the reasonable and balanced regulations currently in place, makes the country attractive for local licensing and gambling operations based upon a low corporate tax and highly qualified and low-priced technical specialists. One and a half years after theGambling Act (“Act”) was introduced, the tax base for gambling has been changed and is now in line with good business practices: switching from a turnover base to aGross Gaming Revenue (“GGR”) base.

On December 19, 2013, amendments in the Act (“Amendments”) for liberalizing gambling regulation in Bulgaria passed successfully the second reading in the Bulgarian Parliament amidst tense disputes. The Amendments were promulgated in the National Gazette on January 3, 2014, and came into force effective January 1, 2014.

The Amendments assure that as of January 1, 2014, the taxation of any online games in Bulgaria will be based on GGR with a 20% tax rate. For games in which fees and commissions are collected (such as poker), the tax rate will be 20% of the collected fees. In addition, there is a single fee for issuing and maintenance of a five-year license in the amount of approximately EUR 50,000 (BGL 100,000). No annual fee will be required during the five years’ validity of the license.

Offline bingo and keno will be taxed at a 10% corporate tax rate.

The GGR-based taxation is not a part of the common tax system, but rather it is an administrative fee regulated entirely in the Act instead of the tax laws. Nevertheless, any operator who decides to have an establishment in Bulgaria can take advantage of a favorable and stable corporate tax – only 10%. The low corporate tax rate would apply only to operators who decide to establish a local company in Bulgaria, which might be strongly supported from other economic arguments – for example, a very well-educated and qualified labor force at insignificant costs.

The Amendments introduce a new requirement for any licensed operator not established in Bulgaria but established in any other EU/EEA country or Switzerland. Such operators must have an authorized representative in Bulgaria, but this would not constitute having a local business in the country for purposes of obtaining the 10% corporate tax rate. An operator, in all events, is required to have a local representative in Bulgaria, who should be authorized for representation before Bulgarian authorities and courts.

From a regulatory perspective, the Bulgarian gaming regime is now one of the most balanced in Europe. It does not require a local establishment and main server in Bulgaria for any foreign operator who decides to obtain a local Bulgarian license (nevertheless, a local control server in Bulgaria is required). There are no specific requirements for performing payments through a local bank or to make certain investments in the country. The operators are not required to operate a dot bg domain. Foreign operators – registered, investing, and having a main server anywhere within EU, EEA, and Switzerland – can apply for a license. Nevertheless, the restrictions the Act imposes on an applicant whose shareholder is an offshore company should be carefully considered in light of provisions of the Act relating to economic and financial relations with companies registered in preferential tax regime jurisdictions and their actual shareholders.

A significant number of online gambling operators are expected to apply for a license in Bulgaria. The first online operators have already submitted applications. They are eager to enjoy not only reasonable taxation but also liberal regulation. The Bulgarian government has further stimulated the licensing of online operators by approving amendments that allow the operator to be removed from the blacklist even before being granted a license if the online operator applies for such removal not later than March 31, 2014.

The Amendments also permit the operators to perform any other business activity apart from organized gambling, which was not the case until now.

The efforts of the Bulgarian Parliament are of major significance. Instead of concentrating on blocking measures (such as ISP and/or payment blocking), the government has focused on best practices and introduced regulations that motivate the online gambling operators to get a license and work not only in a balanced regulatory environment but also under a favorable tax regime. These changes are aimed at balancing and optimizing the new sector regulation model that was introduced back in 2012. They give the online operators promising conditions to work legally in the Bulgarian market. At the same time, the new regulations impose stricter administrative sanctions on illegal online gambling operations.

Nadya Hambach, of Velchev & Co., authored this article.

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Dickinson Wright PLLC

ABA Gaming Law Minefield Conference – February 14-15, 2013

The National Law Review is pleased to bring you information about the upcoming ABA Gaming Law Minefield Conference:

ABA Gaming Law Feb 14-15, 2013

When

February 14 – 15, 2013

Where

  • Green Valley Ranch Resort & Spa
  • 2300 Paseo Verde Pkwy
  • Las Vegas, NV 89101
  • United States of America
 
The program will discuss revolutionary legal, regulator, and ethical issues confronting both commercial and Native American gaming.  Attendees will learn about global anti-corruption initiatives, Internet gaming, and the challenges faced by commercial and Native American gaming.