GamblingCompliance: E-Sports Betting The Latest Legal Change Eyed By Nevada Law Students

20TH MAR 2017 | WRITTEN BY: CHRIS SIEROTY

Nevada lawmakers are set to consider a bill to allow for pari-mutuel wagering on e-sports and poker tournaments, in the latest in a series of legislative proposals drafted by students at the William S. Boyd School of Law in Las Vegas.

Senate Bill 240, authored by students of the school’s Gaming Law Policy class, would authorize sportsbooks state-wide to offer “other event” pari-mutuel betting.

“The main reason for our bill is that it’s very hard to set lines for events such as e-sports and the WSOP [World Series of Poker],” said Kathleen Gallagher, a second-year student at the University of Nevada Las Vegas (UNLV) law school.

“Handicapping the odds will keep casinos from suffering large losses,” Gallagher said.

The bill now pending before Nevada Senate members defines “other event” as any event other than a horse race, dog race or sporting event.

If eventually signed by Governor Brian Sandoval, the changes would come into effect on July 1.

“We are clarifying the law,” said Mark Starr, a third-year student at Boyd Law School. “We are submitting a definition to use to approve these events.”

So far, Nevada gaming regulators have only approved the use of pari-mutuel wagering beyond horseracing for daily fantasy sports.

USFantasy Sports launched in August with an initial rollout in about 40 casinos in Nevada.

Nevada has two separate license categories regarding race and sports wagering.

A “race book” is defined by statute NRS 463 as the business of accepting wagers upon the outcome of any event held at a track which uses the pari-mutuel system.

Meanwhile, NRS 464 defines a “sports pool” as the business of accepting wagers on sporting events or other events by any system or method of wagering.

SB 240 would change both statutes to allow for “other event” pari-mutuel wagering. The five-page bill has been referred to the Senate Committee on Judiciary.

“Gaming is the life blood of our city,” said Starr. “We are adapting the regulations to make [pari-mutuel wagering] on other events possible.”

Proposed changes to Nevada’s gaming statutes have been drafted by law students at UNLV for consideration during each of the state’s legislative sessions since 2001.

“We are pretty lucky we fall on this term. The legislature only meets every other year for 120 days,” said P. Nelson Lambert, who enrolled at Boyd to earn his LL.M. degree in gaming law.

The legislative projects were overseen in the past by attorneys Bob Faiss and Greg Gemignani of now-defunct Nevada law firm Lionel Sawyer and Collins.

Faiss, a well-known gaming lawyer for 40 years in Las Vegas, died in June 2014. Gemignani is now a member of law firm Dickinson Wright’s gaming practice.

Student bills in prior sessions have dealt with issues such as the rights of winners of progressive jackpots and the ability of Nevada officials to appoint interim members to the state’s Gaming Control Board.

During Nevada’s last legislative session two years ago, law school students successfully authored an amendment to the state’s charitable lottery statutes so that alumni or local bar organizations could operate charitable lotteries.

In 2011, Nevada lawmakers approved Boyd Law School-backed legislation allowing companies or individuals to apply for a so-called “preliminary finding of suitability” from Nevada gaming regulators.

Under the law, applicants are now able to undergo background investigation to establish that they would qualify for a Nevada gaming license without actually establishing a business operation that triggers a licensing requirement.

Prior to the 2011 legal change, to apply for a Nevada gaming license or a formal finding of suitability, applicants already had to be doing business with a Nevada casino or have an agreement with one.

The previous law, on the books since the 1980s, allowed busy state regulators to focus on license applications that seemed more financially viable.

Since 2011, however, the “preliminary finding of suitability” concept has been used by the likes of Malaysian casino giant Genting and Ireland’s Paddy Power, among others.

Lambert, the LL.M. student, is a member of the Eastern Band of Cherokee Indians in North Carolina.

The tribe have operated Harrah’s Cherokee Casino in partnership with Nevada’s Caesars Entertainment since 1997. The Eastern Band of Cherokee Indians opened a second Harrah’s Casino in 2015 in Murphy, North Carolina.

“It’s our life blood,” Lambert said of casino gaming.

Once the year is over, Lambert told GamblingCompliance he plans to work as a gaming attorney “for the betterment of our tribe.”

“I wanted to learn about the future. What better place to do that than in Las Vegas,” Lambert said. “It has given me a really strong regulatory experience to take home with me.”

Starr, the third-year law student, agreed, saying “it’s about getting our feet wet” when it comes to writing new gaming regulations.

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PaymentsCompliance: U.S. Legalized Marijuana Industry Struggling To Bank Its Billions

14TH MAR 2017 | WRITTEN BY: CHRIS SIEROTY IN WASHINGTON, D.C.

Payments start-ups in the U.S. have said the rift between federal and state regulations means banks are unwilling to process transactions linked to legalized marijuana businesses.

Despite a flurry of state laws making it legal for retailers to supply marijuana, industry insiders believe a federal-level ban on the drug means the vast majority of transactions — worth billions of dollars — are being made in cash.

Financial institutions, fearful of being on the receiving end of stinging enforcement actions by federal authorities, will often refuse transactions or deny account services to businesses involved in the industry.

“Banks are very risk adverse, especially when it comes to dealing with marijuana businesses,” said Adam Healy, the chief information security officer at digital wallet provider Tokken.

“How can we de-risk these transactions?”

Tokken, along with other start-ups such as Kind Financial and PayQwick, have created online systems that help dispensaries and banks record and monitor transactions, with the goal of moving transactions away from cash.

“Really, how we see it in terms of law enforcement, is that we don’t want to operate in the shadows,” Healy told PaymentsCompliance.

“We really see it as an advantage to provide stability for the industry.

“We are talking about billions of dollars in transactions.”

Industry analysts GreenWave Advisors and the Arcview Group estimated the cannabis industry in the U.S. last year reached $6.5bn and $6.7bn respectively.

Both research groups estimate the industry will surpass $20bn by 2020.

But, with few exceptions, marijuana customers pay with cash, leaving retailers to pay their employees, taxes, landlords and suppliers with stacks of possibly questionable and hard-to-trace cash.

“Consumers and retailers don’t want to deal with the cash issue,” Healy said. “Local governments don’t want that volume of cash on the street due to public safety concerns.”

He added that if it was easier to bank marijuana-related businesses it would also mean billions of dollars in liquidity for smaller, community banks and millions in tax revenue for local and state governments.

That means the business cannot only accept card transactions from consumers but also utilize its balance like any other mainstream company with a business banking account, paying suppliers, employees and taxes.

Tokken was founded in February last year by a formal federal banking regulator, and says it helps law enforcement authorities by recording all transactions indelibly using distributed ledger technology.

All transactions are also “geofenced”, meaning the company can prove customers are making purchases where they say they are.

PayQwick, which has also targeted the legalized marijuana sector, has taken a slightly different approach.

Registered federally as a money services business, the firm is a licensed money transmitter in Washington and is overseen by the state’s Department of Financial Institutions.

It is also supervised in Oregon by the state’s Division of Finance and Corporate Securities, and intends to expand into Colorado, Nevada, and other states that adopt seed-to-sale traceability systems.

Marijuana customers, retailers and producers are able to use PayQwick’s app, website and prepaid card to make purchases or transfer money between each other.

The system allows for a customer to sign up for an account online and link it to their bank account and transfer funds to PayQwick, which sends the customer a physical card.

When the card is swiped the funds are transferred from the consumer’s PayQwick account to that of the retailer, which can then transfer it to their bank account.

It vows to minimise the risk of exposure to illicit activity by taking on the regulatory compliance role itself, ensuring customer due diligence requirements are met and anti-money laundering rules are being adhered to.

GamblingCompliance: California Bill Aims To Increase Legislative Oversight Of Tribal Gaming

7TH MAR 2017 | WRITTEN BY: CHRIS SIEROTY

A California Assemblyman has introduced a bill that would severely restrict the governor’s ability to sign off on federal approvals of newly acquired lands for tribal casinos without prior approval by the legislature.

Marc Levine, a Democrat, said he introduced Assembly Bill 1377 as a way for the legislature to decide “whether compacts are appropriate for communities.”

Levine’s bill specifically would require California’s governor, if a casino is approved on newly acquired land, to notify the legislature.

AB 1377 would also “prohibit the governor from concurring in that determination without the prior approval, by concurrent resolution, of the legislature.”

Opponents of the bill believe Levine wants to make it more difficult for tribes to ask the federal government to secure land-in-trust in California, especially for those communities wanting to build casinos.

But Levine noted that the California Constitution already authorizes the governor to negotiate compacts to permit casino gaming on Indian lands, and those agreements must be ratified by the legislature.

“The construction of off-reservation gaming does not match the expectations of voters who approved tribal gaming,” Levine told GamblingCompliance.

The Indian Gaming Regulatory Act 1988 (IGRA) generally restricts tribal gaming to existing Indian lands, with limited exceptions for newly recognized and restored tribes, as well as the specific case of off-reservation casinos.

Off-reservation gaming is permitted only when federal officials agree a casino on the newly acquired lands would be in the best interests of the tribe and not to the detriment of the surrounding communities.

In that case, the state’s governor must formally concur with the federal government’s decision, although there is no requirement for state legislative input.

“So this bill forces a conversation about how we plan for gaming expansion throughout California,” Levine said. “It’s not about being for or against gaming, but how do we get it right for our constituents.”

The next step for AB 1377 is a hearing by the Assembly Governmental Organization Committee, but as of Monday no hearing date had been scheduled.

Governor Jerry Brown, a Democrat, declined to comment on the bill, with a spokeswoman saying officials “don’t comment on pending legislation.”

Before any committee hearing takes place both supporters and opponents, including some Native American tribes, of Levine’s bill are expected to propose changes or even try to kill the legislation.

“While the association has not taken a formal position on this legislation, we are aware of it and have concerns,” said Carlos Valdez, deputy director of public affairs with the California Nations Indian Gaming Association (CNIGA).

Valdez said CNIGA has concerns “about changing a process that has worked for both the tribes and the state.”

“This bill proposes adding complicated and possibly unnecessary steps to an already vigorous process,” Valdez said. “We are looking forward to engaging Mr. Levine in discussions on the intent of this legislation.”

Governor Brown approved California’s first two off-reservation casinos several years ago for the North Fork Rancheria and Enterprise Rancheria Indian tribes. However, both projects have since been mired in legal challenges.

Levine’s bill was also introduced amid a new battle over the Wilton Rancheria’s plans to build a $400m casino-resort in northern California.

Stand Up for California, a gambling watchdog group, last month submitted an appeal with the Bureau of Indian Affairs (BIA), alleging the U.S. Department of the Interior improperly handled the tribe’s application for trust land status.

As a restored Indian tribe, the Wilton Rancheria’s project would not seem to be affected by Levine’s bill.

Still, Stand Up for California director Cheryl Schmit praised the bill, arguing that it would develop a more reasonable process to ensure any casinos on newly acquired lands would be in the best interest of the tribe and the surrounding community.

“AB 1377 confronts state legislators with the question of whether gaming in California should expand beyond that which the federal government foists upon the state,” said Cheryl Schmidt of Stand Up for California. “Permitting off reservation gaming will require the state to confront challenging questions about which tribe gets what and why.”

Schmidt, who suggested AB 1377 might do better as an amendment to the state Constitution, said the measure will also allow lawmakers to decide if a tribal casino should be moved from a rural area to a more lucrative urban location.

However, she criticized the bill for lacking “substantive standards for the role of the state legislature.”

Schmit said the process should involve:

  • Approval of the affected community, including a vote of the affected county consistent with the current law regarding gambling expansion
  • A rigorous environmental review process in accordance with state law by the hosting government
  • A careful analysis of socio-economic impacts and the cumulative impacts of the proposal
  • Comprehensive intergovernmental agreements that mitigate environmental impacts, as well as the costs of the county or city services such as law enforcement, fire and emergency services
  • The right of any or all affected parties to seek judicial relief before final ratification of a tribal state compact by the state legislature.